<PAGE>
As filed with the Securities and Exchange Commission on May 4, 2000
Registration No.: 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 8 [X]
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
Lincoln ChoicePlus Bonus
(Exact Name of Registrant)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
1300 South Clinton Street
Post Office Box 1110
Fort Wayne, Indiana 46801
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(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (219)455-2000
Elizabeth A. Frederick, Esq.
The Lincoln National Life Insurance Company
1300 S. Clinton St.
Post Office Box 1110
Fort Wayne, Indiana 46802
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(Name and Address of Agent for Service)
Copy to:
Mary Jo Ardington, Esq.
The Lincoln National Life Insurance Company
1300 S. Clinton St.
Fort Wayne, Indiana 46802
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration Statement.
Title of securities being registered:
Interests in a separate account under individual flexible premium deferred
variable annuity contracts.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
<PAGE>
Lincoln ChoicePlus Bonus
Lincoln Life Variable Annuity Account N
individual variable annuity contracts
Home Office:
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46802
www.lincolnlife.com
This Prospectus describes the individual flexible premium deferred variable an-
nuity contract that is issued by Lincoln National Life Insurance Company (Lin-
coln Life). It is primarily for use with nonqualified plans and retirement
plans under Section 408 (IRAs) and 408A (Roth IRAs) of the tax code. Generally,
you do not pay federal income tax on the contract's growth until it is paid
out. The contract is designed to accumulate contract value and to provide re-
tirement income that you cannot outlive or for an agreed upon time. These bene-
fits may be a variable or fixed amount or a combination of both. If you die be-
fore the annuity commencement date, we will pay your beneficiary a death bene-
fit. In the alternative, you may choose to receive a death benefit on the death
of the annuitant.
The minimum initial purchase payment for the contract is $10,000. Additional
purchase payments may be made to the contract and must be at least $100 per
payment ($25 if transmitted electronically), and at least $300 annually.
You choose whether your contract value accumulates on a variable or a fixed
(guaranteed) basis or both. If all your purchase payments and bonus credits are
in the fixed account, we guarantee your principal and a minimum interest rate.
We limit withdrawals and transfers from the fixed side of the contract. A mar-
ket value adjustment (MVA) may be applied to any surrender or transfer from the
fixed account before the expiration date of a guaranteed period.
All purchase payments and bonus credits for benefits on a variable basis will
be placed in Lincoln Life Variable Annuity Account N (variable annuity account
[VAA]). The VAA is a segregated investment account of Lincoln Life. You take
all the investment risk on the contract value and the retirement income for
amounts placed into one or more of the contract's variable options. If the
subaccounts you select make money, your contract value goes up; if they lose
money, it goes down. How much it goes up or down depends on the performance of
the subaccounts you select. We do not guarantee how any of the variable options
or their funds will perform. Also, neither the U.S. Government nor any federal
agency insures or guarantees your investment in the contract.
The available funds are listed below:
AIM Variable Insurance Funds:
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Equity Fund
Alliance Variable Products Series Fund (Class B):
Alliance Growth and Income Portfolio
Alliance Growth Portfolio
Alliance Premier Growth Portfolio
Alliance Technology Portfolio
American Funds Insurance Series (AFIS) also known as American Variable Insur-
ance Series (AVIS) (Class 2):
AFIS Global Small Capitalization Fund
AFIS Growth Fund
AFIS Growth-Income Fund
AFIS International Fund
Delaware Group Premium Fund (Service Class):
Delaware Premium Emerging Markets Series
Delaware Premium Growth & Income Series
Delaware Premium High Yield Series (formerly Delchester)
Delaware Premium REIT Series
Delaware Premium Select Growth Series
Delaware Premium Small Cap Value Series
Delaware Premium Social Awareness Series
Delaware Premium Trend Series
Deutsche Asset Management VIT Funds (formerly BT Insurance Funds Trust):
Deutsche VIT Equity 500 Index Fund
1
<PAGE>
Franklin Templeton Variable Insurance Products Trust (Class 2):
Franklin Mutual Shares Securities Fund
Franklin Small Cap Securities Fund
Templeton Growth Securities Fund (formerly Global Growth)
Templeton International Securities Fund
Liberty Variable Investment Trust:
Newport Tiger Fund
Lincoln National:
Bond Fund
Money Market Fund
MFS(R) Variable Insurance Trust (Service Class):
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
Variable Insurance Products Fund (Service Class 2):
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Variable Insurance Products Fund III (Service Class 2):
Fidelity VIP III Growth Opportunities Portfolio
This Prospectus gives you information about the contracts that you should know
before you decide to buy a contract and make purchase payments. You should
also review the prospectus for the funds that is attached, and keep both pro-
spectuses for reference.
Neither the SEC nor any state securities commission has approved this contract
or determined that this Prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
Lincoln Life offers variable annuity contracts that do not have bonus credits,
and have lower fees. You should carefully consider whether or not this con-
tract is the best product for you.
You can obtain a current Statement of Additional Information (SAI), dated the
same date as this Prospectus, about the contracts which has more information.
Its terms are made part of this Prospectus. For a free copy, write: Lincoln
National Life Insurance Company, P.O. Box 7866, Fort Wayne, Indiana 46801, or
call1-888-868-2583. The SAI and other information about Lincoln Life and Ac-
count N 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.
, 2000
2
<PAGE>
Table of contents
<TABLE>
<CAPTION>
Page
- -------------------------------------------------
<S> <C>
Special terms 3
- -------------------------------------------------
Expense tables 4
- -------------------------------------------------
Summary 8
- -------------------------------------------------
Condensed financial information 9
- -------------------------------------------------
Investment results 9
- -------------------------------------------------
Financial statements 9
- -------------------------------------------------
Lincoln National Life Insurance Co. 9
- -------------------------------------------------
Variable annuity account (VAA) 9
- -------------------------------------------------
Investments of the variable annuity account 9
- -------------------------------------------------
Charges and other deductions 13
- -------------------------------------------------
The contracts 15
- -------------------------------------------------
Annuity payouts 19
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Page
- ------------------------------------------------------------------------
<S> <C>
Fixed side of the contract 20
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Federal tax matters 22
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Voting rights 25
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Distribution of the contracts 25
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Return privilege 26
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State regulation 26
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Restrictions under the Texas Optional Retirement Program 26
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Records and reports 26
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Other information 26
- ------------------------------------------------------------------------
Statement of additional information table of contents for Variable
Annuity Account N Lincoln ChoicePlus Bonus 28
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</TABLE>
Special terms
(We have italicized the terms that have special meaning throughout this Pro-
spectus)
Account or variable annuity account (VAA) -- The segregated investment ac-
count, Account N, into which Lincoln Life sets aside and invests the assets
for the variable side of the contract offered in this Prospectus.
Accumulation unit -- A measure used to calculate contract value for the vari-
able side of the contract before the annuity commencement date.
Annuitant -- The person on whose life the annuity benefit payments are based
and upon whose life a death benefit may be paid.
Annuity commencement date -- The valuation date when funds are withdrawn or
converted into annuity units or fixed dollar payout for payment of retirement
income benefits under the annuity payout option you select.
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 annuity payouts for
the variable side of the contract after the annuity commencement date.
Beneficiary -- The person you choose to receive the death benefit that is paid
if you die before the annuity commencement date.
Bonus credit -- The additional amount credited to the contract for each pur-
chase payment.
Contractowner (you, your, owner) -- The person who has the ability to exercise
the rights within the contract (decides on investment allocations, transfers,
payout option, designates the beneficiary, etc.). Usually, but not always, the
owner is the annuitant.
Contract value -- At a given time before the annuity commencement date, the
total value of all accumulation units for a contract plus the value of the
fixed side of the contract.
Contract year -- Each one-year period starting with the effective date of the
contract and starting with each contract anniversary after that.
Death benefit -- The amount payable to your designated beneficiary if the
owner dies before the annuity commencement date or, if selected, to the owner
if the annuitant dies.
Earnings -- The excess of contract value over the sum of bonus credits and
purchase payments which have not yet been withdrawn from the contract.
Free amount -- The amount that may be withdrawn each contract year without in-
curring a surrender charge.
Lincoln Life (we, us, our) -- The Lincoln National Life Insurance Company.
Purchase payments -- Amounts paid into the contract other than bonus credits.
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 class of a
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.
3
<PAGE>
Expense tables
Summary of Contractowner expenses:
The maximum surrender charge (contingent deferred sales charge)
(as a percentage of purchase payments surrendered/withdrawn): 8.5%
The surrender charge percentage is reduced over time. The later the redemption
occurs, the lower the surrender charge with respect to that surrender or with-
drawal. We may waive this charge in certain situations. See Surrender charges.
Account fee: $35
- --------------------------------------------------------------------------------
Account N annual expenses for Lincoln ChoicePlus Bonus subaccounts:*
(as a percentage of average daily net assets):
<TABLE>
<CAPTION>
With Enhanced
Guaranteed
Minimum With 5%
Death Benefit Step-Up
(EGMDB) Death Benefit
<S> <C> <C>
Mortality and expense risk charge 1.45% 1.60%
Administrative charge .15% .15%
----- -----
Total annual charge for each subaccount 1.60% 1.75%
</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 Other Total
Fees (after any Expenses (after Expenses (after
waivers/ 12b-1 any waivers/ any waivers/
reimbursements) + Fees + reimbursements) = reimbursements)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AFIS Global Small Capitalization Fund (class 2) 0.78% 0.25 0.03% 1.06%
- -------------------------------------------------------------------------------------------------------------
AFIS Growth Fund (class 2) 0.38 0.25 0.01 0.64
- -------------------------------------------------------------------------------------------------------------
AFIS Growth-Income Fund (class 2) 0.34 0.25 0.01 0.60
- -------------------------------------------------------------------------------------------------------------
AFIS International Fund (class 2) 0.55 0.25 0.05 0.85
- -------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 0.62 N/A 0.11 0.73
- -------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 0.63 N/A 0.10 0.73
- -------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund 0.75 N/A 0.22 0.97
- -------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 0.61 N/A 0.15 0.76
- -------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio (class B) 0.75 0.25 0.12 1.12
- -------------------------------------------------------------------------------------------------------------
Alliance Growth and Income Portfolio (class B) 0.63 0.25 0.09 0.97
- -------------------------------------------------------------------------------------------------------------
Alliance Premier Growth Portfolio (class B) 1.00 0.25 0.04 1.29
- -------------------------------------------------------------------------------------------------------------
Alliance Technology Portfolio (class B) 0.71 0.25 0.24 1.20
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Emerging Markets Series
(Service class)/1/ 1.19 0.15 0.28 1.62
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Growth and Income Series
(Service class)/1/ 0.60 0.15 0.11 0.86
- -------------------------------------------------------------------------------------------------------------
Delaware Premium High Yield Series (formerly
Delchester) (Service class)/1/ 0.65 0.15 0.07 0.87
- -------------------------------------------------------------------------------------------------------------
Delaware Premium REIT Series (Service class)/1/ 0.64 0.15 0.21 1.00
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Select Growth Series (Service 0.75 0.15 0.06 0.96
class)/1/
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Small Cap Value Series
(Service class)/1/ 0.75 0.15 0.10 1.00
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Social Awareness Series
(Service class)/1/ 0.70 0.15 0.15 1.00
- -------------------------------------------------------------------------------------------------------------
Delaware Premium Trend Series (Service 0.15 0.07 0.97
class)/1/ 0.75
- -------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Management Other Total
Fees (after any Expenses (after Expenses (after
waivers/ 12b-1 any waivers/ any waivers/
reimbursements) + Fees + reimbursements) = reimbursements)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Deutsche VIT Equity 500 Index Fund/2/ 0.14% N/A 0.16% 0.30%
- -------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (Service 0.48 0.25 0.10 0.83
class 2)/3/
- -------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio (Service class 0.58 0.25 0.10 0.93
2)/3/
- -------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio (Service class 0.73 0.25 0.18 1.16
2)/3/
- -------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 0.58 0.25 0.13 0.96
(Service class 2)/3/
- -------------------------------------------------------------------------------------------------------------
Franklin Mutual Shares Securities Fund (class 0.60 0.25 0.19 1.04
2)/4/,/9/
- -------------------------------------------------------------------------------------------------------------
Franklin Small Cap Securities Fund (class 0.55 0.25 0.27 1.07
2)/5/,/9/
- -------------------------------------------------------------------------------------------------------------
Liberty Variable Trust Newport Tiger Fund 0.49 N/A 0.31 1.21
- -------------------------------------------------------------------------------------------------------------
Lincoln National Bond Fund 0.45 N/A 0.08 0.53
- -------------------------------------------------------------------------------------------------------------
Lincoln National Money Market Fund 0.48 N/A 0.11 0.59
- -------------------------------------------------------------------------------------------------------------
MFS Variable Trust Emerging Growth Series 0.75 0.20 0.09 1.04
(Service class)/6/
- -------------------------------------------------------------------------------------------------------------
MFS Variable Trust Research Series (Service 0.75 0.20 0.11 1.06
class)/6/
- -------------------------------------------------------------------------------------------------------------
MFS Variable Trust Total Return Series (Service 0.75 0.20 0.15 1.10
class)/6/
- -------------------------------------------------------------------------------------------------------------
MFS Variable Trust Utilities Series (Service 0.75 0.20 0.16 1.11
class)/6/
- -------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund formerly 0.83 0.25 0.05 1.13
Global Growth (class 2)/7/,/8/,/9/
- -------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund (class 0.69 0.25 0.19 1.13
2)/9/,/10/
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective May 1, 2000 through October 31, 2000, Delaware Management Compa-
ny, "DMC" has voluntarily agreed to waive its management fee and reimburse
the Series for expenses to the extent that total expenses will not exceed
0.80% for High Yield and Growth and Income; 0.85% for REIT, Select Growth,
Small Cap Value, Social Awareness and Trend 1.50% for Emerging Markets.
Without such an arrangement, the total operating expenses would have been
0.96% for REIT, 0.90% for Social Awareness, and 1.53% for Emerging Markets.
DMC voluntarily elected to cap its management fee for the Growth and Income
Series at 0.60% indefinitely. The Service class shares are subject to an
annual 12b-1 fee of not more than 0.30% (currently set at 0.15%).
(2) Under the Advisory Agreement with Bankers Trust Company (the "Advisor"),
the fund will pay an advisory fee at an annual percentage rate of 0.20% of
the average daily net assets of the Equity 500 Index Fund. These fees are
accrued daily and paid monthly. The Advisor has voluntarily undertaken to
waive its fee and to reimburse the fund for certain expenses so that the
fund's total operating expenses will not exceed 0.30% of average daily net
assets. Without the reimbursement to the Funds for the year ended 12/31/99
total expenses would have been 0.43% for the Equity 500 Index Fund.
(3) Service class 2 expenses are based on estimated expenses for the first
year.
(4) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. The table shows restated total expenses based
on the new fees and assets of the fund as of 12/31/99, and not the assets
of the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.60%, Distribution and Service Fees 0.25%, Other Ex-
penses 0.19% and Total Fund Operating Expenses 1.04%.
(5) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. On 2/8/00, fund shareholders approved new
management fees, which apply to the combined fund effective 5/1/00. The ta-
ble shows restated total expenses based on the new fees and assets of the
fund as of 12/31/99, and not the assets of the combined fund. However, if
the table reflected both the new fees and the combined assets, the fund's
expenses after 5/1/00 would be estimated as: Management Fees 0.55%, Distri-
bution and Service Fees 0.25%, Other Expenses 0.27% and Total Fund Operat-
ing Expenses 1.07%.
(6) Each series has an expense offset arrangement which reduces the series'
custodian fee based on the amount of cash maintained by the series with its
custodian and dividend disbursing agent. Each series may enter into other
such arrangement and directed brokerage arrangements, which would also have
the effect of reducing the series' expenses. "Other Expenses" do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the series. Had the fee reductions been taken into ac-
count, "Net Expenses" would be lower for certain series and would equal:
1.03% for Emerging Growth Series; 1.05% for Research Series; 1.09% for To-
tal Return Series; 1.10% for Utilities Series.
(7) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. The table shows restated total expenses based
on the new fees and assets of the fund as of 12/31/99, and not the assets
of the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.80%, Distribution and Service Fees 0.25%, Other Ex-
penses 0.05% and Total Fund Operating Expenses 1.10%.
(8) The Fund administration fee is paid indirectly through the management fee.
(9) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
class 2 rule 12b-1 plan is 0.35% per year of the fund's average daily net
assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at 0.25% per year.
(10) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton International Equity
Fund, effective 5/01/00. The shareholders of that fund approved new man-
agement fees, which apply to the combined fund effective 5/1/00. The table
shows restated total expenses based on the new fees and assets of the fund
as of 12/31/99, and not the assets of the combined fund. However, if the
table reflected both the new fees and the combined assets, the fund's ex-
penses after 5/1/00 would be estimated as: Management Fees 0.65%, Distri-
bution and Service Fees 0.25%, Other Expenses 0.20% and Total Fund Operat-
ing Expenses 1.10%.
5
<PAGE>
Examples
(expenses of the subaccounts and of 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 3% bonus and a 5%
annual return:
<TABLE>
<CAPTION>
1 year 3 years
- -------------------------------------------------------------------------------
<S> <C> <C>
AFIS Global Small Cap (Class 2) $115 $171
- -------------------------------------------------------------------------------
AFIS Growth (Class 2) 110 158
- -------------------------------------------------------------------------------
AFIS Growth-Income (Class 2) 110 156
- -------------------------------------------------------------------------------
AFIS International (Class 2) 112 163
- -------------------------------------------------------------------------------
AIM V.I. Capital Appreciation 111 160
- -------------------------------------------------------------------------------
AIM V.I. Growth 111 160
- -------------------------------------------------------------------------------
AIM V.I. International Equity 113 167
- -------------------------------------------------------------------------------
AIM V.I. Value 111 160
- -------------------------------------------------------------------------------
Alliance Growth (Class B) 115 172
- -------------------------------------------------------------------------------
Alliance Growth and Income (Class B) 113 167
- -------------------------------------------------------------------------------
Alliance Premier Growth (Class B) 117 177
- -------------------------------------------------------------------------------
Alliance Technology (Class B) 116 174
- -------------------------------------------------------------------------------
Delaware Emerging Markets (Service Class) 120 187
- -------------------------------------------------------------------------------
Delaware Growth and Income (Service Class) 112 164
- -------------------------------------------------------------------------------
Delaware High-Yield Bond (Service Class) 112 164
- -------------------------------------------------------------------------------
Delaware REIT (Service Class) 114 168
- -------------------------------------------------------------------------------
Delaware Select Growth (Service Class) 113 167
- -------------------------------------------------------------------------------
Delaware Small Cap Value (Service Class) 114 168
- -------------------------------------------------------------------------------
Delaware Social Awareness (Service Class) 114 168
- -------------------------------------------------------------------------------
Delaware Trend (Service Class) 113 167
- -------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index 106 146
- -------------------------------------------------------------------------------
Fidelity VIP Equity-Income (Service Class 2) 112 163
- -------------------------------------------------------------------------------
Fidelity VIP Growth (Service Class 2) 113 166
- -------------------------------------------------------------------------------
Fidelity VIP Overseas (Service Class 2) 113 167
- -------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities (Service Class 2) 115 173
- -------------------------------------------------------------------------------
Franklin Mutual Shares Securities (Class 2) 114 169
- -------------------------------------------------------------------------------
Franklin Small Cap Securities (Class 2) 114 169
- -------------------------------------------------------------------------------
Liberty Variable Trust Newport Tiger 116 174
- -------------------------------------------------------------------------------
Lincoln National Bond 109 153
- -------------------------------------------------------------------------------
Lincoln National Money Market 109 155
- -------------------------------------------------------------------------------
MFS Variable Trust Emerging Growth (Service Class) 114 169
- -------------------------------------------------------------------------------
MFS Variable Trust Research (Service Class) 114 170
- -------------------------------------------------------------------------------
MFS Variable Trust Total Return (Service Class) 115 171
- -------------------------------------------------------------------------------
MFS Variable Trust Utilities (Service Class) 115 171
- -------------------------------------------------------------------------------
Templeton Growth (Class 2) 115 172
- -------------------------------------------------------------------------------
Templeton International (Class 2) 115 172
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
If you do not surrender your contract, you would pay the following expenses on
a $1,000 investment, assuming a 3% bonus and 5% annual return:
<TABLE>
<CAPTION>
1 year 3 years
- -------------------------------------------------------------------------------
<S> <C> <C>
AFIS Global Small Capitalization Fund $30 $91
- -------------------------------------------------------------------------------
AFIS Growth Fund 25 78
- -------------------------------------------------------------------------------
AFIS Growth-Income Fund 25 76
- -------------------------------------------------------------------------------
AFIS International Fund 27 83
- -------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 26 80
- -------------------------------------------------------------------------------
AIM V.I. Growth Fund 26 80
- -------------------------------------------------------------------------------
AIM V.I. International Equity Fund 28 87
- -------------------------------------------------------------------------------
AIM V.I. Value Fund 26 80
- -------------------------------------------------------------------------------
Alliance Growth and Income Portfolio 28 87
- -------------------------------------------------------------------------------
Alliance Growth Portfolio 30 92
- -------------------------------------------------------------------------------
Alliance Premier Growth Portfolio 32 97
- -------------------------------------------------------------------------------
Alliance Technology Portfolio 31 94
- -------------------------------------------------------------------------------
Delaware Premium Emerging Markets Series 35 107
- -------------------------------------------------------------------------------
Delaware Premium Growth and Income Series 27 84
- -------------------------------------------------------------------------------
Delaware Premium High Yield Series (formerly Delchester) 27 84
- -------------------------------------------------------------------------------
Delaware Premium REIT Series 29 88
- -------------------------------------------------------------------------------
Delaware Premium Select Growth Series 28 87
- -------------------------------------------------------------------------------
Delaware Premium Small Cap Value Series 29 88
- -------------------------------------------------------------------------------
Delaware Premium Social Awareness Series 29 88
- -------------------------------------------------------------------------------
Delaware Premium Trend Series 28 87
- -------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index Fund 21 66
- -------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 27 83
- -------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 28 86
- -------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 28 87
- -------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 30 93
- -------------------------------------------------------------------------------
Franklin Mutual Shares Securities Fund 29 89
- -------------------------------------------------------------------------------
Franklin Small Cap Securities Fund 29 89
- -------------------------------------------------------------------------------
Liberty Variable Trust Newport Tiger Fund 31 94
- -------------------------------------------------------------------------------
Lincoln National Bond Fund 24 73
- -------------------------------------------------------------------------------
Lincoln National Money Market Fund 24 75
- -------------------------------------------------------------------------------
MFS Variable Trust Emerging Growth Series 29 89
- -------------------------------------------------------------------------------
MFS Variable Trust Research Series 29 90
- -------------------------------------------------------------------------------
MFS Variable Trust Total Return Series 30 91
- -------------------------------------------------------------------------------
MFS Variable Trust Utilities Series 30 91
- -------------------------------------------------------------------------------
Templeton Growth Securities Fund (formerly Global Growth) 30 92
- -------------------------------------------------------------------------------
Templeton International Securities Fund 30 92
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
We provide these examples to help you understand the direct and indirect costs
and expenses of the contract. The example assumes that the 5% Step-Up death
benefit is in effect. Without this benefit, expenses would be lower. If the
bonus credit is higher, your expenses on a $1,000 investment will be slightly
higher.
For more information, see Charges and other deductions in this Prospectus, and
Management and Organization in the prospectus for the funds. Premium taxes may
also apply, although they do not appear in the examples. This example should
not be considered a representation of past or future expenses. Actual expenses
may be more or less than those shown.
Summary
What kind of contract am I buying? It is an individual variable and/or market
value adjusted annuity contract between you and Lincoln Life. 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 Indiana 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 Lincoln Life may conduct. See Variable
annuity account.
What are my investment choices? Based upon your instruction for purchase pay-
ments, the VAA applies your purchase payments and bonus credits to buy shares
in one or more of the investment options. See Investments of the variable an-
nuity account and Description of the funds.
Who invests my money? Several different investment advisors manage the invest-
ment options. See Investments of the variable annuity account--Investment ad-
visors.
How does the contract work? If we approve your application, we will send you a
contract. When you make purchase payments during the accumulation phase, you
receive bonus credits and you buy accumulation units. If you decide to receive
retirement income payments, your accumulation units are converted to annuity
units. Your retirement income payments will be based on the number of annuity
units you received and the value of each annuity unit on payout days. See The
contracts.
What charges do I pay under the contract? If you withdraw purchase payments,
you pay a surrender charge from 0% to 8.5% of the surrendered or withdrawn
purchase payment, depending upon how many contract years those payments have
been in the contract. We may waive surrender charges in certain situations.
See surrender charge.
We will deduct any applicable premium tax from purchase payments or contract
value at the time the tax is incurred or at another time we choose.
We charge an account fee of $35 per contract year if the contract value is
less than $100,000.
We apply an annual charge totaling 1.60% to the daily net asset value of the
VAA. This charge includes 0.15% as an administrative charge and 1.45% as a
mortality and expense risk charge. If the 5% Step-Up death benefit is in ef-
fect, the mortality and expense risk charge is 1.60%, for an annual charge to-
taling 1.75%. See Charges and other deductions.
The fund's investment management fees, expenses and expense limitations, if
applicable, are more fully described in the prospectuses for the funds.
What purchase payments do I make, and how often? Subject to the minimum and
maximum payment amounts, your payments are completely flexible. See The con-
tracts--Purchase payments.
What is a bonus credit? When purchase payments are made, Lincoln Life will
credit an additional amount to the contract, known as a bonus credit. The
amount of the bonus credit is calculated as a percentage of the purchase pay-
ments. The bonus credit percentage will vary based on the owner's cumulative
purchase payments, as defined in this Prospectus. All bonus credits become
part of the contract value at the same time as the corresponding purchase pay-
ments. Bonus credits are not considered to be purchase payments. See The con-
tracts--Bonus credits.
Lincoln Life offers a variety of variable annuity contracts. Other annuity
contracts that we offer have no provision for bonus credits but may have lower
mortality and expense risk charges and/or lower surrender charges. We encour-
age you to talk with your financial advisor and determine which annuity con-
tract is most appropriate for you.
How will my annuity payouts be calculated? If you decide to annuitize, you may
select an annuity option and start receiving retirement income payments from
your contract as a fixed option or variable option or a combination of both.
See Annuity 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 I die before I annuitize? Your beneficiary will receive either
the enhanced death benefit or the 5% Step-Up death benefit, depending on which
death benefit is in effect at the time of your death. Your beneficiary has op-
tions as to how the death benefit is paid. In addition, you may choose to re-
ceive a death benefit on the death of the annuitant. See Death benefit before
the annuity commencement date.
May I transfer contract value between variable options and between the fixed
side of the contract? Yes, with certain limits. See The contracts--Transfers
between subaccounts on or before the annuity commencement date, Transfer after
the annuity commencement date and Transfers to and from a fixed account on or
before the annuity commencement date.
May I surrender the contract or make a withdrawal? Yes, subject to contract
requirements and to the re-
8
<PAGE>
strictions of any qualified retirement plan for which the contract was pur-
chased. See Surrenders and withdrawals. If you surrender the contract or make a
withdrawal, certain charges may apply. See Charges and other deductions. A por-
tion of surrender/withdrawal proceeds may be taxable. In addition, if you de-
cide to take a distribution before age 59 1/2, a 10% Internal Revenue Service
(IRS) tax penalty may apply. A surrender or a withdrawal also may be subject to
20% withholding. See Federal tax matters.
Do I get a free look at this contract? Yes. You can cancel the contract within
ten days (in some states longer) of the date you first receive the contract.
You need to return the contract, postage prepaid, to our home office. In most
states you assume the risk of any market drop on purchase payments you allocate
to the variable side of the contract. We will not refund any bonus credits
credited to your contract value if you elect to cancel your contract. See Re-
turn privilege.
Condensed financial information for the variable annuity account
Because the subaccounts which are available under the contracts did not begin
operation before the date of this Prospectus, financial information for the
subaccounts is not included in this Prospectus or in the SAI.
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 contingent deferred sales charges. Total re-
turns 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 of the VAA and the statutory-basis financial state-
ments of Lincoln Life are located in the SAI. If you would like a free copy of
the SAI, complete and mail the enclosed card, or call 1-888-868-2583.
Lincoln National Life Insurance Co.
Lincoln Life was founded in 1905 and is organized under Indiana law. We are one
of the largest stock life insurance companies in the United States. We are
owned by Lincoln National Corp. (LNC) which is also organized under Indiana
law. LNC's primary businesses are insurance and financial services.
Variable annuity account (VAA)
On November 3, 1997, the VAA was established as an insurance company separate
account under Indiana law. It is registered with the SEC as a unit investment
trust under the provisions of the Investment Company Act of 1940 (1940 Act).
The SEC does not supervise the VAA or Lincoln Life. The VAA is a segregated in-
vestment account, meaning that its assets may not be charged with liabilities
resulting from any other business that we may conduct. Income, gains and loss-
es, whether realized or not, from assets allocated to the VAA are, in accor-
dance 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 Lincoln Life. The VAA satisfies the definition of a separate account
under the federal securities laws. We do not guarantee the investment perfor-
mance of the VAA. Any investment gain or loss depends on the investment perfor-
mance of the funds. You assume the full investment risk for all amounts placed
in the VAA.
The VAA is used to support other annuity contracts offered by Lincoln Life in
addition to the contracts described in this Prospectus. The other annuity con-
tracts supported by the VAA generally invest in the same funds as the contracts
described in this Prospectus. These other annuity contracts may have different
charges that could affect performance of the subaccount.
Investments of the variable annuity account
You decide the subaccount(s) to which you allocate purchase payments. Bonus
credits are allocated to the subaccounts at the same time and at the same per-
centage as the purchase payments being made. There is a separate subaccount
which corresponds to each class of each fund. You may change your allocation
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 contracts. The
funds are required to redeem fund shares at net asset value upon our request.
We reserve the right to add, delete or substitute funds.
Investment advisors
The investment advisors of the funds are:
AIM Variable Insurance Funds, Inc. ("AIM V.I. Funds"), managed by A I M Advi-
sors, Inc.
Alliance Variable Products Series Fund managed by Alliance Capital Management,
L.P.
American Funds Insurance Series, managed by Capital Research and Management
Company.
9
<PAGE>
Delaware Group Premium Fund Inc. ("Delaware Group"), managed by Delaware Man-
agement Company. The Social Awareness Series is sub-advised by Vantage Invest-
ment Advisors. The REIT Series is sub-advised by Lincoln Investment Management.
The Emerging Markets Series is managed by Delaware International Advisers Ltd.
Deutsche Asset Management VIT Funds (formerly BT Insurance Funds Trust), man-
aged by Bankers Trust Company.
Franklin Templeton Variable Insurance Products Trust--Franklin Small Cap is
managed by Franklin Advisers, Inc.; Mutual Shares Securities is managed by
Franklin Mutual Advisers, LLC; Templeton Growth Securities is managed by Tem-
pleton Global Advisors Limited; Templeton International Securities is managed
by Templeton Investment Counsel, Inc.
Liberty Variable Investment Trust ("Liberty Variable Trust"), managed by Lib-
erty Advisory Series Corp., and sub-advised by Colonial Management Associates,
Inc. and Newport Fund Management, Inc.
Lincoln National Bond Fund, Inc., and Lincoln National Money Market Fund, Inc.,
managed by Lincoln Investment Management, Inc. ("LIM") LIM has informed the
funds to which it provides advisory services that it intends to merge into a
newly created series of its affiliate, Delaware Management Business Trust, dur-
ing the second or third quarter of 2000. LIM does not expect the merger to re-
sult in any change in the level of advisory services that it currently provides
to these funds, although there may be some changes in, and additions to, per-
sonnel. See the prospectuses for these funds for more information.
MFS--Variable Insurance Trust ("MFS Variable Trust"), managed by Massachusetts
Financial Services Company.
Variable Insurance Products Fund ("Fidelity VIP") and Variable Insurance Prod-
ucts Fund III ("Fidelity VIP III"), managed by Fidelity Management & Research
Company.
As compensation for their services to the fund, the investment advisors receive
a fee from the fund, which is accrued daily and paid monthly. This fee is based
on the net assets of each fund, as defined under the 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 Lincoln Life (or an affiliate) for administrative, distribu-
tion, or other
services. Some funds may compensate us more than other funds. It is anticipated
that such compensation will be based on assets of the particular fund attribut-
able to the contracts along with certain other variable contracts issued or ad-
ministered by Lincoln Life (or an affiliate). As of the date of this Prospec-
tus, we were receiving compensation from each fund company except Delaware.
The funds' shares are issued and redeemed only in connection with variable an-
nuity contracts and variable life insurance policies (mixed funding) issued
through separate accounts of Lincoln Life and other life insurance companies
(shared funding). The funds do not foresee any disadvantage to contractowners
arising out of mixed or shared funding. Nevertheless, the funds' Boards intend
to monitor events in order to identify any material irreconcilable conflicts
which may possibly arise and to determine what action, if any, should be taken
in response thereto. If such a conflict were to occur, one of the separate ac-
counts might withdraw its investment in a fund. This might force a fund to sell
portfolio securities at disadvantageous prices.
Description of the funds
Each of the subaccounts of the VAA is invested solely in shares of one of the
funds available under the contract. Each fund is registered as a diversified,
open-end management investment company under the 1940 Act, except for the Dela-
ware Group REIT Series and Delaware Group Emerging Market Series, which are
non-diversified. Diversified means not owning too great a percentage of the se-
curities of any one company. An open-end company is one which, in this case,
permits Lincoln Life to sell its shares back to the fund when you make a with-
drawal, surrender the contract or transfer from one fund to another. Management
investment company is the legal term for a mutual fund. These definitions are
very general. The precise legal definitions for these terms are contained in
the 1940 Act.
Certain funds offered as part of this contract have similar investment objec-
tives and policies to other portfolios managed by the advisor. The investment
results of the funds, however, may be higher or lower than the other portfolios
that are managed by the advisor or sub-advisor. There can be no assurance, and
no representation is made, that the investment results of any of the funds will
be comparable to the investment results of any other portfolio managed by the
advisor or sub-advisor.
Following are brief summaries of the investment objectives and policies of the
funds. Each fund is subject to certain investment policies and restrictions
which may not be changed without a majority vote of shareholders of that fund.
More detailed information may be obtained from the current prospectus for the
fund which is included in this booklet. Please be advised that there is no as-
surance that any of the funds will achieve their stated objectives.
AFIS Global Small Capitalization Fund: Seeks to make your investment grow over
time by investing primarily in stocks of smaller companies located around the
world that typically have market capitalizations of $50
million to $1.5 billion. The fund is designed for investors seeking capital ap-
preciation through stocks. Investors in the fund should have a long-term per-
spective and be able to tolerate potentially wide price fluctuations
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AFIS Growth Fund: Seeks to make your investment grow by investing primarily in
common stocks of companies that appear to offer superior opportunities for
growth of capital. The fund is designed for investors seeking capital appreci-
ation through stocks. Investors in the fund should have a long-term perspec-
tive and be able to tolerate potentially wide price fluctuations.
AFIS Growth-Income Fund: Seeks to make your investment grow and provide you
with income over time by investing primarily in common stocks or other securi-
ties which demonstrate the potential for appreciation and/or dividends. The
fund is designed for investors seeking both capital appreciation and income.
AFIS International Fund: Seeks to make your investment grow over time by in-
vesting primarily in common stocks of companies located outside the United
States. The fund is designed for investors seeking capital appreciation
through stocks. Investors in the fund should have a long-term perspective and
be able to tolerate potentially wide price fluctuations.
AIM V.I. Capital Appreciation Fund: Seeks growth of capital through investment
in common stocks, with emphasis on medium- and small-sized growth companies.
The investment advisor will be particularly interested in companies that are
likely to benefit from new or innovative products, services or processes as
well as those that have experienced above average, long-term growth in earn-
ings and have excellent prospects for future growth.
AIM V.I. Growth Fund: Seeks growth of capital primarily by investing in sea-
soned and better capitalized companies considered to have strong earnings mo-
mentum.
AIM V.I. International Equity Fund: Seeks to provide long-term growth of capi-
tal by investing in a diversified portfolio of international equities whose
issuers are considered to have strong earnings momentum.
AIM V.I. Value Fund: Seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by its investment advisor to be under-
valued relative to the investment advisor's appraisal of the current or pro-
jected earnings of the companies issuing the securities, or relative to the
current market values of assets owned by the companies issuing the securities
or relative to the equity market generally. Income is a secondary objective.
Alliance Growth and Income Portfolio: Seeks reasonable current income and rea-
sonable appreciation through investments primarily in dividend-paying common
stocks of good quality. The portfolio also may invest in fixed-income securi-
ties and convertible securities.
Alliance Growth Portfolio: Seeks to provide long-term growth of capital. Cur-
rent income is only an incidental consideration. The portfolio invests primar-
ily in equity securities of companies with favorable earnings outlooks, which
have long-term growth rates that are expected to exceed that of the U.S. econ-
omy over time.
Alliance Premier Growth Portfolio: Seeks long-term growth of capital by pursu-
ing aggressive investment policies. The portfolio invests predominantly in the
equity securities of a limited number of large, carefully selected, high-qual-
ity U.S. companies that are judged likely to achieve superior earnings growth.
Alliance Technology Portfolio: Seeks to emphasizes growth of capital and in-
vests for capital appreciation. Current income is only an incidental consider-
ation. The portfolio may seek income by writing listed call options. The port-
folio invests primarily in securities of companies expected to benefit from
technological advances and improvements (i.e., companies that use technology
extensively in the development of new or improved products or processes).
Delaware Premium Emerging Markets Series: Seeks long-term growth by investing
primarily in stocks of companies located or operating in emerging or develop-
ing countries.
Delaware Premium Growth and Income Series: Seeks the highest possible total
return by investing in stocks that exhibit the potential for growth while pro-
viding higher than average dividend income.
Delaware Premium High Yield Series (formerly Delchester): Seeks total return
and, as a secondary objective, high current income. The series invests in
rated and unrated corporate bonds (including high-risk, high-yield bonds com-
monly known as junk bonds), foreign bonds, U.S. government securities and com-
mercial paper. An investment in this series may involve greater risks than an
investment in a portfolio comprised primarily of investment-grade bonds.
Delaware Premium REIT Series: Seeks to achieve maximum long-term total return
by investing primarily in the securities of real estate investment trusts and
real estate operating companies.
Delaware Premium Select Growth Series: Seeks long-term capital appreciation by
primarily investing in common stocks of companies that have the potential for
high earnings growth. Companies of any size are considered, as long as they
are larger than $300 million in market capitalization.
Delaware Premium Small Cap Value Series: Seeks growth by investing primarily
in stocks of small cap companies whose market values appear low relative to
underlying value or future earnings and growth potential.
Delaware Premium Social Awareness Series: Seeks long-term growth by investing
in stocks of mid-size and large companies expected to grow over time that also
meet certain criteria of social responsibility.
Delaware Premium Trend Series: Seeks long-term growth by investing primarily
in stocks of small companies and convertible securities of emerging and other
growth-oriented companies.
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Deutsche VIT Equity 500 Index Fund: Seeks to match the performance of the stock
market as represented by Standard & Poor's 500 Index, before fund expenses.
Fidelity VIP Equity-Income Portfolio: Seeks reasonable income by investing pri-
marily in income-producing equity securities, with some potential for capital
appreciation, seeking a yield that exceeds the composite yield on the securi-
ties comprising the Standard and Poor's 500 Index (S&P 500).
Fidelity VIP Growth Portfolio: Seeks long-term capital appreciation. The port-
folio normally purchases common stocks.
Fidelity VIP Overseas Portfolio: Seeks long-term growth of capital by investing
primarily in foreign securities.
Fidelity VIP III Growth Opportunities Portfolio: Seeks capital growth by in-
vesting primarily in common stocks.
Franklin Mutual Shares Securities Fund: Seeks capital appreciation with income
as a secondary goal. It invests primarily in equity securities of companies
that the manager believes are available at market prices less than their actual
value based on certain recognized or objective criteria.
Franklin Small Cap Securities Fund: Seeks long-term capital growth. It invests
primarily in equity securities of U.S. small cap growth companies. Small cap
companies are generally those with market cap values of less than $1.5 billion
at time of purchase.
Liberty Variable Trust Newport Tiger Fund: Seeks capital growth by investing
primarily in the stocks of high quality international companies located in the
nine "Tigers" of Asia: Hong Kong, China, Singapore, Malaysia, Thailand, Indone-
sia, the Philippines, South Korea and Taiwan.
Lincoln National Bond Fund: Seeks maximum current income consistent with pru-
dent investment strategy. The fund invests primarily in medium- and long-term
corporate and government bonds.
Lincoln National Money Market Fund: Seeks maximum current income consistent
with the preservation of capital. The fund invests in short-term obligations
issued by U.S. corporations; the U.S. Government; and federally chartered banks
and U.S. branches of foreign banks.
MFS Variable Trust Emerging Growth Series: Seeks to provide long-term growth by
investing primarily in the common stocks of companies the managers believe are
in the early stages of their life cycle but which have the potential to become
major enterprises.
MFS Variable Trust Research Series: Seeks long-term growth and future income by
investing primarily in equity companies believed to possess better than average
prospects for long-term growth. A committee of investment research analysts se-
lects the securities for the fund, with individual analysts responsible for
choosing securities within an assigned industry.
MFS Variable Trust Total Return Series: Seeks to provide above-average income
consistent with the prudent employment of capital and to provide a reasonable
opportunity for capital growth and income. The fund invests in a broad range of
securities, including short-term obligations, and may be diversified not only
by company and industry, but also by security type.
MFS Variable Trust Utilities Series: Seeks capital growth and current income by
investing the majority of its assets in equity and debt securities of both do-
mestic and foreign companies in the utilities industry.
Templeton Growth Securities Fund: Seeks long-term capital growth. It invests
primarily in equity securities of companies in various nations throughout the
world, including the U.S. and emerging markets.
Templeton International Securities Fund: Seeks long-term capital growth. It in-
vests primarily in equity securities of companies outside the United States,
including emerging markets.
Fund shares
We will purchase shares of the funds at net asset value and direct them to the
appropriate subaccounts of the VAA. We will redeem sufficient shares of the
appropriate funds to pay annuity payouts, death benefits, surrender/withdrawal
proceeds or for other purposes described in the contract. If you want to trans-
fer all or part of your investment from one subaccount to another, we may re-
deem shares held in the first and purchase shares of the other. Redeemed 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 Lincoln Life, and may be sold to other insurance companies, for investment
of the assets of the subaccounts established by those insurance companies to
fund variable annuity and variable life insurance contracts.
Reinvestment of dividends and capital gain distributions
All dividends 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 add, delete and substitute series
and/or funds within the VAA. We may also add, delete, or substitute series or
funds only for certain classes of contractowners. New or substitute funds may
have different fees and expenses, and may only be offered to certain classes of
contractowners. This substitution might occur if shares of a fund should no
12
<PAGE>
longer be available, or if investment in any fund's shares should become inap-
propriate, in the judgment of our management, for the purposes of the contract.
We cannot substitute shares of one fund for another without the approval by the
SEC. We will also notify you.
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 incur certain costs
and expenses for the distribution and administration of the contracts and for
providing the benefits payable thereunder. More particularly, our administra-
tive services include: processing applications for and issuing the contracts,
processing purchases and redemptions of fund shares as required (including dol-
lar cost averaging, cross-reinvestment, portfolio rebalancing, and automatic
withdrawal services), maintaining records, administering annuity payouts, fur-
nishing accounting and valuation services (including the calculation and moni-
toring of daily subaccount values), reconciling and depositing cash receipts,
providing contract confirmations, providing toll-free inquiry services and fur-
nishing telephone fund transfer services. The risks we assume include: the risk
that annuitants receiving annuity payouts under contract live longer than we
assumed when we calculated our guaranteed rates (these rates are incorporated
in the contract and cannot be changed); the risk that death benefits paid under
the EGMDB or the 5% Step-Up death benefit, will exceed the actual contract val-
ue; and the risk that our costs in providing the services will exceed our reve-
nues 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 description of the charge. For example, the con-
tingent deferred sales charge collected may not fully cover all of the sales
and distribution expenses actually incurred by us.
Deductions from the VAA for Lincoln ChoicePlus Bonus
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.60% (1.75% for contracts with the 5% Step-Up death benefit) of the
daily net asset value. The charge consists of a 0.15% administrative charge and
a 1.45% (1.60% for contracts with the 5% Step-Up death benefit) mortality and
expense risk charge.
Surrender charge
A surrender charge applies (except as described below) to surrenders and with-
drawals of other purchase payments that have been invested for the periods in-
dicated as follows:
<TABLE>
<CAPTION>
Number of contract anniversaries
since purchase payment was
invested
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Less than At least
2 years 2 3 4 5 6 7 8 9+
Surrender charge as a percentage of
the surrendered or withdrawn
purchase payments 8.5% 8 7 6 5 4 3 2 0
</TABLE>
A surrender charge does not apply to:
1. A surrender or withdrawal of a purchase payment beyond the ninth anniversary
since the purchase payment was invested.
2. Withdrawals of contract value during a contract year to the extent that the
total contract value withdrawn during the current contract year does not ex-
ceed the free amount which is equal to the greater of 10% of the current
contract value or 10% of the total purchase payments;
3. Any purchase payments applied to an annuity payout option available within
the contract that have been invested at least 12 months.
4. A surrender or withdrawal of any purchase payments, if such purchase pay-
ments were received more than 12 months prior to the onset of a permanent
and total disability of the contractowner as defined in Section 22(e)(3) of
the tax code, after the effective date of the contract and before the 65th
birthday of the contractowner. For contracts issued in the State of New Jer-
sey, a different definition of permanent and total disability applies.
5. When the surviving spouse assumes ownership of the contract as a result of
the death of the original owner;
6. A surrender or withdrawal of any purchase payments, if such purchase pay-
ments were received more than 12 months prior to admittance of the
contractowner to an accredited nursing home or equivalent health care facil-
ity, where the admittance into the nursing home occurs after the effective
date of the contract and the owner has been confined for at least 90 consec-
utive days.
7. A surrender or withdrawal of any purchase payments, if such purchase pay-
ments were received more than 12 months prior to the diagnosis date of a
terminal illness that is after the effective date of the contract and re-
sults in a life expectancy of less than one year as determined by a quali-
fied professional medical practitioner.
13
<PAGE>
8. A surrender of the contract as a result of the death of the contractowner or
annuitant. However if an annuitant is changed for any reason other than
death of a prior annuitant the surrender charge is not waived. See Death
benefit before annuity commencement date.
9. A surrender or withdrawal of a purchase payment beyond the fifth anniversary
since the purchase payment was invested for any contract issued to employees
and registered representatives of any member of the selling group and their
spouses and minor children, or to officers, directors, trustees or bona-fide
full-time employees and their spouses and minor children, of Lincoln Finan-
cial Group, AIM Advisors, Inc., Alliance Capital Management, L.P., The Capi-
tal Group, Inc., Bankers Trust Company, Delaware Investments, Fidelity Man-
agement and Research Company, Franklin Advisors, Inc., Franklin Mutual Advi-
sors, LLC, Templeton Global Advisors Limited, Templeton Investment Counsel,
Inc., Liberty Advisory Services Corp., Massachusetts Financial Services Com-
pany, or their affiliated or managed companies (based upon the
contractowner's status at the time the contract was purchased), provided the
contract was not issued with the assistance of a sales representative under
contract with Lincoln Life. For the individuals described above, a reduced
schedule of surrender charges applies.
10. A surrender or annuitization of bonus credits.
For purposes of calculating the surrender charge on withdrawals, Lincoln Life
assumes that:
a. The free amount will be withdrawn from purchase payments on a "first in-
first out (FIFO)" basis.
b. Prior to the ninth anniversary of the contract, any amount withdrawn above
the free amount during a contract year will be withdrawn in the following
order:
1. from purchase payments (on a FIFO basis) until exhausted; then
2. from earnings until exhausted; then
3. from bonus credits.
c.On or after the ninth anniversary of the contract, any amount withdrawn above
the free amount during a contract year will be withdrawn in the following or-
der:
1. from purchase payments (on a FIFO basis) to which a surrender charge no
longer applies until exhausted; then
2. from earnings until exhausted; then
3. from bonus credits attributable to purchase payments to which a surrender
charge no longer applies until exhausted; then
4. from purchase payments (on a FIFO basis) to which a surrender charge still
applies until exhausted; then
5. from bonus credits attributable to purchase payments to which a surrender
charge still applies.
The surrender charge is calculated separately for each contract year's purchase
payments to which a charge applies. The surrender charges associated with sur-
render or withdrawal are paid to us to compensate us for the loss we experience
on contract distribution costs when contractowners surrender or withdraw before
distribution costs have been recovered.
If the contractowner is a corporation or other non-individual (non-natural per-
son), the annuitant or joint annuitant will be considered the contractowner or
joint owner for purposes of determining when a surrender charge does not apply.
Account fee
During the accumulation period, we will deduct $35 from the contract value on
each contract anniversary to compensate us for the administrative services pro-
vided to you; this $35 account fee will also be deducted from the contract
value upon surrender. This fee may be lower in certain states, if required. The
account fee will be waived for any contract with a contract value that is
greater than $100,000 on the contract anniversary.
Rider charges
A fee or expense may also be deducted in connection with any benefits added to
the contract by rider or endorsement. See the rider for any applicable fee or
expense.
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 the contract
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. These premium taxes gener-
ally depend upon the law of your state of residence. The tax ranges from zero
to 5.0%.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the underlying
funds that are more fully described in the prospectus for the funds. Among
these deductions and expenses are 12b-1 fees which reimburse Lincoln Life for
certain expenses incurred in connection with certain administrative and distri-
bution support services provided to the funds.
Additional information
The administrative charge, surrender charges and account fee described previ-
ously may be reduced or eliminated for any particular contract. However, these
charges will be reduced only to the extent that we anticipate lower distribu-
tion and/or administrative expenses, or that we perform fewer sales or adminis-
trative services than those originally contemplated in establishing the level
of those charges. Lower distribution and administrative expenses may be the re-
sult of economies associated with
14
<PAGE>
(1) the use of mass enrollment procedures, (2) the performance of administra-
tive or sales functions by the employer, (3) the use by an employer of auto-
mated techniques in submitting deposits or information related to deposits on
behalf of its employees or (4) any other circumstances which reduce distribu-
tion or administrative expenses. The exact amount of charges and fees applica-
ble to a particular contract will be stated in that contract.
The contracts
Purchase of contracts
If you wish to purchase a contract, you must apply for it through a sales rep-
resentative authorized by us. The completed application is sent to us and we
decide whether to accept or reject it. If the application is accepted, a con-
tract is prepared and executed by our legally authorized officers. The con-
tract is then sent to you through your sales representative. See Distribution
of the contracts.
When a completed application and all other information necessary for process-
ing a purchase order is received, an initial purchase payment and its corre-
sponding bonus credit will be priced no later than two business days after we
receive the order. While attempting to finish an incomplete application, we
may hold the initial purchase payment for no more than five business days. If
the incomplete application cannot be completed within those five days, you
will be informed of the reasons, and the purchase payment will be returned im-
mediately. Once the application is complete, the initial purchase payment and
its corresponding bonus credit must be priced within two business days.
Who can invest
To apply for a contract, you must be of legal age in a state where the con-
tracts may be lawfully sold and also be eligible to participate in any of the
qualified or nonqualified plans for which the contracts are designed. The
contractowner, joint owner and annuitant cannot be older than age 85.
Purchase payments
Purchase payments are payable to us at a frequency and in an amount selected
by you in the application. The minimum initial purchase payment is $10,000.
The minimum annual amount for additional purchase payments is $300. The mini-
mum payment to the contract at any one time must be at least $100 ($25 if
transmitted electronically). Purchase payments in total may not exceed $2 mil-
lion for an owner or $1 million for each joint owner without Lincoln Life ap-
proval. If you stop making purchase payments, the contract will remain in
force as a paid-up contract. However, we may terminate the contract as allowed
by your state's non-forfeiture law for individual deferred annuities. Purchase
payments may be made or, if stopped, resumed at any time until the annuity
commencement date, the surrender of the contract, maturity date or the payment
of any death benefit, whichever comes first. Lincoln Life reserves the right
to limit purchase payments made to the contract.
Bonus Credits
For each purchase payment made into the contract, Lincoln Life will credit the
contract with a bonus credit. The amount of the bonus credit will be added to
the value of the contract at the same time and allocated in the same
percentage as the purchase payment. The amount of the bonus credit is
calculated as a percentage of the purchase payment made. The bonus credit
percentage is based on the owner's cumulative purchase payment at the time
each purchase payment is made according to the following scale:
<TABLE>
<CAPTION>
<S> <C>
Cumulative
Purchase
Payments Bonus Credit %
Less than
$100,000 3.0%
$100,000-
$999,999 4.0%
$1,000,000
or greater 5.0%
</TABLE>
Owner's cumulative purchase payments at the time of a purchase payment is
equal to the sum of (1) all prior purchase payments made to this contract;
plus (2) the current purchase payment made to this contract; minus (3) all
prior withdrawals of purchase payments from this contract.
If you make an additional purchase payment prior to the first anniversary of
the contract date and that purchase payment increases the owner's cumulative
purchase payments to a level that qualifies for a higher bonus credit percent-
age, then we will contribute an additional bonus credit into your contract at
the time the subsequent purchase payment is made (it will not be contributed
retroactively). The additional bonus credit is determined by multiplying the
sum of the prior purchase payments by the additional bonus credit percentage
(the difference between the percentage applicable to the subsequent purchase
payment and the percentage applicable to prior purchase payments). This addi-
tional bonus credit is not available after the first anniversary of the con-
tract date.
Lincoln Life offers a variety of variable annuity contracts. Other annuity
contracts that we offer have no provision for bonus credits but may have lower
mortality and expense risk charges and/or lower surrender charges. We
encourage you to talk with your financial advisor and determine which annuity
contract is most appropriate for you.
Valuation date
Accumulation 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.
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Allocation of purchase payments and bonus credits
Purchase payments allocated to the variable account are placed into the VAA's
subaccounts, each of which invests in shares of the class of its corresponding
fund, according to your instructions. Corresponding bonus credits will be al-
located to the subaccount(s) and/or the fixed side of the contract in the same
proportion in which you allocated purchase payments.
The minimum amount of any purchase payment which can be put into any one
subaccount is $20. Upon allocation to a subaccount, purchase payments and bo-
nus credits are converted into accumulation units. The number of accumulation
units credited is determined by dividing the amount allocated to each
subaccount by the value of an accumulation unit for that subaccount on the
valuation date on which the purchase payment is received at our home office if
received before 4:00 p.m., New York time. If the purchase payment is received
at or after 4:00 p.m., New York time, we will use the accumulation unit value
computed on the next valuation date. The number of accumulation units deter-
mined 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 expenses of the VAA and the underlying funds.
Valuation of accumulation units
Purchase payments and bonus credits allocated to the VAA are converted into
accumulation units. This is done by dividing the amount allocated by the value
of an accumulation unit for the valuation period during which the purchase
payments and bonus credits are 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 pe-
riod. The accumulation unit value for a subaccount for a later valuation pe-
riod 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 the end of the valuation period, and adding any dividend or other
distribution of the fund if an ex-dividend date occurs during the valua-
tion 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.
The daily charges imposed on a subaccount for any valuation period are equal
to the daily mortality and expense risk charge and the daily administrative
charge multiplied by the number of calendar days in the valuation period. Be-
cause a different daily charge is made for contracts with different death ben-
efit options, each of the two types of contracts will have different corre-
sponding accumulation unit values on any given day.
Transfers between subaccounts on or before the annuity commencement date
You may transfer all or a portion of your investment from one subaccount to
another. A transfer involves the surrender of accumulation units in one
subaccount and the purchase of accumulation units in the other subaccount. A
transfer will be done using the respective accumulation unit values determined
at the end of the valuation date on which the transfer request is received.
There is no charge for a transfer. Transfers are limited to twelve (12) per
contract year unless otherwise authorized by Lincoln Life. Transfers made as a
part of an automatic transfer program (such as a DCA program) will not be
counted against these twelve transfers.
The minimum amount which may be transferred between subaccounts is $300 (or
the entire amount in the subaccount, if less than $300). If the transfer from
a subaccount would leave you with less than $300 in the subaccount, we may
transfer the total balance of the subaccount.
A transfer may be made by writing to our home office or, if a Telephone Ex-
change Authorization form (available from us) is on file with us, by a toll-
free telephone call or by the Lincoln Life internet site. In order to prevent
unauthorized or fraudulent telephone transfers, we may require the caller to
provide certain identifying information before we will act upon his or her in-
structions. We may also assign the contractowner a Personal Identification
Number (PIN) to serve as identification. We will not be liable for following
telephone instructions we reasonably believe are genuine. Telephone requests
may be recorded and written confirmation of all transfer requests will be
mailed to the contractowner on the next valuation date. Telephone transfers
will be processed on the valuation date that they are received when they are
received at our customer service center before 4 p.m. New York time.
When thinking about a transfer of contract value, you should consider the in-
herent risk involved. Frequent transfers based on short-term expectations may
increase the risk that a transfer will be made at an inopportune time. Lincoln
Life may allow more than twelve transfers in any contract year. This contract
is not designed for professional market timing organizations or other entities
using programmed and frequent transfers.
Repeated patterns of frequent transfers are disruptive to the operation of the
subaccounts, and should Lincoln Life become aware of such disruptive practic-
es, Lincoln
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Life may refuse to permit more than twelve transfers in any contract year and
may modify the transfer provisions of the contract.
Payment or transfer may be delayed as permitted by the 1940 Act.
Transfers to and from a fixed account on or before the annuity commencement
date
You may transfer all or any part of the contract value from the subaccount(s)
to the fixed side of the contract. The minimum amount which can be transferred
to a fixed account is $2,000 or the total amount in the subaccount if less than
$2,000. However, if a transfer from a subaccount would leave you with less than
$300 in the subaccount, we may transfer the total amount to the fixed side of
the contract.
You may also transfer part of the contract value from a fixed account to the
various subaccount(s) subject to the following restrictions: (1) the sum of the
percentages of fixed value transferred is limited to 25% of the value of that
fixed account in any twelve month period; and (2) the minimum amount which can
be transferred is $300 or the amount in the fixed account.
There is no charge to you for a transfer. Transfers are limited to twelve (12)
per contract year unless otherwise authorized by Lincoln Life. Transfers made
as a part of an automatic transfer program (such as a DCA program) will not be
counted against these twelve transfers. Transfers of all or a portion of a
fixed account (other than dollar cost averaging) may be subject to a market
value adjustment.
Payment or transfer may be delayed as permitted by the 1940 Act.
Transfers after the annuity commencement date
You may transfer all or a portion of your investment in one subaccount to an-
other subaccount or to the fixed side of the contract. Those transfers will be
limited to three times per contract year. Currently, there is no charge for
these transfers. However, we reserve the right to impose a charge. You may also
transfer from a variable annuity payment to a fixed annuity payment. No trans-
fers are allowed from the fixed side of the contract to the subaccounts.
Death benefit before the annuity commencement date
You may designate a beneficiary during your lifetime and change the beneficiary
by filing a written request with our home office. Each change of beneficiary
revokes any previous designation. We reserve the right to request that you send
us the contract for endorsement of a change of beneficiary.
Upon the death of the contractowner, a death benefit will be paid to the bene-
ficiary. Upon the death of a joint owner, the death benefit will be paid to the
surviving joint owner. Upon the death of an annuitant who is not the
contractowner or joint owner, a death benefit may be paid to the contractowner
(and joint owner, if applicable, in equal shares). If the contractowner is a
corporation or other non-individual (non-natural person), the death of the an-
nuitant will be treated as death of the contractowner. Death benefits are tax-
able. See Federal tax matters.
If the death occurs before the annuity commencement date and the enhanced guar-
anteed minimum death benefit (EGMDB) is in effect, the death benefit paid will
be the greatest of: (1) the contract value as of the day on which Lincoln Life
approves the payment of the claim; (2) the sum of all purchases payments less
the sum of all withdrawals, partial annuitization and premium tax incurred; or
(3) the highest contract value which the contract attains on any policy anni-
versary date (including the inception date) (determined before the allocation
of any purchase payments on that policy anniversary) for ages up to, and in-
cluding, the deceased's age 80. The highest contract value is increased by pur-
chase payments and is decreased by partial withdrawals, partial annuitizations,
and any premium taxes incurred on or subsequent to the anniversary date on
which the highest contract value is obtained. If the 5% Step-Up death benefit
is in effect, the death benefit paid will be the greater of the death benefit
under the EGMDB or the accumulation of all purchase payments minus the accumu-
lation of all withdrawals, partial annuitizations, and premium tax incurred.
These purchase payments, withdrawals, partial annuitizations and premium tax
incurred are accumulated at an annual rate of 5% from the date of the transac-
tion to the earlier of the date of death of the deceased person or the contract
anniversary immediately preceding the deceased person's 81st birthday. Each
transaction is accumulated separately to a maximum of 200% of the transaction.
If there are joint owners, upon the death of the first contractowner, Lincoln
Life will pay a death benefit to the surviving joint owner. The surviving joint
owner will be treated as the primary, designated beneficiary. Any other benefi-
ciary designation on record at the time of death will be treated as a contin-
gent beneficiary. If the surviving joint owner is the spouse of the deceased
joint owner he/she may continue the contract as sole contractowner. Upon the
death of the spouse who continues the contract, Lincoln Life will pay a death
benefit to the designated beneficiary(s).
Upon the death of a contractowner, joint owner or annuitant, if the surviving
spouse continues the contract, any portion of the death benefit that would have
been payable (if the contract had not been continued) that exceeds the current
contract value will be credited to the contract. This provision applies only
one time for each contract.
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If an annuitant who is not the contractowner or joint owner dies, then the
contingent annuitant, if named, becomes the annuitant and no death benefit is
payable on the death of the annuitant. If no contingent annuitant is named,
the contractowner (or younger of joint owners) becomes the annuitant. Alterna-
tively, a death benefit may be paid to the contractowner (and joint owner, if
applicable, in equal shares) if the annuitant named on this contract has not
been changed, unless due to the death of a prior annuitant.
Notification of the election of this death benefit must be received by Lincoln
Life within 75 days of the death of the annuitant. If no contractowner is liv-
ing on the date of death of the annuitant, the death benefit will be available
to the beneficiary. The contract terminates when any death benefit is paid due
to the death of the annuitant. A death benefit payable on the death of the an-
nuitant will not be paid if the annuitant has been changed subsequent to the
effective date of this contract unless the change occurred because of the
death of a prior annuitant.
If the beneficiary is the spouse of the contractowner, then the spouse may
elect to continue the contract as owner.
The value of the death benefit will be determined as of the date on which the
death claim is approved for payment. This payment of the death benefit will
occur upon receipt of: (1) proof (e.g. an original certified death certifi-
cate), or any other proof of death satisfactory to us, of the death; (2) writ-
ten authorization for payment; and (3) our receipt of all required claim
forms, fully completed. If the beneficiary is a minor, court documents ap-
pointing the guardian/custodian must be submitted.
Notwithstanding any provision of this contract to the contrary, the payment of
death benefits provided under this contract must be made in compliance with
Code Section 72(s) or 401(a)(9) as applicable, as amended from time to time.
Death benefits may be taxable. See Federal tax matters.
When applying for a contract, an applicant can request a contract with the 5%
Step-Up death benefit. The 5% Step-Up death benefit is not available under
contracts issued to a contractowner, joint owner or annuitant who is age 80 or
older at the time of issuance.
After a contract is issued, the contractowner may discontinue the 5% Step-Up
death benefit at any time by completing the Death Benefit Discontinuance form
and sending it to Lincoln Life. The benefit will be discontinued as of the
valuation date we receive the request, and we will stop deducting the charge
for the benefit as of that date. See Charges and other deductions. If you dis-
continue the benefit, it cannot be reinstated.
The death benefit payable on the death of the annuitant will be distributed in
either a lump sum settlement or under an annuity payout. The annuity payout
must be selected within 60 days after Lincoln Life has approved the death
claim.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by us of the claim subject to the laws, regulations and tax
code governing payment of death benefits. This payment may be postponed as
permitted by the Investment Company Act of 1940.
Unless otherwise provided in the beneficiary designation, one of the following
procedures will take place on the death of a beneficiary:
1. If any beneficiary dies before the contractowner, that beneficiary's inter-
est will go to any other beneficiaries named, according to their respective
interests (There are no restrictions on the beneficiary's use of the pro-
ceeds.); and/or
2. If no beneficiary survives the contractowner, the proceeds will be paid to
the contractowner's estate.
Unless the contractowner has already selected a settlement option, the benefi-
ciary may choose the method of payment of the death benefit. The death benefit
payable to the beneficiary or joint owner must be distributed within five
years of the contractowner's date of death unless the beneficiary begins re-
ceiving within one year of the contractowner's death the distribution in the
form of a life annuity or an annuity for a designated period not extending be-
yond the beneficiary's life expectancy.
Joint ownership
If a contract has joint owners, the joint owners shall be treated as having
equal undivided interests in the contract. Either owner, independently of the
other, may exercise any ownership rights in this contract. Not more than two
owners (an owner and joint owner) may be named and contingent owners are not
permitted.
Surrenders and withdrawals
Before the annuity commencement date, we will allow the surrender of the con-
tract or a withdrawal of the contract value upon your written request, subject
to the rules discussed below. Surrender or withdrawal rights after the annuity
commencement date depend upon the annuity option you select.
The amount available upon surrender/withdrawal is the cash surrender value
(contract value less any applicable charges, fees, and taxes) at the end of
the valuation period during which the written request for surrender/withdrawal
is received at the home office. The minimum amount which can be withdrawn is
$300. Unless 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 contract val-
ue. Surrenders and withdrawals
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from the fixed account may be subject to a market value adjustment. See Fixed
side of the contract. Unless prohibited, surrender/ withdrawal payments will
be mailed within seven days after we receive a valid written request at the
home office. The payment may be postponed as permitted by the 1940 Act.
There are charges associated with surrender of a contract or withdrawal of
contract value. You may specify whether these charges are deducted from the
amount you request to be withdrawn or from the remaining contract value. See
Charges and other deductions.
The tax consequences of a surrender/withdrawal are discussed later in this
booklet. See Federal tax matters.
Lincoln Life reserves the right to surrender this contract if any withdrawal
reduces the total contract value to a level at which this contract may be sur-
rendered in accordance with applicable law for individual deferred annuities.
Participants in the Texas Optional Retirement Program should refer to the Re-
strictions under the Texas Optional Retirement Program, later in this Prospec-
tus.
Delay of Payments
Contract proceeds 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 restricted 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.
Reinvestment privilege
You may elect to make a reinvestment purchase with any part of the proceeds of
a surrender/withdrawal, and we will recredit that portion of the
surrender/withdrawal charges attributable to the amount returned. This elec-
tion must be made within 30 days of the date of the surrender/withdrawal, and
the repurchase must be of a contract covered by this Prospectus. A representa-
tion must be made that the proceeds being used to make the purchase have re-
tained their tax-favored status under an arrangement for which the contracts
offered by this Prospectus are designed. The number of accumulation units
which will be credited when the proceeds are reinvested will be based on the
value of the accumulation unit(s) on the next valuation date. This computation
will occur following receipt of the proceeds and request for reinvestment at
the home office. You may utilize the reinvestment privilege only once. No bo-
nus credits will apply when a reinvestment purchase occurs. For tax reporting
purposes, we will treat a surrender/withdrawal and a subsequent reinvestment
purchase as separate transactions. You should consult a tax advisor before you
request a surrender/withdrawal or subsequent reinvestment purchase.
Amendment of 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. You will be
notified in writing of any changes, modifications or waivers.
Commissions
Commissions are paid to dealers under different commission options. The maxi-
mum commission paid as a percentage of each purchase payment is 7.50%. Alter-
nate commission schedules are available with lower initial commission amounts
based on purchase payments plus ongoing annual compensation of up to 1.00%.
Upon annuitization, the commissions paid to dealers are a maximum of 4.00% of
account annuitized and/or an annual continuing commission of up to 1.00% of
statutory reserves. These commissions are not deducted from purchase payments,
bonus credits or contract value; they are paid by us.
Ownership
As contractowner, you have all rights under the contract. According to Indiana
law, the assets of the VAA are held for the exclusive benefit of all
contractowners 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 may not be assigned or transferred except as
permitted by applicable law and upon written notification to us. Non-qualified
contracts may not be collaterally assigned. We assume no responsibility for
the validity or effect of any assignment. Consult your tax advisor about the
tax consequences of an assignment.
Contractowner questions
The obligations to purchasers under the contracts are those of Lincoln Life.
Questions about your contract should be directed to us at 1-888-868-2583.
Annuity payouts
When you apply for a contract, you may select any annuity commencement date
permitted by law.
The contract provides optional forms of payouts of annuities (annuity op-
tions), each of which is payable on a variable basis, a fixed basis or a com-
bination of both as you specify. The contract provides that all or part of the
contract value may be used to purchase an annuity.
You may elect annuity payouts in monthly, quarterly, semiannual or annual in-
stallments. If the payouts from any subaccount would be or become less than
$50, we have the right to reduce their frequency until the payouts are at
least $50 each. Following are explanations of the annuity options available.
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Annuity options
Life Annuity. This option offers a periodic payout during the lifetime of the
annuitant and ends with the last payout before the death of the annuitant. This
option offers the highest periodic payout since there is no guarantee of a min-
imum number of payouts or provision for a death benefit for beneficiaries. How-
ever, there is the risk under this option that the recipient would receive no
payouts if the annuitant dies before the date set for the first payout; only
one payout if death occurs before the second scheduled payout, and so on.
Life Income with Payouts Guaranteed for Designated Period. This option guaran-
tees periodic payouts during a designated period, usually 10 or 20 years, and
then continues throughout the lifetime of the annuitant. The designated period
is selected by the contractowner.
Joint Life Annuity. This option offers a periodic payout during the joint life-
time of the annuitant and a designated joint annuitant. The payouts continue
during the lifetime of the survivor.
Joint Life Annuity with Guaranteed Period. This option guarantees periodic
payouts during a designated period, usually 10 or 20 years, and continues dur-
ing the joint lifetime of the annuitant and a designated joint annuitant. The
payouts continue during the lifetime of the survivor. The designated period is
selected by the contractowner.
Joint Life and Two Thirds to Survivor Annuity. This option provides a periodic
payout during the joint lifetime of the annuitant and a designated joint annui-
tant. When one of the joint annuitants dies, the survivor receives two thirds
of the periodic payout made when both were alive.
Joint Life and Two-Thirds Survivor Annuity with Guaranteed Period. This option
provides a periodic payout during the joint lifetime of the annuitant and a
joint annuitant. When one of the joint annuitants dies, the survivor receives
two-thirds of the periodic payout made when both were alive. This option fur-
ther provides that should one or both of the annuitants dies during the elected
guaranteed period, usually 10 or 20 years, full benefit payment will continue
for the rest of the guaranteed period.
Unit Refund Life Annuity. This option offers a periodic payout during the life-
time of the annuitant with the guarantee that upon death a payout will be made
of the value of the number of annuity units (see Variable annuity payouts)
equal to the excess, if any, of: (a) the total amount applied under this option
divided by the annuity unit value for the date payouts begin, minus (b) the an-
nuity units represented by each payout to the annuitant multiplied by the num-
ber of payouts paid before death. The value of the number of annuity units is
computed on the date the death claim is approved for payment by the home of-
fice.
General Information
Under the annuity options listed above, you may not make withdrawals. Other op-
tions, with or without withdrawal features, may be made available by us. You
may pre-select an annuity payout option as a method of paying the death benefit
to a beneficiary. If you do, the beneficiary cannot change this payout option.
At death, options are only available to the extent they are consistent with the
requirements of the contract as well as Sections 72(s) and 401(a)(9) of the tax
code, if applicable. The mortality and expense risk charge of 1.25% and the
charge for administrative services of .15% will be assessed on all variable an-
nuity payouts, including options that may be offered that do not have a life
contingency and therefore no mortality risk.
The annuity commencement date is usually on or before the contractowner's 90th
birthday. You may change the annuity commencement date, change the annuity op-
tion or change the allocation of the investment among subaccounts up to 30 days
before the scheduled annuity commencement date, upon written notice to the home
office. You must give us at least 30 days notice before the date on which you
want payouts to begin. If proceeds become available to a beneficiary in a lump
sum, the beneficiary may choose any annuity payout option.
Unless you select another option, the contract automatically provides for a
life annuity with annuity payouts guaranteed for 10 years (on a fixed, variable
or combination fixed and variable basis, in proportion to the account alloca-
tions at the time of annuitization) except when a joint life payout is required
by law. Under any option providing for guaranteed period payouts, the number of
payouts which remain unpaid at the date of the annuitant's death (or surviving
annuitant's death in case of joint life annuity) will be paid to your benefi-
ciary as payouts become due.
Variable annuity payouts
Variable annuity payouts will be determined using:
1. The contract value on the annuity commencement date, less any surrender
charges on purchase payments made within twelve months of annuitization and
any applicable premium taxes;
2. The annuity tables contained in the contract;
3. The annuity option selected; and
4. The investment performance of the fund(s) selected.
To determine the amount of payouts, we make this calculation:
1. Determine the dollar amount of the first periodic payout; then
2. Credit the contract with a fixed number of annuity units equal to the first
periodic payout divided by the annuity unit value; and
3. Calculate the value of the annuity units each period thereafter.
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Annuity payouts assume an investment return of 3%, 4%, 5% or 6% per year, as
applied to the applicable mortality table. The amount of each 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 payments will decrease. There is a more complete explanation of
this calculation in the SAI.
Fixed side of the contract
Purchase payments allocated to the fixed side of the contract become part of
Lincoln Life's general account, and do not participate in the investment expe-
rience of the VAA. The general account is subject to regulation and supervi-
sion by the Indiana Insurance Department as well as the insurance laws and
regulations of the jurisdictions in which the contracts are distributed.
In reliance on certain exemptions, exclusions and rules, Lincoln Life has not
registered interests in the general account as a security under the Securities
Act of 1933 and has not registered the general account as an investment com-
pany under the 1940 Act. Accordingly, neither the general account nor any in-
terests in it are regulated under the 1933 Act or the 1940 Act. Lincoln Life
has been advised that the staff of the SEC has not made a review of the dis-
closures which are included in this Prospectus which relate to our general ac-
count and to the fixed account under the contract. These disclosures, however,
may be subject to certain provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses. This Pro-
spectus is generally intended to serve as a disclosure document only for as-
pects of the contract involving the VAA, and therefore contains only selected
information regarding the fixed side of the contract. Complete details regard-
ing the fixed side of the contract are in the contract.
We guarantee an interest rate of not less than 3.0% per year on amounts held
in a fixed account. Any amount withdrawn from or transferred out of a fixed
account prior to the expiration of the guaranteed period is subject to a MVA
(see Market value adjustment below) and other charges. The market value ad-
justment will NOT reduce the amount available for a surrender, withdrawal or
transfer to an amount less than the initial amount allocated or transferred to
a fixed account plus interest of 3.0% per year, and account fees, if any.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE AT LINCOLN LIFE'S
SOLE DISCRETION, CONTRACTOWNERS BEAR THE RISK THAT NO INTEREST IN EXCESS OF
3.0% WILL BE DECLARED.
Guaranteed periods
The owner may allocate purchase payments to one or more fixed subaccounts with
guaranteed periods of 1, 3, 5, 7, or 10 years. Lincoln Life may offer a fixed
subaccount for a period of less than one year for the purpose of dollar cost
averaging. Each purchase payment and corresponding bonus credits allocated to
a fixed subaccount will start its own guaranteed period and will earn a guar-
anteed interest rate. The duration of the guaranteed period affects the guar-
anteed interest rate of the fixed subaccount. A fixed subaccount guarantee pe-
riod ends on the date after the number of calendar years in the fixed
subaccount's guaranteed period. Interest will be credited daily at a guaran-
teed rate that is equal to the effective annual rate determined on the first
day of the fixed subaccount guaranteed period. Amounts transferred or with-
drawn from a fixed subaccount prior to the end of the guaranteed period will
be subject to the market value adjustment. Each guaranteed period purchase
payment and corresponding bonus credits will be treated separately for pur-
poses of determining any applicable market value adjustment. Any amount with-
drawn from a fixed subaccount may be subject to any applicable surrender
charges, account fees and premium taxes.
Lincoln Life will notify the contractowner in writing at least 60 days prior
to the expiration date for any guaranteed period amount. A new fixed
subaccount guaranteed period of the same duration as the previous fixed
subaccount guaranteed period will begin automatically at the end of the previ-
ous guaranteed period, unless Lincoln Life receives, prior to the end of a
guaranteed period, a written election by the contractowner. The written elec-
tion may request the transfer of the guaranteed period amount to a different
fixed subaccount or to a variable subaccount from among those being offered by
Lincoln Life. Transfers of any guaranteed period amount which become effective
upon the date of expiration of the applicable guaranteed period are not sub-
ject to the limitation of twelve transfers per contract year or the additional
fixed account transfer restrictions.
Market value adjustment
Any surrender, withdrawal or transfer of a fixed subaccount guaranteed period
amount before the end of the guaranteed period (other than Dollar Cost Averag-
ing transfers) will be subject to a market value adjustment (MVA). A surren-
der, withdrawal or transfer effective upon the expiration date of the guaran-
teed period will not be subject to an MVA. The MVA will be applied to the
amount being surrendered, withdrawn or transferred. The MVA will be applied
after the deduction of any applicable account fees and before any applicable
transfer charges. In general, the MVA reflects the relationship between the
index rate in effect at the time a purchase payment is allocated to a fixed
subaccount's guaranteed period under the contract and the index rate in effect
at the time of the purchase payment's surrender, withdrawal or transfer. It
also reflects
21
<PAGE>
the time remaining in the fixed subaccount's guaranteed period. If the index
rate at the time of the surrender, withdrawal or transfer is lower than the
index rate at the time the purchase payment was allocated, then the applica-
tion of the MVA will generally result in a higher payment at the time of the
surrender, withdrawal or transfer. Similarly, if the index rate at the time of
surrender, withdrawal or transfer is higher than the index rate at the time of
the allocation of the purchase payment, then the application of the MVA will
generally result in a lower payment at the time of the surrender, withdrawal
or transfer. The index rate is published by the Federal Reserve Board.
The MVA is calculated by multiplying the transaction amount by:
(1+A)n
-1 ----
(1+B)n
where:
A = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
subaccount's guaranteed period, determined at the beginning of the guaranteed
period.
B = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
subaccount's guaranteed period, determined at the time of surrender or trans-
fer, plus a 0.50% adjustment (unless otherwise limited by applicable state
law). If Index Rates "A" and "B" are within .25% of each other when the index
rate is determined, no such percentage adjustment to "B" will be made, unless
required by state law. This adjustment builds into the formula a factor repre-
senting direct and indirect costs to Lincoln Life associated with liquidating
general account assets in order to satisfy surrender requests. This adjustment
of 0.50% has been added to the denominator of the formula because it is antic-
ipated that a substantial portion of applicable general account portfolio as-
sets will be in relatively illiquid securities. Thus, in addition to direct
transaction costs, if such securities must be sold (e.g., because of surren-
ders), the market price may be lower. Accordingly, even if interest rates de-
cline, there will not be a positive adjustment until this factor is overcome,
and then any adjustment will be lower than otherwise, to compensate for this
factor. Similarly, if interest rates rise, any negative adjustment will be
greater than otherwise, to compensate for this factor. If interest rates stay
the same, there will be no MVA.
N = The number of years remaining in the guaranteed period (e.g., 1 year and
73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-Line interpolation is used for periods to maturity not quoted.
See the SAI for examples of the application of the MVA.
Additional adjustments may be included in this calculation that can positively
or negatively affect the MVA. The adjustments represent the direct and indi-
rect costs Lincoln Life can incur due to the liquidation of general account
assets in order to satisfy surrender requests.
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 you and your contract. This discussion also does not address
other Federal tax consequences, or state or local tax consequences, associated
with the contract. As a result, you should always consult a tax advisor about
the application of tax rules to your individual situation.
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 receiving special tax
treatment under the tax code, such as an IRA or a section 403(b) plan.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in your con-
tract value until you receive a contract distribution. However, for this gen-
eral rule to apply, certain requirements must be satisfied:
. An individual must own the contract (or the tax law must treat the contract
as owned by the individual).
. The investments of the VAA must be "adequately diversified" in accordance
with IRS regulations.
. Your 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 purchase payments for the contract.
Examples of contracts where the owner pays current tax on the contract's earn-
ings and bonus credits, are contracts issued to a corporation or a trust. Ex-
ceptions 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.
22
<PAGE>
Investments in the VAA must be diversified
For a contact 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 adequately di-
versified. If the VAA fails to comply with these diversification standards, you
could be required to pay tax currently on the excess of the contract value over
the contract purchase payments. Although we do not control the investments of
the underlying investment options, we expect that the underlying investment op-
tions will comply with the IRS regulations so that the VAA will be considered
"adequately diversified."
Restrictions
Federal income tax law limits your right to choose particular investments for
the contract. Because the IRS has not issued guidance specifying those limits,
the limits are uncertain and your right to allocate contract value among
subaccounts may exceed those limits. If so, you would be treated as the owner
of the assets of the VAA and thus subject to current taxation on the income,
bonus credits 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 your consent to try to prevent the tax law from considering you 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
purchase payments, bonus credits 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 possible that the tax law will not treat the contract as an an-
nuity for Federal income tax purposes. In that event, you would be currently
taxable on the excess of the contract value over the purchase payments 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 your contract will be treated as an annuity for Federal income tax pur-
poses and that the tax law will not tax any increase in your contract value un-
til there is a distribution from your contract.
Taxation of withdrawals and surrenders
You will pay tax on withdrawals to the extent your contract value exceeds your
purchase payments in the contract. This income (and all other income from your
contract) is considered ordinary income. A higher rate of tax is paid on ordi-
nary income than on capital gains. You will pay tax on a surrender to the ex-
tent the amount you receive extends your purchase payments. In certain circum-
stances, your purchase payments are reduced by amounts received from your con-
tract 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 your purchase
payments in the contract. We will notify you annually of the taxable amount of
your annuity payout. 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 annuity payouts end because of the annuitant's death and before the
total amount of the purchase payments in the contract has been received, the
amount not received generally will be deductible.
Taxation of death benefits
We may distribute amounts from your contract because of the death of a
contractowner or an annuitant. The tax treatment of these amounts depends on
whether you 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 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
purchase payments not yet distributed from the contract. All annuity
payouts in excess of the purchase payments 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 payments
not previously received.
Penalty taxes payable on withdrawals, surrenders, or annuity payouts
The tax code may impose a 10% penalty tax on any distribution from your con-
tract which you must include in your gross income. The 10% penalty tax does not
apply if one of several exceptions exists. These exceptions include withdraw-
als, surrenders or annuity payouts that:
. you receive on or after you reach age 59 1/2,
. you receive because you became disabled (as defined in the tax law),
23
<PAGE>
. a beneficiary receives on or after your death, or
. you receive as a series of substantially equal periodic payments for your
life (or life expectancy).
Special rules if you own more than one annuity contract
In certain circumstances, you must combine some or all of the nonqualified an-
nuity contracts you own in order to determine the amount of an annuity payout,
a surrender or a withdrawal that you must include in income. For example, if
you purchase two or more deferred annuity contracts from the same life insur-
ance company (or its affiliates) during any calendar year, the tax code treats
all such contracts as one contract. Treating two or more contracts as one con-
tract could affect the amount of a surrender, withdrawal or an annuity payout
that you 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 re-
ceived as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of your contract value, as a withdrawal of
such amount or portion.
Gifting a contract
If you transfer ownership of your contract to a person other than your spouse
(or to your former spouse incident to divorce), and receive a payment less
than your contract's value, you will pay tax on your contract value to the ex-
tent it exceeds your purchase payments not previously received. The new own-
er's purchase payments in the contract would then be increased to reflect the
amount included in income.
Charges for a contract's death benefit
Your contract may provide an additional death benefit for which you pay an an-
nual charge, computed daily. It is possible that the tax law may treat all or
a portion of the additional charge as a contract withdrawal.
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
consult 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
general information about use of the contract with 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.
Types of qualified contracts and terms of contracts
Currently, we may issue contracts in connection with the following types of
qualified plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Simplified Employee Pensions ("SEPs")
. Savings Incentive Matched Plan for Employees ("SIMPLE 401(k) plans")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans").
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 purchase payments that can be made,
and the tax deduction or exclusion that may be allowed for the purchase pay-
ments. These limits vary depending on the type of qualified plan and the
plan participant's specific circumstances, e.g., the participant's compensa-
tion.
. Under Traditional IRAs, the annuitant must begin receiving payments from the
contract in certain minimum amounts by a certain age, typically age 70 1/2.
However, these "minimum distribution rules" do not apply to a Roth IRA.
24
<PAGE>
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 purchase payments that were deductible or excludible from
income. Thus, under many qualified contracts the total amount received is in-
cluded in income since a deduction or exclusion from income was taken for pur-
chase payments. There are exceptions. For example, you do not include amounts
received from a Roth IRA in income if certain conditions are satisfied.
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 you purchase. 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 annuitant reaches age 59 1/2,
. received on or after the annuitant's death or because of the annuitant's
disability (as defined in the tax law),
. received as a series of substantially equal periodic payments for the
annuitant'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 transfer. Special rules apply to
such rollovers and transfers. If the applicable rules are not followed, you
may suffer adverse Federal income tax consequences, including paying taxes
which might not otherwise have had to be paid. A qualified advisor should al-
ways be consulted before you move or attempt to move funds between any quali-
fied 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 or section 457
plans.) The direct rollover rules require that we withhold Federal income tax
equal to 20% of the eligible rollover distribution from the distribution
amount, unless you elect to have the amount directly transferred to certain
qualified plans or contracts. Before we send a rollover distribution, we will
provide the recipient with a notice explaining these requirements and how the
20% withholding can be avoided by electing a direct rollover.
Death benefit and IRAs
Pursuant to IRS regulations, IRAs may not invest in life insurance contracts.
We do not believe that these regulations prohibit the EGMDB or the 5% Step-Up
death benefit from being provided under the contracts when we issue the con-
tract as Traditional IRAs or Roth IRAs. However, the law is unclear and it is
possible that the presence of these death benefits under a contract issued as
a Traditional IRA or Roth IRA could result in increased taxes to you.
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 distributee notifies us at or
before the time of the 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
recipient an explanation of the withholding requirements.
Tax status of Lincoln Life
Under existing Federal income tax laws, Lincoln Life does not pay tax on in-
vestment income and realized capital gains of the VAA. Lincoln Life 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 in-
come 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 law
The above discussion is based on the tax code, IRS regulations and interpreta-
tions 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 the shareholders of the funds. The voting will be done according to the in-
structions of contractowners who have interests in any subaccounts which in-
vest in classes of the funds. If the 1940 Act or any regulation under it
should be amended or if present interpretations should change,
25
<PAGE>
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 you have the right to cast will be determined by ap-
plying your percentage interest in a subaccount to the total number of votes
attributable to the subaccount. In determining the number of votes, fractional
shares will be recognized.
Fund shares of a class 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, each person having a voting inter-
est in a subaccount will receive proxy voting material, reports and other ma-
terials relating to the funds. Since the funds engage in shared funding, other
persons or entities besides Lincoln Life may vote fund shares. See Fund
shares.
Distribution of the contracts
Lincoln Life is the distributor and principal underwriter of the contracts.
Under an agreement with Lincoln Life, Delaware Distributors, L.P. ("DDLP")
will act as wholesaler and will assist Lincoln Life in forming the selling
group. DDLP will also perform certain enumerated marketing and ancillary func-
tions in support of the selling group. The contracts will be sold by our prop-
erly licensed registered representatives of independent broker-dealers which
in turn have selling agreements with Lincoln Life and have been licensed by
state insurance departments to represent us. Included among these broker-deal-
ers is Lincoln Financial Advisors (LFA). LFA is affiliated with us and in ad-
dition to selling our contracts, may also act as a principal underwriter for
certain other contracts issued by us. Lincoln Life will offer the contracts in
all states it is licensed to do business.
Return privilege
Within the free-look period after you receive the contract, you may cancel it
for any reason by delivering or mailing it postage prepaid, to the home office
at P.O. Box 7866, 1300 South Clinton Street, Fort Wayne, Indiana, 46801. A
contract canceled under this provision will be void. Except as explained in
the following paragraph, we will return the contract value as of the valuation
date on which we receive the cancellation request, plus any premium taxes plus
mortality and expense risk charges and administrative charges proportionately
attributable to the bonus credits, less any bonus credits paid into the con-
tract by us. In addition, if the contract value on the date of cancellation is
less than the sum of purchase payments minus withdrawals, we will also return
both the investment loss and fund management fees, each in an amount that is
proportionately attributable to the bonus credits. A purchaser who partici-
pates in the VAA is subject to the risk of a market loss during the free-look
period.
For contracts written in those states whose laws require that we assume this
market risk during the free-look period, a contract may be canceled, subject
to the conditions explained before, except that we will return only the pur-
chase payment(s).
State regulation
As a life insurance company organized and operated under Indiana law, we are
subject to provisions governing life insurers and to regulation by the Indiana
Commissioner of Insurance.
Our books and accounts are subject to review and examination by the Indiana
Insurance Department at all times. A full examination of our operations is
conducted by that Department at least every five years.
Restrictions under the Texas Optional Retirement Program
Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits partic-
ipants in the Texas Optional Retirement Program (ORP) to redeem their interest
in a variable annuity contract issued under the ORP only upon:
1. Termination of employment in all institutions of higher education as de-
fined in Texas law;
2. Retirement; or
3. Death.
Accordingly, a participant in the ORP will be required to obtain a certificate
of termination from their employer before accounts can be redeemed.
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 the Delaware Management Company, 2005 Mar-
ket Street, Philadelphia, PA 19203, to provide accounting services to the VAA.
We will mail to you, at your last known address of record at the home office,
at least semiannually after the first contract year, reports containing infor-
mation required by that Act or any other applicable law or regulation.
26
<PAGE>
Other information
A Registration Statement has been filed with the SEC, under the Securities Act
of 1933 as amended, for the contracts being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further informa-
tion about the VAA, Lincoln Life and the contracts offered. Statements in this
Prospectus about the content of contracts and other legal instruments are sum-
maries. For the complete text of those contracts and instruments, please refer
to those documents as filed with the SEC.
We are a member of the Insurance Marketplace Standards Association ("IMSA") and
may include the IMSA logo and information about IMSA membership in our adver-
tisements. Companies that belong to IMSA subscribe to a set of ethical stan-
dards covering the various aspects of sales and services for individually sold
life insurance and annuities.
Legal proceedings
Lincoln Life is involved in various pending or threatened legal proceedings
arising from the conduct of its business. Most of those proceedings are routine
and in the ordinary course of business. In some instances they include claims
for unspecified or substantial punitive damages and similar types of relief in
addition to amounts 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 suits will not have a material adverse effect on
the financial position of Lincoln Life.
Lincoln Life is presently defending several lawsuits in which Plaintiffs seek
to represent national classes of policyholders in connection with alleged
fraud, breach of contract and other claims relating to the sale of interest-
sensitive universal and participating whole life insurance policies. As of the
date of this Prospectus, the courts have not certified a class in any of the
suits. Plaintiffs seek unspecified damages and penalties for themselves and on
behalf of the putative class. Although the relief sought in these cases is sub-
stantial, the cases are in the preliminary stages of litigation, and it is pre-
mature to make assessments about potential loss, if any. Management is defend-
ing these suits vigorously. The amount of liability, if any, which may ulti-
mately arise as a result of these suits cannot be reasonably determined at this
time.
27
<PAGE>
Statement of additional information table of contents for Separate Account N
<TABLE>
<CAPTION>
Item
- ----------------------------------------------------
<S> <C>
General information and history of Lincoln Life B-2
- ----------------------------------------------------
Special terms B-2
- ----------------------------------------------------
Services B-2
- ----------------------------------------------------
Principal underwriter B-2
- ----------------------------------------------------
Purchase of securities being offered B-2
</TABLE>
For a free copy of the SAI please see page one of this booklet.
<TABLE>
<CAPTION>
Item
- ---------------------------------------
<S> <C>
Calculation of investment results B-2
- ---------------------------------------
Annuity payouts B-8
- ---------------------------------------
Advertising and sales literature B-9
- ---------------------------------------
Financial statements B-11
</TABLE>
28
<PAGE>
Lincoln ChoicePlus Bonus
Lincoln LifeVariable Annuity Account N (Registrant)
The Lincoln NationalLife Insurance Company (Depositor)
Statement of Additional Information (SAI)
This Statement of Additional Information should be read in conjunction with the
Lincoln ChoicePlus Bonus
Prospectus of Lincoln Life Variable Annuity Account N dated .
You may obtain a copy of the Lincoln ChoicePlus Bonus Prospectus on request and
without charge.
Please write Lincoln ChoicePlus Customer Service, The Lincoln National Life In-
surance Company,
P.O. Box 7866, Fort Wayne, Indiana 46801 or call 1-888-868-2583.
Table of Contents
<TABLE>
<CAPTION>
Item Page
- ------------------------------------------
<S> <C>
General information and history
of Lincoln Life B-2
- ------------------------------------------
Special terms B-2
- ------------------------------------------
Services B-2
- ------------------------------------------
Principal underwriter B-2
- ------------------------------------------
Purchase of securities being offered B-2
- ------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Item Page
<S> <C>
Calculation of investment results B-2
Annuity payouts B-8
Advertising and sales literature B-9
Financial statements B-11
</TABLE>
This SAI is not a Prospectus.
The date of this SAI is .
<PAGE>
General information and
history of the
Lincoln National Life
Insurance Company (Lincoln Life)
The Lincoln National Life Insurance Company (Lincoln Life), organized in 1905,
is an Indiana stock insurance corporation, engaged primarily in the direct in-
surance of life and health insurance contracts and annuities, and is also a
professional reinsurer. Lincoln Life is wholly owned by Lincoln National Cor-
poration (LNC), a publicly held insurance and financial services holding com-
pany domiciled in Indiana.
Special terms
The special terms used in this SAI are the ones defined in the Prospectus. In
connection with the term, valuation date, the New York Stock Exchange is cur-
rently closed on weekends and on these holidays: New Year's Day, Martin Luther
King's Birthday, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. If any of these holidays oc-
curs on a weekend day, the Exchange may also be closed on the business day oc-
curring just before or just after the holiday.
Services
Independent auditors
The financial statements of the variable annuity account (VAA) and the statu-
tory-basis financial statements of Lincoln Life appearing in this SAI and Reg-
istration Statement have been audited by Ernst & Young LLP, independent audi-
tors, as set forth in their reports also appearing elsewhere in this document
and in the Registration 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.
Keeper of records
All accounts, books, records and other documents which are required to be
maintained for the VAA are maintained by Lincoln Life or by third parties re-
sponsible to Lincoln Life. We have entered into an agreement with the Delaware
Management Company, 2005 Market Street, Philadelphia, PA 19203, to provide ac-
counting services to the VAA. No separate charge against the assets of the VAA
is made by Lincoln Life for this service.
Principal underwriter
Lincoln Life is the principal underwriter for the contracts, which are offered
continuously. Delaware Distributors, L.P. will perform certain marketing and
other ancillary functions as described in the Prospectus.
Purchase of securities being offered
The variable annuity contracts are offered to the public through licensed in-
surance agents who specialize in selling Lincoln Life products; through inde-
pendent insurance brokers; and through certain securities brokers/dealers se-
lected by Lincoln Life whose personnel are legally authorized to sell annuity
products. There are no special purchase plans for any class of prospective
buyers. However, under certain limited circumstances described in the Prospec-
tus under the section Charges and other deductions, the account fee and/or the
surrender charge may be reduced or waived.
Both before and after the annuity commencement date, there are exchange privi-
leges between subaccounts, and from the VAA to the general account subject to
restrictions set out in the Prospectus. See The contracts, in the Prospectus.
No exchanges are permitted between the VAA and other separate accounts.
The offering of the contracts is continuous.
Calculation of investment results
The seven-day yield is determined by calculating the change in unit value for
the base period (the 7-day period ended December 31, 1999); then dividing this
figure by the account value at the beginning of the period; then annualizing
this result by the factor of 365/7. This yield includes all deductions charged
to the contractowner's account, and excludes any realized gains and losses
from the sale of securities.
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
B-2
<PAGE>
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; and (2) there will be a complete redemption upon the
anniversary 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
performance 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.
Standard Performance Data:
Period Ending December 31, 1999
<TABLE>
<CAPTION>
10 Years
or Since
1-Year 5-Years Inception
Subaccount With With With
Commenced 5% Step Up 5% Step Up 5% Step Up
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AFIS Global Small Cap % % %
AFIS Growth
AFIS Growth-Income
AFIS International
AIM V.I. Cap Appreciation
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Equity Fund
Alliance Growth
Alliance Growth & Income
Alliance Premier Growth
Alliance Technology
Delaware Emerging Markets Series
Delaware Growth and Income Series
Delaware High Yield Series
Delaware REIT Series
Delaware Select Growth
Delaware Small Cap Value Series
Delaware Social Awareness Series
Delaware Trend Series
Deutsche VIT Equity 500 Index Fund
Fidelity VIP Equity-Income
Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP III Growth
Opportunities Portfolio
Franklin Mutual Shares
Franklin Small Cap
Lincoln National Bond Fund
Lincoln National Money Market Fund
MFS(R) Emerging Growth Series
MFS(R) Research Series
MFS(R) Total Return Series
MFS(R) Utilities Series
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
10 Years
or
Since
1-Year 5-Years Inception
Subaccount With With With
Commenced 5% Step Up 5% Step Up 5% Step Up
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Newport Tiger Fund, Variable Series % % %
Templeton Growth
Templeton International
</TABLE>
The performance figures shown reflect the cost of the 5% Step-Up death benefit.
If contractowners had chosen to eliminate the 5% Step-Up death benefit, their
returns would have been higher.
B-4
<PAGE>
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 an-
nuities 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 options (ie: 5% Step-Up) that were in effect during the time periods shown.
This performance is referred to as non-standardized performance data. Such re-
sults may be computed on a cumulative and/or annualized basis. We may also re-
port performance assuming that you deposited $10,000 into a subaccount at in-
ception 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 underlying fund adjusted for contract charges. This information repre-
sents past performance and does 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 invest-
ment. Cumulative quotations are arrived at by calculating the change in accumu-
lation unit value between the first and last day of the base period being mea-
sured, 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 en-
tire base period, would produce the cumulative return.
Non-Standard Performance Data (adjusted for contract expense charges):
Period Ending December 31, 1999
<TABLE>
<CAPTION>
YTD 1-year 3-year 5-year 10-year
With With With With With As if
5% Step-Up 5% Step-Up 5% Step-Up 5% Step-Up 5% Step-Up Lifetime Commenced
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AFIS Global
Small Cap % % % % % %
AFIS Growth
AFIS Growth-
Income
AFIS
International
AIM V.I. Cap
Appreciation
AIM V.I.
Growth Fund
AIM V.I.
International
Equity Fund
AIM V.I. Value
Equity Fund
Alliance
Growth
Alliance
Growth &
Income
Alliance
Premier
Growth
Alliance
Technology
Delaware
Emerging
Markets
Series
Delaware
Growth and
Income Series
Delaware High
Yield Series
Delaware REIT
Series
Delaware
Select Growth
Delaware Small
Cap Value
Series
Delaware
Social
Awareness
Series
Delaware Trend
Series
Deutsche VIT
Equity 500
Index Fund
Fidelity VIP
Equity-Income
Portfolio
Fidelity VIP
Growth
Portfolio
Fidelity VIP
Overseas
Portfolio
Fidelity VIP
III Growth
Opportunities
Portfolio
Franklin
Mutual Shares
Franklin Small
Cap
Lincoln
National Bond
Fund
Lincoln
National
Money Market
Fund
MFS Emerging
Growth
MFS Research
MFS Total
Return
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
YTD 1-year 3-year 5-year 10-year
With With With With With As if
5% Step-Up 5% Step-Up 5% Step-Up 5% Step-Up 5% Step-Up Lifetime Commenced
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS Utilities % % % % % % %
Newport Tiger
Fund
Templeton
Growth
Templeton
International
</TABLE>
The performance figures shown reflect the cost of the 5% Step-Up death benefit.
If contractowners had chosen to eliminate the 5% Step-Up death benefit, their
returns would have been higher.
B-6
<PAGE>
Market Value Adjustment
The following example illustrates the
detailed calculations for a $50,000
deposit plus a 3% bonus credit into
the fixed account with a guaranteed
rate of 4.5% for a duration of five
years. The intent of the example is
to show the effect of the "MVA" and
the 3% minimum guarantee under vari-
ous interest rates on the calculation
of the cash surrender (withdrawal)
values. Any charges for optional
death benefit risks are not taken
into account in the example. The ef-
fect of the MVA is reflected in the
index rate factor in column (2) and
the minimum 3% guarantee is shown un-
der column (4) under the "Surrender
Value Calculation". The "Market Value
Adjustment Tables" and "Minimum Value
Calculation" contain the explicit
calculation of the index factors and
the 3% minimum guarantee respective-
ly. The "Annuity Value Calculation"
and "Minimum Value" calculations as-
sume the imposition of the annual $35
account fee, but that fee is waived
if the annuity account value at the
end of a contract year is $100,000 or
more. The results would be slightly
different in the states where the an-
nual fee is less than $35.
SAMPLE CALCULATIONS FOR MALE 35 ISSUE
<TABLE>
<S> <C>
Single Premium............................... $50,000
Premium Taxes................................ None
Withdrawals.................................. None
Guaranteed Period............................ 5 years
Guaranteed Interest Rate..................... 4.50%
Annuity Date................................. Age 70
Index Rate A................................. 5.00%
Index Rate B................................. 6.00% End of contract year 1
5.50% End of contract year 2
5.00% End of contract year 3
4.00% End of contract year 4
Percentage Adjustment to Index Rate B........ 0.50%
</TABLE>
SURRENDER VALUE CALCULATION
<TABLE>
<CAPTION>
(5)
(2) (3) Greater
(1) Index Adjusted (4) of (6) (7)
Annuity Rate Annuity Minimum (3) & Surrender Surrender
Contract Year Value Factor Value Value (4) Charge Value
------------- ------- -------- -------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1....................... $53,783 0.944841 $50,816 $53,010 $53,010 $4,250 $48,760
2....................... $56,168 0.971964 $54,593 $54,565 $54,593 $4,250 $50,343
3....................... $58,660 1.000000 $58,660 $56,167 $58,660 $4,000 $54,660
4....................... $61,265 1.004785 $61,558 $57,817 $61,558 $3,500 $58,058
5....................... $63,987 NA $63,987 $59,517 $63,987 $3,000 $60,987
</TABLE>
ANNUITY VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1.............................. $(50,000 + $1,500) X 1.045 - $35 = $53,783
2.............................. $53,783 X 1.045 - $35 = $56,168
3.............................. $56,168 X 1.045 - $35 = $58,660
4.............................. $58,660 X 1.045 - $35 = $61,265
5.............................. $61,265 X 1.045 - $35 = $63,987
</TABLE>
B-7
<PAGE>
SURRENDER CHARGE CALCULATION
<TABLE>
<S> <C> <C> <C>
Contract Year SC factor Deposit Surrender Chg
-------------
1..................................... 8.5% X $50,000 = $4,250
2..................................... 8.5% X $50,000 = $4,250
3..................................... 8.0% X $50,000 = $4,000
4..................................... 7.0% X $50,000 = $3,500
5..................................... 6.0% X $50,000 = $3,000
</TABLE>
INDEX RATE FACTOR CALCULATION
<TABLE>
<CAPTION>
Adj-
Index Index Index
Contract Year A B B N Result
------------- ----- ----- ----- --- --------
<S> <C> <C> <C> <C> <C>
1.......................................... 5.00% 6.00% 6.50% 4 0.944841
2.......................................... 5.00% 5.50% 6.00% 3 0.971964
3.......................................... 5.00% 5.00% 5.00% 2 1.000000
4.......................................... 5.00% 4.00% 4.50% 1 1.004785
5.......................................... 5.00% N/A N/A N/A N/A
</TABLE>
MINIMUM VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1............................... ($50,000 + $1,500) X 1.03 - $35 = $53,010
2............................... $53,010 X 1.03 - $35 = $54,565
3............................... $54,565 X 1.03 - $35 = $56,167
4............................... $56,167 X 1.03 - $35 = $57,817
5............................... $57,817 X 1.03 - $35 = $59,517
</TABLE>
Annuity payouts
Variable annuity payouts
Variable annuity payouts will be determined on the basis of: (1) the dollar
value of the contract on the annuity commencement date less any applicable
premium tax; (2) the annuity tables contained in the contract; (3) the type of
annuity option selected; and (4) the investment results of the fund(s) select-
ed. In order to determine the amount of variable annuity payouts, Lincoln Life
makes the following calculation: first, it determines the dollar amount of the
first payout; second, it credits the contract with a fixed number of annuity
units based on the amount of the first payout; and third, it calculates the
value of the annuity units each period thereafter. These steps are explained
below.
The dollar amount of the first periodic variable annuity payout is determined
by applying the total value of the accumulation units credited under the con-
tract valued as of the annuity commencement date (less any premium taxes) to
the annuity tables contained in the contract. The first variable annuity pay-
out will be paid 14 days after the annuity commencement date. This day of the
month will become the day on which all future annuity payouts will be paid.
Amounts shown in the tables are based on the 1983 Table "a" Individual Annuity
Mortality Tables, modified, with an assumed investment return at the rate of
3%, 4%, 5% or 6% per annum. The first annuity payout is determined by multi-
plying the benefit per $1,000 of value shown in the contract tables by the
number of thousands of dollars of value accumulated under the contract. These
annuity tables vary according to the form of annuity selected and the age of
the annuitant at the annuity commencement date. The assumed interest rate is
the measuring point for subsequent annuity payouts. If the actual net invest-
ment rate (annualized) exceeds the assumed interest rate, the payout will in-
crease at a rate equal to the amount of such excess. Conversely, if the actual
rate is less than the assumed interest rate, annuity payouts will decrease. If
the assumed rate of interest were to be increased, annuity payouts would start
at a higher level but would decrease more rapidly or increase more slowly.
Lincoln Life may use sex distinct annuity tables in contracts that are not as-
sociated with employer sponsored plans and where not prohibited by law.
At an annuity commencement date, the contract is credited with annuity units
for each subaccount on which variable annuity payouts are based. The number of
annuity units to be credited is determined by dividing the amount of the first
periodic payout by the value of an annuity unit in each subaccount selected.
Although the number of annuity units is fixed by this process, the value of
such units will vary with the value of the underlying fund.
B-8
<PAGE>
The amount of the second and subsequent periodic payouts is determined by mul-
tiplying the contractowner's fixed number of annuity units in each subaccount
by the appropriate annuity unit value for the valuation date ending 14 days
prior to the date that payout is due.
The value of each subaccount's annuity unit will be set initially at $1.00.
The annuity unit value for each subaccount at the end of any valuation date is
determined by multiplying the subaccount annuity unit value for the immedi-
ately preceding valuation date by the product of:
(a) The net investment factor of the subaccount for the valuation period for
which the annuity unit value is being determined, and
(b) A factor to neutralize the assumed investment return in the annuity table.
The value of the annuity units is determined as of a valuation date 14 days
prior to the payment date in order to permit calculation of amounts of annuity
payouts and mailing of checks in advance of their due dates. Such checks will
normally be issued and mailed at least three days before the due date.
Proof of age, sex and survival
Lincoln Life may require proof of age, sex, or survival of any payee upon
whose age, sex, or survival payments depend.
Advertising and sales
literature
As set forth in the Prospectus, Lincoln Life may refer to the following orga-
nizations (and others) in its marketing materials:
A.M. Best's Rating System is designed to evaluate the various factors affect-
ing the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability
to meet its contractual obligations. The procedure includes both a quantita-
tive and qualitative review of each company. A.M. Best also provides certain
rankings, to which Lincoln Life intends to refer.
Duff & Phelps insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and
statistical information on the solvency and liquidity of major U.S. licensed
insurance companies, both mutual and stock.
EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It mea-
sures performance of equity securities in Europe, Australia and the Far East.
The index reflects the movements of world stock markets by representing the
evolution of an unmanaged portfolio. The EAFE Index offers international di-
versification representing 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 financial strength rating is an opinion of an insurance
company's financial strength and ability to meet financial obligations. The
purpose of Moody's ratings is to provide investors with a simple 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
annuities.
Standard & Poor's insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations under 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.
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 -- A broad-based measurement of U.S. stock-market
performance based on the weighted average performance of 500 common stocks of
leading company's and leading industries; commonly known as the Standard &
Poor's 500 (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 Corporation, a financial
advisory, securities rating, and publishing firm.
NASDAQ-OTC Price Index -- this index is based on the National Association of
Securities 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 currently including Ameri-
can
B-9
<PAGE>
Express Company and American Telephone and Telegraph Company. Prepared and
published by Dow Jones & Company, it is the oldest and most widely quoted of
all the market indicators. 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 U.S.
companies.
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
U.S. companies.
Lehman Brothers Aggregate Bond Index--Composed of securities from Lehman
Brothers Government/Corpo-rate 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--This is a measurement of the
movement of approximately 4,200 corporate, publicly traded, fixed-rate, non-
convertible, domestic debt securities, as well as the domestic debt securities
issued by the U.S. government or its agencies.
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 U.S. government or any agency thereof, qua-
si-federal corporations, or corporate debt guaranteed by the U.S. 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
U.S. 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.
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 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.
In its advertisements and other sales literature for the VAA and the funds,
Lincoln Life 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 illustration,
the literature may emphasize the potential tax savings through tax deferral;
the potential advantage of the variable annuity account over the fixed ac-
count; and the compounding effect when a client makes regular deposits to his
or her contract.
Internet. An electronic communications network which may be used to provide
information regarding Lincoln Life, performance of the subaccounts and adver-
tisement literature.
Dollar-Cost Averaging. (DCA) -- You may systematically transfer on a monthly
basis amounts from the DCA Fixed Account or certain variable subaccounts into
the variable subaccounts or the fixed side of the contract. You may elect to
participate in the DCA program at the time of application or at anytime before
the annuity commencement date by completing an election form available from
us. The minimum amount to be dollar cost averaged is $1,500 over any period
between six and 60 months. Once elected, the program will remain in effect un-
til the earlier of: (1) the annuity commencement date; (2) the value of the
amount being DCA'd is depleted; or (3) you cancel the program by written re-
quest
B-10
<PAGE>
or by telephone if we have your telephone authorization on file. If you have
cancelled the DCA program prior to the end of the selected DCA period, any re-
maining contract value in the DCA holding account within the fixed account,
will automatically be transferred to the variable subaccounts selected by you.
Currently, there is no charge for this service. However, we reserve the right
to impose one. A transfer under this program is not considered a transfer for
purposes of limiting the number of transfers that may be made, or assessing
any charges which may apply to transfers. We reserve the right to discontinue
this program at any time. DCA does not assure a profit or protect against
loss.
Automatic Withdrawal Service. (AWS) -- AWS provides an automatic, periodic
withdrawal of contract value to you. You may elect to participate in AWS at
the time of application or at any time before the annuity commencement date by
sending a written request to our home office. The minimum contract value re-
quired to establish AWS is $10,000. You may cancel or make changes to your AWS
program at any time by sending a written request to our home office. If tele-
phone authorization has been elected, certain changes may be made by tele-
phone. Notwithstanding the requirements of the program, any withdrawal must be
permitted by Section 401(a)(9) of the code for qualified plans or permitted
under Section 72 for non-qualified contracts. Currently, there is no charge
for this service. However, we reserve the right to impose one. If a charge is
imposed, it will not exceed $25 per transaction or 2% of the amount withdrawn,
whichever is less. We reserve the right to discontinue this service at any
time.
Cross-reinvestment service -- Under this option, account value in a designated
variable subaccount of the contract that exceeds a certain baseline amount is
automatically transferred to another specific variable subaccount(s) of the
contract at specific intervals. You may elect to participate in cross-rein-
vestment at the time of application or at any time before the annuity com-
mencement date by sending a written request to our home office or by telephone
if we have your telephone authorization on file. You designate the holding ac-
count, the receiving account(s), and the baseline amount. Cross-reinvestment
will continue until we receive authorization to terminate the program.
The minimum holding account value required to establish cross-reinvestment is
$10,000. Currently, there is no charge for this service. However, we reserve
the right to impose one. A transfer under this program is not considered a
transfer for purposes of limiting the number of transfers that may be made, or
assessing any charges which may apply to transfers. We reserve the right to
discontinue this service at any time.
Portfolio rebalancing -- Portfolio rebalancing is an option which, if elected
by the contractowner, restores to a pre-determined level the percentage of
contract value allocated to each variable account subaccount. This pre-deter-
mined level will be the allocation initially selected when the contract was
purchased, unless subsequently changed. The portfolio rebalancing allocation
may be changed at any time by submitting a request to Lincoln Life.
If portfolio rebalancing is elected, all purchase payments and corresponding
bonus credits allocated to the variable account subaccounts must be subject to
portfolio rebalancing.
Portfolio rebalancing may take place on either a monthly, quarterly, semi-an-
nual or annual basis, as selected by the contractowner. Once the portfolio
rebalancing option is activated, any variable account subaccount transfers ex-
ecuted outside of the portfolio rebalancing option will terminate the portfo-
lio rebalancing option. Any subsequent purchase payment or withdrawal that
modifies the account balance within each variable account subaccount may also
cause termination of the portfolio rebalancing option. Any such termination
will be confirmed to the contractowner. The contractowner may terminate the
portfolio rebalancing option or re-enroll at any time by calling or writing
Lincoln Life.
The portfolio rebalancing program is not available following the annuity com-
mencement date. Currently, there is no charge for this service. However, we
reserve the right to impose one.
Lincoln Financial Group
Lincoln Financial Group is the marketing name for Lincoln National Corporation
(NYSE:LNC) and its affiliates. With headquarters in Philadelphia, Lincoln Fi-
nancial Group has consolidated assets of over $103 billion and annual consoli-
dated revenues of $6.8 billion. Through its wealth accumulation and protection
businesses, the company provides annuities, life insurance, 401(k) plans,
life-health reinsurance, mutual funds, institutional investment management and
financial planning and advisory services.
Lincoln Life's customers. Sales literature for the VAA and the funds may refer
to the number of employers and the number of individual annuity clients which
Lincoln Life serves. As of the date of this SAI, Lincoln Life was serving over
15,000 employers and more than 1.5 million individuals.
Lincoln Life's assets, size. Lincoln Life may discuss its general financial
condition (see, for example, the reference to A.M. Best Company, 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 sub-classification of those com-
panies, based upon recognized evaluation criteria (see reference to A.M. Best
Company above). For example, at year-end 1999 Lincoln Life had statutory ad-
mitted assets of over $79 billion.
Financial Statements
[TO BE FILED BY AMENDMENT.]
B-11
<PAGE>
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
REGISTRATION STATEMENT ON FORM N-4
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. (To be filed by amendment)
2. Part B The following Financial Statements for the Variable Account are
included in Part B of this Registration Statement. (To be filed by
amendment)
3. Part B The following Statutory-Basis Financial Statements of The
Lincoln National Life Insurance Company are included in the SAI: (To be
filed by amendment)
<PAGE>
Item 24. (Continued)
(b) List of Exhibits
(1) Resolutions of the Board of Directors of The Lincoln National Life
Insurance Company establishing Separate Account N are incorporated herein
by reference to Registration Statement on Form N-4 (333-40937) filed on
November 24, 1997.
(2) None.
(3)(a) Selling Group Agreement incorporated herein by reference to Registration
Statement on Form N-4 (333-40937) filed on April 29, 1999.
(3)(b) Amendment to Selling Group Agreement incorporated herein by reference to
Registration Statement on Form N-4 (333-40937) filed on April 29, 1999.
(3)(c) Amendment to Schedule A of Selling Group dated February 14, 2000 is
incorporated herein by reference to Post-Effective Amendment No. 5 (333-
40937) filed on April 19, 2000.
(3)(d) Wholesale Agreement between Lincoln National Life Insurance Company and
Delaware Management Holdings is incorporated herein by reference to Post-
Effective Amendment No. 3 (333-40937).
(3)(e) Form of Amendment to Wholesaling Agreement is incorporated herein by
reference to Post Effective Amendment No. 5 (333-40937) filed on
April 19, 2000.
(4)(a) Form of Variable Annuity Contract
(5) Form of Application
(6)(a) Articles of Incorporation of The Lincoln National Life Insurance Company
are incorporated herein by reference to Registration Statement on Form
N-4 (333-40937) filed on November 9, 1998
(b) By-laws of The Lincoln National Life Insurance Company are incorporated
herein by reference to Registration Statement on Form N-4 (333-40937)
filed on November 9, 1998.
(7) Not applicable.
(8)(a) Agreements and Amendments between The Lincoln National Life Insurance
Company and:
(i) AIM Variable Insurance Funds, Inc.
(ii) BT Insurance Funds Trust
(iii) Delaware Group Premium Fund, Inc.
(iv) Dreyfus Variable Investment Fund is incorporated herein by
reference to Post-Effective Amendment No. 4 (333-40937) filed
December 17, 1999.
(v) Form of Agreement Investors Fund Series is incorporated herein
by reference to Registration Statement on Form N-4 (333-40937)
filed on November 9, 1998.
(vi) Liberty Variable Investment Trust is incorporated herein by
reference to Post-Effective Amendment No. 3 (333-40937) filed
on April 29, 1999.
(vii) Lincoln National Bond Fund, Inc.
(viii) Lincoln National Money Market Fund, Inc.
(ix) Fidelity Variable Insurance Products Fund
(x) MFS-Registered Trademark-Variable Insurance Trust
(xi) OCC Accumulation Trust
(xii) American Variable Insurance Series (To be filed by amendment)
(xiii) Alliance FPA. (To be filed by amendment)
(xiv) Templeton FPA
(b) Service agreement between Delaware Management Holdings, Inc.,
Delaware Services Company, Inc. and Lincoln National Life Insurance
Company is incorporated herein by reference to the registration
statement of Lincoln National Growth & Income Fund, Form N-1A 2-80741,
Amendment No. 21 filed on April 10, 2000.
(9) Opinion and consent of Mary Jo Ardington, Counsel of The Lincoln National
Life Insurance Company as to legality of securities being issued. (To be
filed by amendment)
(10) Consent of Ernst & Young LLP, Independent Auditors (To be filed by
amendment)
(11) Not applicable.
(12) Not applicable.
(13) Schedule for Computation for Performance Quotations (To be filed by
amendment)
(14) Not applicable
(15) Other Exhibits:
(a) Organizational Chart of the Lincoln National Insurance
Holding Company System
(b) Books and Records Report is incorporated herein by
reference to Post-Effective Amendment No. 5 on Form N-4
(File No. 333-40937) filed on April 19, 2000.
Item 25.
DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name Positions and Offices with LNL
- ---- ------------------------------
Jon A. Boscia** President and Director
John H. Gotta**** Chief Executive Officer of Life Insurance, Senior Vice
President, and Director
Stephen H. Lewis* Interim Chief Executive Officer of Annuities, Senior
Vice President, and Director
H. Thomas McMeekin***** Director
Cynthia A. Rose* Secretary and Assistant Vice President
Lawrence T. Rowland*** Executive Vice President and Director
Keith J. Ryan* Vice President, Controller and Chief Accounting Officer
Eldon J. Summers* Second Vice President and Treasurer
Richard C. Vaughan** Director
Roy V. Washington* Vice President and Chief Compliance Officer
Janet Chrzan** Senior Vice President, Chief Financial Officer and
Director
*Principal business address is 1300 South Clinton Street, Fort Wayne, Indiana
46802-3506
**Principal business address is Center Square West Tower, 1500 Market Street-
Suite 3900, Philadelphia, PA 19102-2112.
***Principal business address is One Reinsurance Place, 1700 Magnavox Way,
Fort Wayne, Indiana 46804-1538.
****Principal business address is 350 Church Street, Hartford, CT 06103
*****Principal business address is One Commerce Square, 2005 Market Street 39th
floor, Philadelphia, PA 19103
<PAGE>
Item 26.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH THE DEPOSITOR OR REGISTRANT
See Exhibit 15(a): Organizational Chart of the Lincoln National Insurance
Holding Company System.
Item 27.
NUMBER OF CONTRACTOWNERS
As of February 29, 2000, there were 6,053 Contract Owners under Account N.
Item 28. Indemnification
(a) Brief description of indemnification provisions.
In general, Article VII of the By-Laws of The Lincoln National Life
Insurance Company (LNL) provides that LNL will indemnify certain
persons against expenses, judgments and certain other specified costs
incurred by any such person if he/she is made a party or is threatened
to be made a party to a suit or proceeding because he/she was a
director, officer, or employee of LNL, as long as he/she acted in good
faith and in a manner he/she reasonably believed to be in the best
interests of, or act opposed to the best interests of, LNL. Certain
additional conditions apply to indemnification in criminal proceedings.
In particular, separate conditions govern indemnification of directors,
officers, and employees of LNL in connection with suits by, or in the
right of, LNL.
Please refer to Article VII of the By-Laws of LNL (Exhibit no. 6(b)
hereto) for the full text of the indemnification provisions.
Indemnification is permitted by, and is subject to the requirements of,
Indiana law.
(b) Undertaking pursuant to Rule 484 of Regulation C under the Securities
Act of 1933:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item
28(a) above or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any such 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 Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriter
(a) Lincoln National Variable Annuity Fund A (Group); Lincoln National
Variable Annuity Fund A (Individual); Lincoln National Variable Annuity
Account C; Lincoln National Flexible Premium Variable Life Account D;
Lincoln Life Flexible Premium Variable Life Account F; Lincoln Life
Flexible Premium Variable Life Account J; Lincoln Life Flexible Premium
Variable Life Account K; Lincoln Life Variable Annuity Account N;
Lincoln Life Flexible Premium Variable Life Account M; Lincoln Life
Flexible Premium Variable Life Account R; Lincoln Life Flexible Premium
Variable Life Account S; Lincoln Life Variable Annuity Account Q;
Lincoln National Variable Annuity Account 53.
(b) See Item 25.
(c) Commissions and other compensations received by The Lincoln National
Life Insurance Company from Lincoln Life Variable Annuity Account N
during the fiscal year which ended December 31, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Underwriting
Name of Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
----------------- ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
The Lincoln National
Life Insurance Company None $176,441 None $2,289,189
</TABLE>
<PAGE>
Item 30. Location of Accounts and Records
See Exhibit 15(b): Books and Records Report
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a Certificate or an Individual 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 a similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to Lincoln Life at the address or
phone number listed in the Prospectus.
(d) The Lincoln National Life Insurance Company 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 The Lincoln National Life Insurance Company.
(e) Registrant hereby represents that it is relying on the American Council of
Life Insurance (avail. Nov. 28, 1988) no-action letter with respect to
Contracts used in connection with retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code, and represents further that
it will comply with the provisions of paragraphs (1) through (4) set forth
in that no-action letter.
(f) For Contracts sold in connection with the Texas Optional Retirement
Program, Registrant is relying on Rule 6c-7 and represents that paragraphs
(a) through (d) of that rule have been complied with.
<PAGE>
SIGNATURES
(a) As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement to be signed on
its behalf, in the City of Fort Wayne and the State of Indiana on this 4th day
of May, 2000.
LINCOLN NATIONAL VARIABLE ANNUITY
ACCOUNT N -- Lincoln ChoicePlus Bonus
(Registrant)
/s/ Jeffrey K. Dellinger
By: ___________________________
Jeffrey K. Dellinger
Vice President, Lincoln Life
(Title)
By: THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
(Depositor)
/s/ Stephen H. Lewis
By: ___________________________
Stephen H. Lewis
(Signature-Officer of Depositor)
Senior Vice President, Lincoln Life
(Title)
(b) As required by the Securities Act of 1933, the Registration Statement has
been signed for the Depositor by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Jon A. Boscia President and Director May 4, 2000
- ---------------------- (Principal Executive Officer)
Jon A. Boscia
/s/ Keith J. Ryan Vice President and Controller May 4, 2000
- ---------------------- (Principal Accounting Officer)
Keith J. Ryan
/s/ Janet Chrzan Senior Vice President, Chief May 4, 2000
- ---------------------- Financial Officer and Director
Janet Chrzan (Principal Financial Officer)
/s/ Stephen H. Lewis Second Vice President, May 4, 2000
- ---------------------- Interim Chief Executive Officer
Stephen H. Lewis of Annuities and Director
/s/ John H. Gotta Senior Vice President, May 4, 2000
- ---------------------- Chief Executive Officer of Life
John H. Gotta Insurance and Director
/s/ Lawrence T. Rowland Executive Vice President and May 4, 2000
- ---------------------- Director
Lawrence T. Rowland
/s/ H. Thomas McMeekin Director May 4, 2000
- ----------------------
H. Thomas McMeekin
/s/ Richard C. Vaughan Director May 4, 2000
- ----------------------
Richard C. Vaughan
</TABLE>
<PAGE>
Abraham Lincoln
XX-0123456
[LOGO LINCOLN NATIONAL LIFE INSURANCE CO.]
-----------------------------------
A part of LINCOLN NATIONAL CORPORATION
(A Stock Company)
ANNUITY CONTRACT
Flexible Premium Deferred
Variable Annuity and/or Market Value Adjusted Annuity
With Benefit Payment Options
Nonparticipating
The Lincoln National Life Insurance Company (LNL) agrees to provide the benefits
and other rights described in this Contract in accordance with the terms of this
Contract.
READ THIS CONTRACT CAREFULLY. This is a legal contract between the Owner and
LNL. We want to be sure you understand the features and benefits contained in
this Contract. IT IS THEREFORE IMPORTANT THAT YOU READ YOUR CONTRACT CAREFULLY.
If you have any questions after reading the Contract, we hope you will contact
your representative or the Home Office of LNL.
NOTICE OF 10-DAY RIGHT TO EXAMINE CONTRACT. Within 10 days after this Contract
is first received, it may be cancelled for any reason without penalty (e.g., no
Market Value Adjustment will apply) by delivering or mailing it to the
representative through whom it was purchased or to the Home Office of LNL. Upon
cancellation, LNL will return the value of the Variable Account as of the
Valuation Date on which LNL receives the cancellation request plus any Purchase
Payments made to the Fixed Account of the Contract.
UPON A TRANSFER, WITHDRAWAL, OR SURRENDER, PAYMENTS AND VALUES ALLOCATED TO THE
FIXED ACCOUNT MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT WHICH MAY RESULT IN
UPWARD OR DOWNWARD ADJUSTMENTS IN AMOUNTS TRANSFERRED, WITHDRAWN, OR SURRENDERED
BY THE OWNER.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT, ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
(SEE PAGES 7 AND 17).
Signed for The Lincoln National Life Insurance Company at its Home Office in
Fort Wayne, Indiana.
/s/ Jon A. Boscia /s/ Nancy J. Alford
Jon A. Boscia, President Nancy J. Alford, Vice President
<PAGE>
Table of Contents
Article Page
1 Definitions............................................. 4
2 Purchase Payments....................................... 6
3 Variable Account........................................ 6
4 Fixed Account........................................... 8
6 Options................................................. 10
6 Death Benefits.......................................... 13
7 Annuity Payment Option.................................. 15
8 Beneficiary............................................. 18
9 General Provisions...................................... 19
10 Annuity Purchase Rates Under a Variable Payment Option.. 22
11 Annuity Purchase Rates Under a Fixed Payment Option..... 26
<PAGE>
CONTRACT DATA
Contract Number XX-0123456
Annuitant Abraham Lincoln
Age at Issue 35
Contract Date April 1, 2000
Purchase Payment $25,000.00
Purchase Payment Frequency Flexible
Maturity Date April 1, 2055
OWNER
Abraham Lincoln
Mary Lincoln
BENEFICIARY DESIGNATION
Please refer to the Client Information Profile for beneficiary designation.
FIXED ACCOUNT - SUB-ACCOUNTS
[ 1-YEAR INITIAL GUARANTEED PERIOD ]
[ 3-YEAR INITIAL GUARANTEED PERIOD ]
[ 5-YEAR INITIAL GUARANTEED PERIOD ]
[ 7-YEAR INITIAL GUARANTEED PERIOD ]
[ 10-YEAR INITIAL GUARANTEED PERIOD ]
VARIABLE ACCOUNT
The Variable Account for this variable annuity Contract is the Lincoln Life
Variable Account N. There are currently [thirty-six) Subaccounts in the Variable
Account available to the Owner. The Owner may direct Purchase Payments under the
Contract to any of the available Sub-accounts, subject to limitations. The
amounts allocated to each Sub-account will be invested at net asset value in the
shares of one of the Funds. The Subaccounts are:
[AFIS GLOBAL SMALL CAPITALIZATION FUND]
[AFIS GROWTH FUND]
[AFIS GROWTH-INCOME FUND]
[AFIS INTERNATIONAL FUND]
[AIM V.I. CAPITAL APPRECIATION FUND]
[AIM V.I. GROWTH FUND]
[AIM V.I. INTERNATIONAL EQUITY FUND]
[AIM V.I. VALUE FUND]
[ALLIANCE GROWTH AND INCOME PORTFOLIO]
[ALLIANCE GROWTH PORTFOLIO]
[ALLIANCE PREMIER GROWTH PORTFOLIO]
[ALLIANCE TECHNOLOGY PORTFOLIO]
[DEUTSCHE ASSET MANAGEMENT VIT FUNDS: EQUITY 500 INDEX]
[DELAWARE GROUP EMERGING MARKETS SERIES]
[DELAWARE GROUP GROWTH & INCOME SERIES]
[DELAWARE GROUP HIGH YIELD SERIES]
[DELAWARE GROUP REIT SERIES]
[DELAWARE GROUP SMALL CAP VALUE SERIES]
[DELAWARE GROUP SOCIAL AWARENESS SERIES]
[DELAWARE GROUP TREND SERIES]
<PAGE>
[DELAWARE PREMIUM SELECT GROWTH SERIES]
[FIDELITY VIP EQUITY-INCOME PORTFOLIO]
[FIDELITY VIP GROWTH PORTFOLIO]
[FIDELITY VIP OVERSEAS PORTFOLIO]
[FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO]
[FRANKLIN MUTUAL SHARES SECURITIES FUND]
[FRANKLIN SMALL CAP SECURITIES FUND]
[LIBERTY VARIABLE TRUST NEWPORT TIGER FUND]
[LINCOLN NATIONAL BOND FUND]
[LINCOLN NATIONAL MONEY MARKET FUND]
[MFS VARIABLE TRUST EMERGING GROWTH SERIES]
[MFS VARIABLE TRUST RESEARCH SERIES]
[MFS VARIABLE TRUST TOTAL RETURN SERIES]
[MFS VARIABLE TRUST UTILITIES SERIES]
[TEMPLETON GLOBAL GROWTH FUND]
[TEMPLETON INTERNATIONAL FUND]
See Section 3.01 for provisions governing any limitations, substitution or
elimination of Funds.
<PAGE>
ARTICLE 1
DEFINITIONS
1.01
ACCUMULATION UNIT -- A unit of measure used in the calculation of the value of a
Variable Sub-account prior to the Annuity Commencement Date.
1.02
ANNUITANT OR JOINT ANNUITANT -- The person or persons upon whose life or lives
the annuity benefit payments made after the Annuity Commencement Date will be
based.
1.03
ANNUITY COMMENCEMENT DATE -- The Valuation Date on which the Contract Value is
withdrawn for payment of annuity benefits under the Annuity Payment Option
selected.
1.04
ANNUITY PAYMENT DATE -- The date on which the Owner is entitled to the first
annuity benefit payment. Subsequent annuity benefit payments will be made on the
same day of the month as the first annuity benefit payment, at the applicable
frequency.
1.05
ANNUITY PAYMENT OPTION -- An optional form of payment of the annuity benefits
provided for under this Contract.
1.06
ANNUITY UNIT -- A unit of measure used after the Annuity Commencement Date to
calculate the amount of a variable annuity benefit payment.
1.07
BENEFICIARY -- The person or entity designated by the Owner to receive the Death
Benefit, if any.
1.08
CODE -- The Internal Revenue Code of 1986, as amended.
1.09
CONTINGENT ANNUITANT -- Prior to the Annuity Commencement Date, the individual
who will become the Annuitant upon the death of the Annuitant.
1.10
CONTRACT -- The agreement, between LNL and the Owner, in which LNL provides a
variable annuity and/or a market value adjusted annuity.
1.11
CONTRACT DATE -- The date this Contract became effective. The Contract Date is
shown on the Contract Data page(s).
1.12
CONTRACT VALUE -- Prior to the Annuity Commencement Date, the sum of the values
attributable to this Contract of the Variable Account and of the Fixed Account,
prior to any applicable Market Value Adjustment.
1.13
CONTRACT YEAR -- Each twelve-month period starting with the Contract Date on the
Contract Data page(s) and starting with each Contract anniversary thereafter.
1.14
DEATH BENEFIT -- The amount payable upon death of an Owner, or Joint Owner, or
an Annuitant.
<PAGE>
1.15
DOLLAR COST AVERAGING (DCA) -- An option that allows the automatic transfer of a
portion of the Contract Value in periodic installments from a designated DCA
holding account to one or more of the Variable Subaccounts available under the
Contract. The periodic installments will be over any DCA period made available
by LNL and selected by the Owner. A designated DCA holding account may be in the
Fixed Account and/or the Variable Account.
1.16
EXPIRATION DATE -- The date on which a selected Guaranteed Period of the Fixed
Account will end.
1.17
FIXED ACCOUNT -- The fixed portion of this Contract which is invested in the
general account of LNL.
1.18
FIXED SUB-ACCOUNT -- That portion of the Fixed Account which accepts allocations
for a Guaranteed Period at a Guaranteed Interest Rate. There is a separate Fixed
Sub-account for each particular Guaranteed Period and DCA holding account.
1.19
FUND -- Any of the underlying investment options available in the Variable
Account.
1.20
GUARANTEED INTEREST RATE -- The effective annual rate of interest LNL guarantees
to credit on assets in each Fixed Sub-account.
1.21
GUARANTEED PERIOD -- The length, in years, of the period during which an initial
or subsequent Guaranteed Interest Rate will be credited. The Guaranteed Period
is selected by the Owner from those made available by LNL at the time of
selection.
1.22
HOME OFFICE -- The principal office of LNL located at 1300 South Clinton Street,
Fort Wayne, Indiana, 46802, or an institution designated by LNL.
1.23
LNL -- The Lincoln National Life Insurance Company.
1.24
MATURITY DATE -- The date specified on the Contract Data page(s) of this
Contract.
1.25
NET ASSET VALUE PER SHARE -- The market value of a Fund share calculated each
day by taking the closing market value of all securities owned, adding the value
of all other assets (such as cash), subtracting all liabilities, and then
dividing the result (total net assets) by the number of shares outstanding.
1.26
OWNER OR JOINT OWNERS -- The one person, two persons or entity who exercise
rights of ownership under this Contract.
<PAGE>
1.27
PURCHASE PAYMENTS -- Amounts paid into this Contract by the Owner.
1.28
QUALIFIED PLAN -- A retirement plan qualified for special tax treatment under
the Code, including Sections 401, 403, 408, 408A and 457. All other plans are
considered Non-Qualified.
1.29
VALUATION DATE -- Close of the market of each day that the New York Stock
Exchange is open for business.
1.30
VALUATION PERIOD -- The period commencing at the close of business on a
particular Valuation Date and ending at the close of business on the next
succeeding Valuation Date.
1.31
VARIABLE ACCOUNT -- The segregated investment account into which LNL sets aside
and invests the assets allocated to the Variable Sub-account(s) made available
by LNL and selected by the Owner. The Variable Account for this Variable Annuity
Contract is shown on the Contract Data page(s).
1.32
VARIABLE SUB-ACCOUNT -- That portion of the Variable Account which invests in
shares of a particular Fund. There is a separate Variable Sub-account for each
particular Fund.
ARTICLE 2
PURCHASE PAYMENTS
2.01 WHERE PAYABLE
All Purchase Payments must be made to LNL at its Home Office or to an agent
designated by LNL.
2.02 AMOUNT AND FREQUENCY
Purchase Payments are made in the amount and at the frequency shown on the
Contract Data Page(s). The Owner may change the frequency or amount of Purchase
Payments subject to LNL's rules in effect at the time of the change. LNL
reserves the right to limit future Purchase Payments into this Contract.
Purchase Payments may be made until the earliest of: the Annuity Commencement
Date, termination of the Contract upon payment of any Death Benefit, surrender
of the Contract, or the Maturity Date.
ARTICLE 3
VARIABLE ACCOUNT
3.01 THE VARIABLE ACCOUNT
The Variable Account is for the exclusive benefit of persons entitled to receive
benefits under variable annuity contracts. The Variable Account will not be
charged with the liabilities arising from any other part of LNL's business.
Subject to any required regulatory approvals, LNL reserves the right to
eliminate the shares of any Fund and substitute the securities of a different
Fund or investment company or mutual fund. Such elimination and substitution may
occur if the shares of a Fund are no longer available for investment, or, if in
the judgment of LNL, further investment in any Fund should become inappropriate
in view of the purposes of the Contract. LNL may add a new Variable Sub-account
in order to invest the assets of the Variable Account into a Fund. LNL will give
the Owner written notice of the elimination and substitution of any Fund within
fifteen days after such substitution occurs.
<PAGE>
3.02 ALLOCATION OF PURCHASE PAYMENTS INTO THE VARIABLE ACCOUNT
Any Purchase Payment to this Contract may be allocated to the Variable Account.
Purchase Payments allocated to the Variable Account of the Contract will be
credited to the Variable Sub-account(s) made available by LNL and selected by
the Owner.
The Owner may allocate Purchase Payments to any of the available Variable Sub-
accounts subject to the following limitations.
a. The minimum amount of a Purchase Payment allocated to any one Variable
Sub-account is $20.
b. If the Owner elects to allocate any Purchase Payment to a new Variable
Sub-account not previously selected, that election must be made in
writing to LNL or through voice or electronic instructions, provided
LNL has received the appropriate authorization from the Owner for voice
or electronic instructions in accordance with LNL procedures.
Purchase Payments allocated to each Variable Sub-account will be invested at net
asset value in the shares of one of the Funds. LNL will use each Purchase
Payment to buy Accumulation Units in the Variable Subaccount(s) selected by the
Owner. The number of Accumulation Units bought will be determined by dividing
the amount allocated to a Variable Sub-account by the dollar value of an
Accumulation Unit in such Variable Sub-account as of the Valuation Date
immediately following receipt of the Purchase Payment at the Home Office. The
number of Accumulation Units held for an Owner in a Variable Sub-account will
not be changed by any change in the dollar value of Accumulation Units in the
Variable Sub-account.
3.03 VALUATION OF THE VARIABLE ACCOUNT ALLOCATIONS
The value of the portion of this Contract allocated to the Variable Account at
any time prior to the Annuity Commencement Date is equal to the sum of the
values allocated under this Contract to the Variable Subaccounts. The value of
the portion of this Contract allocated to a Variable Sub-account at any time
prior to the Annuity Commencement Date is equal to the Accumulation Units
credited under this Contract to a Variable Sub-account multiplied by the value
of the Accumulation Unit for the respective Variable Sub-account.
Accumulation Units for each Variable Sub-account are valued separately. The
value of a Variable Sub-account Accumulation Unit may increase or decrease from
Valuation Period to Valuation Period. Initially, the value of an Accumulation
Unit was arbitrarily established at the inception of the Variable Sub-account.
The Accumulation Unit value for a Variable Sub-account for any later Valuation
Period is determined as follows:
a. the total value of Fund shares held in the Variable Sub-account is
calculated by multiplying the number of Fund shares owned by the
Variable Sub-account at the beginning of the Valuation Period by the
Net Asset Value Per Share of the Fund at the end of the Valuation
Period, and adding any dividend or other distribution of the Fund if an
ex-dividend date occurs during the Valuation Period; minus
b. the liabilities of the Variable Sub-account at the end of the Valuation
Period (such liabilities include daily charges imposed on the Variable
Sub-account and may include a charge or credit with respect to any
taxes paid or reserved for by LNL that LNL determines as a result of
the operation from the Variable Account); the result divided by
c. the outstanding number of Accumulation Units in the Variable Sub-
account at the beginning of the Valuation Period.
The daily charge imposed on a Variable Sub-account for any Valuation Period
represents the daily mortality and expense risk charge and the daily
administrative charge adjusted for the number of calendar days in the Valuation
Period. On an annual basis, this daily charge will not exceed the level
determined by the Death Benefit option (see Section 6.01) in effect:
for any Valuation Period the Enhanced Guaranteed Minimum Death Benefit
(EGMDB) is in effect, on an annual basis the daily charge will not exceed
[1.65%] of the average daily net assets of the Variable Sub-account.
for any Valuation Period the [5%] Step-up Death Benefit is in effect, on
an annual basis the daily charge will not exceed [1.80%] of the average
daily net assets of the Variable Sub-account.
<PAGE>
For any Valuation Period on or after the Annuity Commencement Date, on an annual
basis the daily charge will not exceed [1.40%] of the average daily net assets
of the Variable Sub-account.
The Accumulation Unit value may increase or decrease the dollar value of
benefits under the Contract. Expenses incurred by LNL will not adversely affect
the dollar value of benefits.
ARTICLE 4
FIXED ACCOUNT
4.01 THE FIXED ACCOUNT
The Fixed Account holds the Fixed Sub-accounts for each Guaranteed Period. LNL
reserves the right to discontinue accepting new allocations or transfers to any
of the available Guaranteed Periods at any time. LNL may also add one or more
new Guaranteed Periods at any time.
4.02 ALLOCATION OF PURCHASE PAYMENTS INTO THE FIXED ACCOUNT
Any Purchase Payment to this Contract may be allocated to the Fixed Account for
the Contract. Purchase Payments allocated to the Fixed Account of the Contract
will be credited to the Fixed Sub-account(s) made available by LNL and selected
by the Owner.
The Owner may allocate Purchase Payments to any of the available Fixed
Sub-accounts subject to the following limitations:
a. The minimum amount of a Purchase Payment which may be allocated to any
one Fixed Sub-account is $2000.
b. If the Owner elects to allocate any Purchase Payment to a new Fixed
Sub-account not previously selected, that election must be made in
writing to LNL through voice or electronic instructions, provided LNL
has received the appropriate authorization from the Owner for voice or
electronic instructions in accordance with LNL procedures.
Any Purchase Payment allocated to a Fixed Sub-account will be invested at the
Guaranteed Interest Rate in effect for the respective Guaranteed Period on the
day the allocation is credited to the Fixed Sub-account.
4.03 VALUATION OF FIXED ACCOUNT ALLOCATIONS
The value of the portion of this Contract allocated to the Fixed Account at any
time prior to the Annuity Commencement Date is equal to the sum of the then
current values of all Fixed Sub-account(s) with respect to this Contract before
any applicable Market Value Adjustment. See Section 4.06 for an explanation of
the Market Value Adjustment.
4.04 CREDITING OF INTEREST ON FIXED ACCOUNT
LNL will establish the applicable effective annual Guaranteed Interest Rate for
each Fixed Sub-account at the beginning of that Guaranteed Period. The
Guaranteed Interest Rate will be guaranteed for the duration of the applicable
Guaranteed Period. Subsequent Guaranteed Interest Rate(s) will be determined at
the beginning of subsequent Guaranteed Period(s) and may be higher or lower than
the previous interest rate. A Guaranteed Interest Rate will never be less than
an effective annual interest rate of 3.0%. LNL may credit interest at effective
annual rates in excess of 3.0% at any time.
Prior to the earlier of:
a. the Annuity Commencement Date;
b. termination of this Contract upon payment of any Death Benefit; or
c. surrender of this Contract;
LNL guarantees that at the end of each Valuation Period the applicable effective
annual interest rate, adjusted for the number of days in the Valuation Period,
will be credited to the portion of Contract Value, if any, in the Fixed Account
at that time.
<PAGE>
4.05 GUARANTEED PERIODS
Each individual Purchase Payment allocated to a Fixed Sub-account will have an
associated Guaranteed Period, Guaranteed Interest Rate and Expiration Date and
will be treated separately from other Purchase Payments allocated to the Fixed
Account. Multiple Purchase Payments within the same Fixed Sub-account may have
different Guaranteed Interest Rates, Expiration Dates, and Market Value
Adjustments. The Guaranteed Period begins when the Purchase Payment is credited
into that Fixed Sub-account and ends on the Expiration Date for the Guaranteed
Period selected.
LNL will send written notice to the Owner at the last address known to LNL
regarding an upcoming expiration of a Purchase Payment's Guaranteed Period. LNL
will send this notice at least 60 days prior to the Expiration Date of such
Guaranteed Period. The Owner may request in writing, prior to the Expiration
Date of a previously selected Guaranteed Period, to transfer all or a portion of
the value of the amount in a Fixed Sub-account at the Expiration Date. The value
may be transferred to one or more of the Fixed Sub-accounts or Variable
Sub-accounts. Such requests must be in accordance with the transfer provision as
described in Section 5.01. If no written notification from the Owner is received
by LNL prior to the Expiration Date of a previously selected Guaranteed Period,
a subsequent Guaranteed Period of the same duration, if available, will begin
automatically upon the expiration of the preceding Guaranteed Period.
If the written notification requests only a portion of the value of the Fixed
Sub-account to be transferred, the remaining amount will be automatically
invested in a subsequent Guaranteed Period of the same duration upon the
expiration of the preceding Guaranteed Period. In the event the preceding
Guaranteed Period is no longer available and no written notification has been
received from the Owner, all or the remaining portion of value of the Fixed Sub-
account will be transferred to a new Fixed Sub-account for a Guaranteed Period
with the shortest duration currently available.
4.06 MARKET VALUE ADJUSTMENT
Any transfer (except as noted below), withdrawal, or surrender of value from a
Fixed Sub-account, unless effective on the Expiration Date of a Guaranteed
Period, the Annuity Commencement Date, or at the death of the Owner, Joint Owner
or Annuitant, will be increased or decreased by the Market Value Adjustment
described in the following paragraphs. The Market Value Adjustment will not
apply to any Contract Value being transferred as part of a DCA program.
The amount of the Market Value Adjustment is calculated by multiplying the
dollar amount of any transfer, withdrawal, or surrender of value from a Fixed
Sub-account by the following amount:
(1 +A)/n/ divided by (1 + B) /n/ , the result reduced by 1.0, where:
A = the yield rate for a Treasury security (U.S. Treasury Bonds, Notes, or
Bills) with time to maturity equal to the applicable Guaranteed Period,
determined at the beginning of the Guaranteed Period.
B = the yield rate for a Treasury security (U.S. Treasury Bonds, Notes, or
Bills) with time to maturity equal to the applicable Guaranteed Period,
determined at the time of cash withdrawal or transfer, plus the
Percentage Adjustment to Index Rate "B". The Percentage Adjustment to
Index Rate "B" is [0.50%] If rates "A" and "B" are within 0.25% of each
other, the Percentage Adjustment to Index Rate "B" will not be applied.
N = the number of years remaining in the applicable Guaranteed Period (e.g.
1 year and 73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-line interpolation is used to determine the yield rate for a
Treasury security with time to maturity for the applicable Guaranteed
Period if such yield rate is not quoted.
A positive Market Value Adjustment increases the amount transferred, withdrawn,
or surrendered while a negative Market Value Adjustment decreases it.
If such yields are no longer published, LNL will substitute an appropriate index
of publicly traded obligations.
4.07 AUTOMATIC NONFORFEITURE OPTION
In the event that Purchase Payments are discontinued by the Owner, this Contract
will continue and Purchase Payments may be resumed at any time prior to the
earlier of:
<PAGE>
a. the Annuity Commencement Date;
b. termination of this Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date.
LNL reserves the right to surrender this Contract in accordance with the terms
set forth in the standard nonforfeiture law, applicable in the state in which
this Contract was purchased, for individual deferred annuities.
4.08 MINIMUM VALUE OF FIXED ACCOUNT
The Minimum Value of the Fixed Account will be determined by crediting an
effective annual interest rate of 3.0%. The effective annual interest rate,
adjusted for the number of days in the Valuation Period, will be credited at the
end of each Valuation Period on the portion of the Contract Value, if any, in
the Fixed Account at that time.
ARTICLE 5
OPTIONS
5.01 TRANSFER OPTION
Prior to the earlier of:
a. the Annuity Commencement Date;
b. termination of this Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date;
the Owner may direct a transfer of a portion of the Contract Value:
a. from one Variable Sub-account to another Variable Sub-account or to a
Fixed Sub-account;
b. from one Fixed Sub-account to another Fixed Sub-account or to a
Variable sub-account; or
c. from a designated DCA holding account to a Variable Sub-account under a
DCA program;
subject to the restrictions described below.
Such a transfer request must be made in writing to LNL through voice or
electronic instructions, provided LNL has received the appropriate authorization
from the Owner for voice or electronic instructions in accordance with LNL
procedures.
A transfer from one Variable Sub-account to another Variable Sub-account will
result in the redemption of Accumulation Units in one Variable Sub-account and
the purchase of Accumulation Units in the other Variable Sub-account. A transfer
from the Fixed Account to a Variable Sub-account will result in a withdrawal of
Contract Value from the Fixed Account and the purchase of Accumulation Units in
the Variable Sub-account. Such transfers will be accomplished at Accumulation
Unit values as of the Valuation Date the transfer request is received in the
Home Office.
Transfers from a Fixed Sub-account will be subject to a Market Value Adjustment
(as described in Section 4.06) unless the transfer is effective on the
Expiration Date of the Guaranteed Period. If a request for a transfer from a
Fixed Sub-account is received during the 60-day period immediately preceding the
Expiration Date of that Guaranteed Period, the transfer will be effective as of
the Expiration Date unless an immediate transfer is requested. If an immediate
transfer is requested, the transfer will occur on the Valuation Date the
transfer is
<PAGE>
received in the Home Office. If a transfer request is received at any time other
than during this 60-day period, the transfer will be accomplished as of the
Valuation Date the transfer request is received in the Home Office.
Transfers to a Fixed Sub-account will have an associated Guaranteed Period,
Guaranteed Interest Rate and Expiration Date and will be treated separately from
other Purchase Payment allocations or transfers of a portion of the Contract
Value to the Fixed Account. The allocation of multiple Purchase Payments and
transfers into the same Fixed Sub-account may result in portions of the Contract
Value therein having different Guaranteed Interest Rates, Expiration Dates, and
Market Value Adjustments. The Guaranteed Period begins when the transfer of a
portion of Contract Value is credited into that Fixed Sub-account and ends on
the Expiration Date of the Guaranteed Period selected. See Section 4.05 for an
explanation of Guaranteed Periods and Section 4.04 for an explanation of
Guaranteed Interest Rates.
Transfers will be subject to the following restrictions.
a. Transfers may not be made during the first 30 days after the Contract
Date.
b. Twelve (12) transfers within and/or between the Variable Account and
the Fixed Account may be made per Contract Year. There will be no fee
imposed for these twelve (12) transfers.
c. LNL reserves the right to allow more than twelve (12) transfers per
Contract Year, but in doing so may impose a fee of up to $10.00 for
each transfer after the first twelve (12) transfers in a Contract Year.
Transfers made as a part of an automatic transfer program (such as a
DCA program) will not be counted against these twelve (12) transfers.
d. The minimum single transfer amount from a Variable Sub-account or a
Fixed Sub-account is $300 or the entire amount in the Variable Sub-
account or Fixed Sub-account, whichever is less. If, after the
transfer, the amount remaining under this Contract in the Variable Sub-
account and/or Fixed Sub-account from which the transfer is taken is
less than $300, the entire amount held in that Variable Sub-account
and/or Fixed Sub-account will be transferred with the requested
transfer amount.
e. For transfers on a date other than the Expiration Date of a Guaranteed
Period, the sum of the percentages transferred from any Fixed Sub-
account in any Contract Year, where the percentages are based upon the
value of the Fixed Sub-account at the time of the current withdrawal,
will be limited to [25%] of the value of the Fixed Sub-account. Such
transfers will be subject to a Market Value Adjustment. Transfers made
as a part of an automatic transfer program (such as a DCA program) will
not be counted against the [25%] limit and will not be subject to a
Market Value Adjustment.
f. The minimum transfer amount to a Variable Sub-account is $300.
g. The minimum transfer amount to a Fixed Sub-account is $2000.
If the DCA program is discontinued by the Owner prior to the end of the selected
DCA period, any remaining portion of the Contract Value held in a designated DCA
holding account within the Fixed Account will be transferred automatically to
the Variable Sub-account(s) the Owner selected under the DCA program.
5.02 WITHDRAWAL OPTION
The Owner may withdraw a part of the Contract Value at any time prior to the
earlier of:
a. the Annuity Commencement Date;
b. termination of this Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date.
A withdrawal will be effective on the Valuation Date on which LNL receives a
written request for withdrawal at its Home Office.
The request may specify from which Sub-account the withdrawal will be made. If
no Sub-account is specified, LNL will withdraw the amount requested on a pro-
rata basis from each Variable Sub-account and/or Fixed
<PAGE>
Sub-account. Any payment from the Variable Account will be mailed from LNL's
Home Office within seven days after the date of withdrawal; however, LNL may be
permitted to defer such payment under the Investment Company Act of 1940, as in
effect at the time such request for withdrawal is received in its Home Office.
Any payment from the Fixed Account may be deferred for a period not to exceed
six months after receipt of the withdrawal request.
Withdrawals from a Variable Sub-account will result in the redemption of
Accumulation Units from that Variable Sub-account. Such withdrawals will be
accomplished at Accumulation Unit values as of the Valuation Date the withdrawal
request is received in the Home Office.
Withdrawals from a Fixed Sub-account will be subject to a Market Value
Adjustment (as described in Section 4.06) unless the withdrawal is effective on
the Expiration Date of the Guaranteed Period or at the death of the Owner, Joint
Owner or Annuitant. If a request for a withdrawal from a Fixed Sub-account is
received during the 60-day period immediately preceding the Expiration Date of
that Guaranteed Period, the withdrawal will be effective as of the Expiration
Date unless an immediate withdrawal is requested. If an immediate withdrawal is
requested, the withdrawal will occur on the Valuation Date the withdrawal is
received in the Home Office. If a withdrawal request is received at any time
other than during this 60-day period, the withdrawal will be accomplished as of
the Valuation Date the withdrawal request is received in the Home Office.
The minimum withdrawal is $300. LNL reserves the right to surrender this
Contract if any withdrawal reduces the total Contract Value to a level at which
this Contract may be surrendered in accordance with the terms set forth in the
standard nonforfeiture law, applicable in your state in which this Contract was
purchased, for individual deferred annuities. LNL may surrender the Contract for
its surrender value.
The Withdrawal Option is not available after the Annuity Commencement Date.
5.03 SURRENDER OPTION
The Owner may surrender this Contract for its Contract Value at any time prior
to the earlier of:
a. the Annuity Commencement Date;
b. termination of this Contract upon payment of any Death Benefit; or
c. the Maturity Date.
This Contract will terminate upon surrender. The surrender will be effective on
the Valuation Date on which LNL receives a written request for surrender at its
Home Office.
The surrender value on the Valuation Date of surrender will be the sum of "a."
and "b.", where:
"a." is the greater of the Minimum Value of the Fixed Account (see Section
4.08) or the portion of the Contract Value in the Fixed Account after any
Market Value Adjustment(s) (see Section 4.06) and;
"b." is the portion of the Contract Value in the Variable Account.
Any payment from the Variable Account will be mailed from LNL's Home Office
within seven days after the date of surrender, however, LNL may be permitted to
defer such payment under the Investment Company Act of 1940, as in effect at the
time a request for surrender is received in its Home Office. Any payment from
the Fixed Account may be deferred for a period not to exceed six months after
receipt of the withdrawal request.
The Surrender Option is not available after the Annuity Commencement Date.
5.06 ANNUITY ACCOUNT FEE
An Annuity Account Fee of [$35] per Contract Year will be deducted on the next
Valuation Date following the last day of each Contract Year. If the Contract is
surrendered prior to the last day of a Contract Year, the full Annuity Account
Fee will be deducted upon the surrender. The Annuity Account Fee shall be
deducted from each Variable Sub-account and Fixed Sub-account on a pro-rata
basis.
The Annuity Account Fee will be waived for any Contract Year in which the
Contract Value equals or exceeds [$100,000.00] as of the Valuation Date an which
the Annuity Account Fee would otherwise be deducted. The Annuity Account Fee
will also be waived on and after the Annuity Commencement Date.
<PAGE>
ARTICLE 6
DEATH BENEFITS
6.01 DEATH BEFORE THE ANNUITY COMMENCEMENT DATE
Entitlement.
If there is a single Owner, then upon the death of the Owner LNL will pay a
Death Benefit to the designated Beneficiary(s) in accordance with the terms of
Article 8. If the designated Beneficiary of the Death Benefit is the surviving
spouse of the deceased Owner, the spouse may elect to continue the Contract as
the new Owner. Upon the death of the spouse who continues the Contract as the
new Owner, LNL will pay a Death Benefit to the designated Beneficiary(s) named
by the spouse, as the new Owner, in accordance with the terms of Article 8. If
there are no designated Beneficiaries, LNL will pay a Death Benefit to the
Owner's estate.
If there are Joint Owners, upon the death of the first Joint Owner, LNL will pay
a Death Benefit to the surviving Joint Owner. If the surviving Joint Owner is
the spouse of the deceased Joint Owner, then the spouse may elect to continue
the Contract as sole Owner. Upon the death of the Joint Owner who continues the
Contract, LNL will pay a Death Benefit to the designated Beneficiary(s) in
accordance with the terms of Article 8.
If the Annuitant is also the Owner or a Joint Owner, then the Death Benefit paid
upon the death of the Annuitant will be subject to the Contract provisions
regarding death of the Owner or a Joint Owner. If the surviving spouse of the
deceased Annuitant assumes the Contract, the Contingent Annuitant, if any, will
become the Annuitant. If there is no named Contingent Annuitant, the surviving
spouse will become the Annuitant.
If an Annuitant who is not the Owner or a Joint Owner dies, then the Contingent
Annuitant, if named, becomes the Annuitant and no Death Benefit is payable on
the death of the Annuitant. If no Contingent Annuitant is named, the Owner (or
younger Joint Owner) becomes the Annuitant. In lieu of continuing the Contract,
a Death Benefit may be paid to the Owner (and Joint Owner in equal shares, if
applicable) if the Annuitant named on this Contract has not been changed, except
on death of a prior Annuitant, and written notification of the election to
receive the Death Benefit is received by LNL within 75 days of the death of the
Annuitant. If no Owner is living on the date of death of the Annuitant, the
Death Benefit will be paid to the Beneficiary in accordance with Article 8. This
Contract will terminate when any Death Benefit is paid due to the death of the
Annuitant. A Death Benefit payable on the death of the Annuitant will not be
paid if the Annuitant has been changed subsequent to the effective date of this
Contract unless the change occurred because of the death of a prior Annuitant.
If the Owner is a corporation or other non-individual (non-natural person), the
death of the Annuitant will be treated as the death of the Owner.
The Death Benefit will be paid upon approval by LNL, after LNL is in receipt of:
a. due proof, satisfactory to LNL, of the death;
b. written authorization for payment; and
c. all claim forms, fully completed.
Due proof of death may be a certified copy of a death certificate, a certified
copy of a decree of a court of competent jurisdiction as to the findings of
death, or any other proof of death acceptable to LNL.
All Death Benefit payments will be subject to the laws and regulations governing
death benefits.
Notwithstanding any provision of this Contract to the contrary, the payment of
Death Benefits provided under the Contract must be made in compliance with Code
Section 72(s) or 401(a)(9) as applicable, as amended from time to time.
Determination of Amounts.
This Contract provides two options for the Death Benefit. The Owner may select
either of these two Death Benefit options to be effective as of the Contract
Date. If no Death Benefit Option is selected, the Enhanced Guaranteed Minimum
Death Benefit option will be the Death Benefit option effective as of the
Contract Date. Each Death Benefit option has a different level of daily charges
(see Section 3.03).
<PAGE>
The two Death Benefit options are:
1. Enhanced Guaranteed Minimum Death Benefit [EGMDB]
The EGMDB is equal to the greatest of:
a. the current Contract Value as of the date on which the death claim
is approved by LNL for payment; or
b. the sum of all Purchase Payments minus all withdrawals, partial
annuitizations, and premium tax incurred, if any; or
c. the highest Contract Value on any Contract Date anniversary
(including the Contract Date itself) prior to the 81st birthday of
the deceased (Owner, Joint Owner, or Annuitant) and prior to the
date of death of the deceased (Owner, Joint Owner or Annuitant);
where the highest Contract Value is increased by Purchase Payments
and decreased for partial withdrawals, partial annuitizations, and
premium tax incurred, if any, subsequent to such Contract Date
anniversary on which the highest Contract Value is obtained.
2. [5%] Step-up Death Benefit.
The [5%] Step-up Death benefit is equal to the greatest of:
a. the current Contract Value as of the date on which the death claim
is approved by LNL for payment; or
b. the sum of all Purchase Payments minus all withdrawals, partial
annuitizations, and premium tax incurred, if any; or
c. the highest Contract Value on any Contract Date anniversary
(including the Contract Date itself) prior to the 81st birthday of
the deceased (Owner, Joint Owner, or Annuitant) and prior to the
date of death of the deceased (Owner, Joint Owner or Annuitant);
where the highest Contract Value is increased by Purchase Payments
and decreased for partial withdrawals, partial annuitizations, and
premium tax incurred, if any, subsequent to such Contract Date
anniversary on which the highest Contract Value is obtained; or
d. the accumulation of all Purchase Payments minus the accumulation of
all withdrawals, partial annuitizations and premium tax incurred,
if any; where each Purchase Payment, withdrawal, partial
annuitization and premium tax incurred, if any, will be accumulated
daily at an annual rate of [5%] from the date of the Purchase
Payment, withdrawal, partial annuitization and premium tax
incurred, if any, until the earlier of the date of death of the
deceased (Owner, Joint Owner, or Annuitant) or the Contract Date
anniversary immediately preceding the 81st birthday of the deceased
(Owner, Joint Owner, or Annuitant), except that the accumulation of
any Purchase Payment, withdrawal, partial annuitization and premium
tax incurred, if any, will not exceed [200%] of that Purchase
Payment, withdrawal, partial annuitization, and premium tax
incurred, if any.
On or after the Contract Date, but prior to the Annuity Commencement Date, the
Owner (or a spouse who continues the Contract as the Owner) may choose to
terminate the [5%] Step-up Death Benefit option, if in effect, by giving written
notice to LNL. The EGMDB option will then be effective as of the Valuation Date
on which the written notification to change the Death Benefit option is received
at the Home Office. Termination of the [5%] Step-up Death Benefit option by the
Owner or surviving spouse who assumed the Contract will be permanent and final.
Upon the death of an Owner, Joint Owner, or Annuitant of this Contract, if a
surviving spouse continues the Contract, the excess, if any, of the Death
Benefit over the current Contract Value as of the date on which the death claim
is approved by LNL for payment will be credited into the Contract. This benefit
will only apply one time for each Contract.
If the Owner is a corporation or other non-individual (non-natural person) and
there are Joint Annuitants, upon the death of the first Joint Annuitant to die,
if the Contract is continued, the excess, if any, of the Death Benefit over the
current Contract Value as of the date on which the death claim is approved by
LNL for payment will be credited into the Contract. This benefit will only apply
one time for each Contract.
<PAGE>
Payment of Amounts.
The Death Benefit payable on the death of the Owner, or after the death of the
first Joint Owner, or upon the death of the spouse who continues the Contract,
will be distributed to the designated Beneficiary(s) as follows:
a. the Death Benefit must be completely distributed within five years of
the Owner's date of death; or
b. the designated Beneficiary may elect, within the one year period after
the Owner's date of death, to receive the Death Benefit in
substantially equal installments over the life of such designated
Beneficiary or over a period not extending beyond the life expectancy
of such designated Beneficiary; provided that such distributions begin
not later than one year after the Owner's date of death.
The Death Benefit payable upon the death of the Annuitant, if elected by the
Owner or Joint Owner within 75 days of the death of the Annuitant, will be
distributed to the Owner or Joint Owners in either the form of a lump sum or
under an Annuity Payment Option. An Annuity Payment Option must be selected
within 60 days after LNL approves the death claim.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by LNL of the claim. This payment may be postponed as permitted
by the Investment Company Act of 1940.
6.02 DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE
The Death Benefit options listed in Section 6.01 are no longer applicable and
the Death Benefit option in effect will terminate.
If the Owner or a Joint Owner dies on or after the Annuity Commencement Date,
any remaining benefits payable will continue to be distributed under the Annuity
Payment Option then in effect. The rights of ownership granted by the Contract
will pass to the Joint Owner, if any; otherwise to the Beneficiary. If there is
no named Beneficiary at the time of the Owner's or last surviving Joint Owner's
death, then the rights of ownership will pass to the Annuitant, if still living;
otherwise to the Joint Annuitant, if applicable. If no named Joint Owner,
Beneficiary, Annuitant, or Joint Annuitant survives the Owner, any remaining
benefits payable will continue to the Owners estate.
On receipt of due proof of death, as described in Section 6.01, of the Annuitant
or both Joint Annuitants, any remaining benefits payable under the Annuity
Payment Option will be paid to the Owner or Joint Owner, if living; otherwise,
to the Beneficiary. If there is no Beneficiary, any remaining benefits payable
will continue to the Annuitant's estate.
ARTICLE 7
ANNUITY PAYMENT OPTION
7.01 ANNUITY BENEFIT PAYMENTS
An election to receive payments under an Annuity Payment Option must be made by
the Maturity Date. If an Annuity Payment Option is not chosen prior to the
Maturity Date, payments will commence to the Owner on the Maturity Date under
the Annuity Payment Option providing a life annuity with annuity benefit
payments guaranteed for 10 years. The Maturity Date is set forth on the Contract
Data Page(s). Upon written request by the Owner and any Beneficiary who cannot
be changed, the Maturity Date may be deferred. Purchase Payments may be made
until the new Maturity Date.
If the Maturity Date is extended, LNL reserves the right to restrict the
availability of certain Annuity Payment Options.
Any Contract Value from a Fixed Sub-account applied to an Annuity Payment Option
will be exempt from a Market Value Adjustment.
7.02 CHOICE OF ANNUITY PAYMENT OPTION
By Owner
Prior to the Annuity Commencement Date, the Owner may choose or change any
Annuity Payment Option. In addition, the Owner may select an Annuity Payment
Option as the distribution method for payment of the Death
<PAGE>
Benefit to a Beneficiary. Such selection of a distribution method must be made
in writing to the Home Office and approved by LNL. The Owner may change or
revoke, in writing to the Home Office, any such selection, unless such selection
was made irrevocable.
By Beneficiary
If an Annuity Payment Option has not been previously selected by the Owner as
the distribution option for payment of the Death Benefit to a Beneficiary, then
at the time proceeds are payable to a Beneficiary, a Beneficiary may choose any
Annuity Payment Option that meets the requirements of Code Section 72(s) or
401(a)(9). The Beneficiary then becomes the Annuitant.
A choice or change of an Annuity Payment Option must be made in writing to LNL.
After the Annuity Commencement Date, the Annuity Payment Option may not be
changed.
7.03 ANNUITY PAYMENT OPTIONS
a. Life Annuity / Life Annuity with Certain Period - Fixed and/or variable
annuity benefit payments will be made for the lifetime of the Annuitant
with no Certain Period, or life and a 10 year Certain Period, or life
and a 20 year Certain Period.
b. Unit Refund Life Annuity - Variable annuity benefit payments will be
made for the lifetime of the Annuitant with the guarantee that upon
death, if:
1) the number of Annuity Units initially purchased (determined by
dividing the total dollar amount applied to purchase this option by
the Annuity Unit value on the Annuity Commencement Date) is greater
than;
2) the number of Annuity Units paid as part of each variable annuity
benefit payment multiplied by the number of annuity benefit
payments paid prior to death;
then a refund payment equal to the number of Annuity Units determined
by (1) minus (2) will be made.
The refund payment value will be determined using the Annuity Unit
value on the Valuation Date on which the refund payment is approved by
LNL, after LNL is in receipt of:
(a) due proof of death acceptable to LNL;
(b) written authorization for payment; and
(c) all claim forms, full completed.
c. Cash Refund Life Annuity - Fixed annuity benefit payments will be made
for the lifetime of the Annuitant with the guarantee that upon death,
if:
1) the total dollar amount applied to purchase this option is greater
than;
2) the fixed annuity benefit payment multiplied by the number of
annuity benefit payments paid prior to death;
then a refund payment equal to the dollar amount of (1) minus (2) will
be made.
The refund payment will be paid upon approval by LNL, after LNL is in
receipt of:
(a) due proof of death acceptable to LNL;
(b) written authorization for payment; and
(c) all claim forms, fully completed.
d. Joint Life Annuity / Joint Life Annuity with Certain Period - Fixed
and/or variable annuity benefit payments will be made during the joint
life of the Annuitant and a Joint Annuitant. Payments will be made
<PAGE>
for joint life with no Certain Period, or joint life and a 10-year
Certain Period, or joint life and a 20-year Certain Period. Upon the
death of either Annuitant, annuity benefit payments continue for the
life of the surviving Annuitant.
e. Joint Life and Two-Thirds to Survivor Annuity / Joint Life and Two-
Thirds to Survivor Annuity with Certain Period - Fixed and/or variable
annuity benefit payments will be made during the joint life of the
Annuitant and a Joint Annuitant. Upon the death of either Annuitant,
two-thirds of the annuity benefit payment due while both Annuitants
were alive will continue for the life of the surviving Annuitant.
Payments will be made for joint life with no Certain Period, or joint
life and a 10-year Certain Period, or joint life and a 20-year Certain
Period.
f. Other options may be available as agreed upon in writing by LNL.
At the time an Annuity Payment, adjusted as described in Section 7.04, Option is
selected under the provisions of this Contract, the Owner may elect to have the
Contract Value, adjusted as described in Section 7.04, applied to provide a
variable annuity benefit payment, a fixed annuity benefit payment, or a
combination fixed and variable annuity benefit payment. If no election is made,
the value of the Owner's Variable Account will be used to provide a variable
annuity benefit payment and the value of the Owner's Fixed Account will be used
to provide a fixed annuity benefit payment.
7.04 DETERMINATION OF THE AMOUNT OF THE FIRST ANNUITY PAYMENT
The amount of annuity benefit payment will depend on the age and sex (except in
cases where unisex rates are required) of the Annuitant(s) as of the Annuity
Commencement Date. A choice may be made to receive payments once each month,
four times each year, twice each year, or once each year.
Article 10 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the first monthly payment for a
unisex variable annuity benefit payment based upon the assumed interest rate
selected by the Owner. The tables show the dollar amount of the first monthly
payment which can be purchased with each $1,000 of Contract Value, after
deduction of any applicable premium taxes. Amounts shown use the 1983 'a'
Individual Annuity Mortality Table, modified, with an assumed interest rate of
3.0%, 4.0%, 5.0% and 6.0% per year. The Owner must select one of the assumed
interest rates for the variable annuity benefit payment prior to the Annuity
Commencement Date. The assumed interest rate may not be changed after the
Annuity Commencement Date.
Article 11 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the monthly payments for a fixed
annuity benefit payment. The tables show the dollar amount of the guaranteed
monthly payments which can be purchased with each $1,000 of Contract Value,
after deduction of any applicable premium taxes. Amounts shown use the 1983 'a'
Individual Annuity Mortality Table, modified, with an interest rate of 3.0% per
year.
For a 100% fixed annuity benefit payment, the Annuity Payment Date must be at
least 30 days after the Annuity Commencement Date. If any portion of the annuity
benefit payment will be on a variable basis, the Annuity Payment Date will be 14
days after the Annuity Commencement Date. The Annuity Unit value, if applicable,
and Contract Value used to effect annuity benefit payments will be determined as
of the Annuity Commencement Date.
7.05 DETERMINATION OF THE AMOUNT OF VARIABLE ANNUITY PAYMENTS AFTER THE FIRST
PAYMENT
The first variable annuity benefit payment is sub-divided into components, each
of which represents the product of:
a. the percentage elected by the Owner of a specific Variable Sub-account,
the performance of which will determine future variable annuity benefit
payments, and
b. the entire first variable annuity benefit payment.
Each variable annuity benefit payment after the first payment attributable to a
specific Variable Sub-account will be determined by multiplying the Annuity Unit
value for the Variable Sub-account for the date each payment is due by a
constant number of Annuity Units. This constant number of each specific Variable
Sub-account is determined by dividing the component of the first payment
attributable to such Variable Sub-account as described above by the Annuity Unit
value for that Variable Sub-account on the Annuity Commencement Date. The total
variable annuity benefit payment will be the sum of the payments attributable to
each Variable Subaccount. In absence of transfers between Variable Sub-accounts,
the number of Annuity Units attributable to
<PAGE>
each Variable Sub-account remains constant, although the Annuity Unit values
will vary with the investment performance of the Funds. The Annuity Unit value
may increase or decrease the dollar value of benefits under the Contract.
The Annuity Unit value for any Valuation Period for any Variable Sub-account is
determined by multiplying the Annuity Unit value for the immediately preceding
Valuation Period by the product of (a) the daily factor raised to a power equal
to the number of days in the current Valuation Period and (b) the Accumulation
Unit value of the same Variable Sub-account for this Valuation Period divided by
the Accumulation Unit value of the same Variable Sub-account for the immediately
preceding Valuation Period. The daily factor is equal to 0.999919020 for a 3%
assumed interest rate, 0.999892552 for a 4% assumed interest rate, 0.999866337
for a 5% assumed interest rate, and 0.999840372 for a 6% assumed interest rate.
The valuation of all assets in the Variable Sub-account will be determined in
accordance with the provisions of applicable laws, rules, and regulations. The
method of determination by LNL of the value of an Accumulation Unit and of any
Annuity Unit will be conclusive upon the Owner and any Beneficiary.
LNL guarantees that the dollar amount of each installment after the first will
not be affected by variations in mortality experience from mortality assumptions
on which the first installment is based. After the Annuity Commencement Date, if
any portion of the annuity benefit payment is a variable annuity benefit
payment, the Owner may direct a transfer of assets from one Variable Sub-account
to another Variable Sub-account or to a fixed annuity benefit payment. Such
transfers will be limited to three (3) times per Contract Year. Assets may not
be transferred from a fixed annuity benefit payment to a variable annuity
benefit payment.
A transfer from one Variable Sub-account to another Variable Sub-account will
result in the purchase of Annuity Units in one Variable Sub-account and the
redemption of Annuity Units in the other Variable Sub-account. Such a transfer
will be accomplished at relative Annuity Unit values as of the Valuation Date
the transfer request is received by LNL. The valuation of Annuity Units is
described above. A transfer from that Variable Sub-account to a fixed annuity
benefit payment will result in the redemption of Annuity Units in a Variable
Sub-account and the purchase of a minimum fixed annuity benefit payment based on
the tables in Article 11.
7.06 PROOF OF AGE
Payment will be subject to proof of age that LNL will accept, such as a
certified copy of a birth certificate.
7.07 MINIMUM ANNUITY 13ENEFIT PAYMENT REQUIREMENTS
If the Annuity Payment Option chosen results in payments of less than $50 from
any Variable Sub-account and/or a fixed annuity benefit payment of less than
$50, the frequency will be changed so that payments will be at least $50.
7.08 EVIDENCE OF SURVIVAL
LNL has the right to ask for proof that the person (or persons) on whose life
(or lives) the payment is based is alive when each payment is due.
7.09 CHANGE IN ANNUITY PAYMENT OPTION
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
ARTICLE 8
BENEFICIARY
8.01 DESIGNATION OF BENEFICIARY
The Owner may designate a Beneficiary(s) and a contingent Beneficiary(s).
If there is a single Owner, the designated Beneficiary(s) will receive the Death
Benefit proceeds upon the death of the Owner unless the Beneficiary as the
surviving spouse elects to continue the Contract.
If there are Joint Owners, upon the death of the first Joint Owner, the
surviving Joint Owner will receive the Death Benefit proceeds. The surviving
Joint Owner will be treated as the primary designated Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
contingent Beneficiary.
<PAGE>
If the surviving spouse of the deceased continues the Contract as the sole
Owner, then the designated Beneficiary(ies) move up, in the order of their
original designation, to replace the spouse as original Beneficiary, unless the
Beneficiary designation is subsequently changed by the surviving spouse as the
new Owner (see Section 8.02).
If the Annuitant dies and a Death Benefit is paid, the Owner (and Joint Owner if
applicable) will be treated as the primary designated Beneficiary(ies). Any
other Beneficiary designation on record at the time of death will be treated as
a contingent Beneficiary.
Unless otherwise stated in the Beneficiary designation, if there is more than
one Beneficiary they are presumed to share equally.
8.02 CHANGE OF BENEFICIARY.
The Owner may change any Beneficiary unless otherwise provided in the previous
designation. A change of Beneficiary will revoke any previous designation. A
change may be made by filing a written request, in a form acceptable to LNL, at
its Home Office. The change will become effective upon receipt of the written
request by LNL at its Home Office.
LNL reserves the right to request the Contract for endorsement of the change.
8.03 DEATH OF BENEFICIARY
Unless otherwise provided in the Beneficiary designation, if any Beneficiary
dies before the Owner, that Beneficiary's interest will go to any other
Beneficiaries named, according to their respective interests. If there are no
Beneficiaries, the Beneficiary's interest will pass to a contingent
Beneficiary(s), if any. Prior to the Annuity Commencement Date, if no
Beneficiary or contingent Beneficiary survives the Owner, the Death Benefits
will be paid to the Owner's estate.
Unless otherwise provided in the Beneficiary designation, once a Beneficiary is
receiving Death Benefits or annuity benefit payments under an Annuity Payment
Option, the Beneficiary may name his or her own Beneficiary(s) to receive any
remaining benefits due under the Contract, should the original Beneficiary die
prior to receipt of all benefits. If no Beneficiary is named or the named
Beneficiary predeceases the original Beneficiary, any remaining benefits will
continue to the original Beneficiary's estate. A Beneficiary designation must be
made in writing to the LNL Home Office in a form acceptable to LNL.
ARTICLE 9
GENERAL PROVISIONS
9.01 THE CONTRACT
The Contract and any riders attached constitute the entire Contract. Only the
President, a Vice President, the Secretary or an Assistant Secretary of LNL has
the power, an behalf of LNL, to change, modify, or waive any provisions of this
Contract.
LNL reserves the right to unilaterally change the Contract for the purpose of
keeping the Contract in compliance with federal or state law.
Any changes, modifications, or waivers must be in writing. No representative or
person other than the above named officers has authority to change or modify
this Contract or waive any of its provisions. All terms used in this Contract
will have their usual and customary meaning except when specifically defined.
9.02 OWNERSHIP
The Owner is the person who has the ability to exercise the rights within this
Contract.
The Owner may name a Joint Owner. Joint Owners will be treated as having equal,
undivided interests in the Contract, including rights of survivorship. Either
Joint Owner, independently of the other, may exercise any ownership rights in
the Contract.
<PAGE>
9.03 ANNUITANTS
Prior to the Annuity Commencement Date.
The Owner may name only one Annuitant. If the Owner is an exempt organization
under Code Section 501(c), the Owner may name one Annuitant or two Joint
Annuitants.
If the Owner is a natural person, the Owner has the right to change the
Annuitant at any time by notifying LNL in writing of the change. The new
Annuitant must be under the age of 91 as of the effective date of the change. A
Death Benefit may not be payable upon the death of the new Annuitant.
A Contingent Annuitant may be named, or changed, by notifying LNL in writing.
On or After the Annuity Commencement Date.
The Annuitant or Joint Annuitants may not be changed. Any Contingent Annuitant
designation is no longer applicable and is terminated.
9.04 ASSIGNMENTS
If this Contract is used with a Qualified Plan, the Contract will not be
transferable unless allowed under applicable law. In addition, if this Contract
is used with either a Qualified or Non-Qualified Plan, it may not be sold,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose.
9.05 INCONTESTABILITY
This Contract will not be contested by LNL.
9.06 MISSTATEMENT OF AGE AND/OR SEX
If the age and/or sex of the Annuitant(s) has been misstated, the benefits
available under this Contract will be those which the Purchase Payments would
have purchased using the correct age and/or sex. Any underpayment already made
by LNL will be made up immediately and any overpayments already made by LNL will
be charged against the annuity benefit payments failing due after the correction
is made.
9.07 NONPARTICIPATING
The Contract is nonparticipating and will not share in the surplus earnings of
LNL.
9.08 VOTING RIGHTS
The Owner will have a right to vote only at the meetings of the Funds of the
Variable Account invested in by the Owner due to the Owner's interest in the
Variable Sub-accounts of the Variable Account. Ownership of this Contract will
not entitle any person to vote at any meeting of shareholders of LNL. Votes
attributable to the Contract will be cast in conformity with applicable law.
9.09 OWNERSHIP OF THE ASSETS
LNL will have exclusive and absolute ownership and control of its assets,
including all assets in the Variable Account.
9.10 REPORTS
Prior to the Annuity Commencement Date, at least once each Contract Year, LNL
will mail a report to the Owner. The report will be mailed to the last address
known to LNL. The report will include a statement of the number of Accumulation
Units credited to the Variable Account under this Contract and the dollar value
of such units as well as a statement of the value of the Fixed Account of this
Contract. The information in the report will be as of a date not more than two
months prior to the date of mailing the report. LNL will also mail to the Owner
at least once in each Contract Year a report of the investments held in the
Variable Sub-accounts under this Contract.
<PAGE>
9.11 PREMIUM TAX
State and local government premium tax, if applicable, will be deducted from
Purchase Payments or Contract Value when incurred by LNL or at another time of
LNL's choosing.
9.12 MAXIMUM ISSUE AGE
The Owner (or both Joint Owners, if applicable) and the Annuitant (or both Joint
Annuitants, if applicable) must be under the age of 91 when this Contract is
issued.
<PAGE>
ARTICLE 10
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
10.01 A VARIABLE PAYMENT OPTION WITH A 3.0% ASSUMED INTEREST RATE
- --------------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
- --------------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60 $4.33 $4.29 $4.13 $4.10
61 4.43 4.38 4.20 4.17
62 4.53 4.47 4.27 4.24
63 4.64 4.57 4.34 4.32
64 4.75 4.68 4.40 4.40
65 4.87 4.79 4.47 4.48
66 5.00 4.90 4.55 4.57
67 5.15 5.03 4.61 4.67
68 5.30 5.16 4.68 4.77
69 5.46 5.30 4.75 4.87
70 5.64 5.44 4.81 4.98
71 5.83 5.60 4.88 5.10
72 6.03 5.76 4.93 5.22
73 6.25 5.93 4.99 5.35
74 6.50 6.10 5.04 5.48
75 6.76 6.29 5.08 5.62
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds to Survivor
- --------------------------------------------------------------------------------
Certain Period Certain Period
- --------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3.93 $3.93 $3.90 60 $4.34 $4.29 $4.14
4.00 4.00 3.96 61 4.43 4.38 4.20
4.08 4.08 4.03 62 4.53 4.48 4.27
4.17 4.16 4.10 63 4.64 4.58 4.34
4.25 4.25 4.18 64 4.75 4.68 4.41
4.35 4.34 4.25 65 4.88 4.79 4.48
4.45 4.44 4.33 66 5.01 4.91 4.55
4.56 4.55 4.41 67 5.15 5.03 4.61
4.68 4.66 4.49 68 5.30 5.16 4.68
4.80 4.78 4.57 69 5.46 5.29 4.75
4.94 4.91 4.64 70 5.63 5.44 4.81
5.08 5.05 4.72 71 5.81 5.59 4.87
5.23 5.19 4.79 72 6.01 5.74 4.93
5.40 5.34 4.86 73 6.22 5.91 4.98
5.57 5.50 4.93 74 6.45 6.08 5.03
5.77 5.67 4.99 75 6.70 6.25 5.08
- --------------------------------------------------------------------------------
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
Before 1920 + 2 1960-1969 -3
1920-1929 + 1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 - 1 1990-1999 -6
1950-1959 -2 ETC. ETC.
</TABLE>
<PAGE>
10.02 A VARIABLE PAYMENT OPTION WITH A 4.0% ASSUMED INTEREST RATE
- -------------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
- -------------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- -------------------------------------------------------------------------------
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- -------------------------------------------------------------------------------
60 $4.88 $4.83 $4.66 $4.67
61 4.97 4.92 4.72 4.74
62 5.07 5.01 4.79 4.82
63 5.18 5.11 4.85 4.90
64 5.30 5.21 4.92 4.99
65 5.42 5.32 4.99 5.08
66 5.55 5.43 5.05 5.17
67 5.69 5.55 5.12 5.27
68 5.84 5.68 5.18 5.38
69 6.00 5.82 5.25 5.49
70 6.18 5.96 5.31 5.61
71 6.37 6.11 5.37 5.73
72 6.57 6.27 5.42 5.86
73 6.80 6.44 5.47 6.00
74 7.04 6.61 5.52 6.14
75 7.30 6.79 5.56 6.29
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- -------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds to Survivor
- -------------------------------------------------------------------------------
Certain Period Certain Period
- -------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
- -------------------------------------------------------------------------------
$4.47 $4.46 $4.43 60 $4.89 $4.84 $4.67
4.54 4.53 4.49 61 4.98 4.92 4.73
4.61 4.61 4.56 62 5.08 5.01 4.79
4.69 4.69 4.63 63 5.19 5.11 4.86
4.78 4.78 4.70 64 5.30 5.21 4.92
4.88 4.87 4.77 65 5.42 5.32 4.99
4.97 4.96 4.84 66 5.55 5.44 5.05
5.08 5.07 4.92 67 5.69 5.56 5.12
5.20 5.18 4.99 68 5.84 5.68 5.18
5.32 5.30 5.07 69 6.00 5.82 5.25
5.45 5.42 5.14 70 6.17 5.96 5.31
5.59 5.56 5.22 71 6.36 6.10 5.36
5.74 5.70 5.29 72 6.55 6.25 5.42
5.91 5.85 5.35 73 6.76 6.41 5.47
6.08 6.01 5.41 74 6.99 6.58 5.52
6.27 6.17 5.47 75 7.24 6.75 5.56
- -------------------------------------------------------------------------------
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
- -------------------- ----------------- ------------- -----------------
Before 1920 +2 1960-1969 -3
1920-1929 +1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ETC. ETC.
Form 30288 ?????
<PAGE>
10.03 A VARIABLE PAYMENT OPTION WITH A 5.0% ASSUMED INTEREST RATE
- -------------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
- -------------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- -------------------------------------------------------------------------------
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- -------------------------------------------------------------------------------
60 $5.45 $5.39 $5.21 $5.26
61 5.55 5.48 5.27 5.33
62 5.64 5.57 5.33 5.41
63 5.75 5.66 5.39 5.49
64 5.86 5.76 5.46 5.58
65 5.98 5.87 5.52 5.67
66 6.11 5.98 5.58 5.77
67 6.25 6.10 5.64 5.87
68 6.40 6.22 5.70 5.98
69 6.56 6.35 5.76 6.10
70 6.73 6.49 5.82 6.22
71 6.92 6.64 5.88 6.35
72 7.13 6.80 5.93 6.48
73 7.35 6.96 5.98 6.62
74 7.60 7.13 6.02 6.77
75 7.86 7.30 6.06 6.93
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- -------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds to Survivor
- -------------------------------------------------------------------------------
Certain Period Certain Period
- -------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
- -------------------------------------------------------------------------------
$5.03 $5.03 $4.99 60 $5.46 $5.40 $5.22
5.10 5.09 5.05 61 5.55 5.48 5.28
5.17 5.17 5.11 62 5.65 5.57 5.34
5.25 5.24 5.18 63 5.75 5.67 5.40
5.33 5.33 5.24 64 5.86 5.77 5.46
5.42 5.41 5.31 65 5.98 5.87 5.52
5.52 5.51 5.38 66 6.11 5.98 5.58
5.62 5.61 5.45 67 6.25 6.10 5.64
5.73 5.72 5.52 68 6.40 6.22 5.70
5.85 5.83 5.59 69 6.56 6.35 5.76
5.98 5.95 5.66 70 6.73 6.49 5.82
6.12 6.08 5.73 71 6.91 6.63 5.87
6.27 6.22 5.80 72 7.11 6.78 5.93
6.43 6.37 5.86 73 7.32 6.94 5.97
6.61 6.52 5.92 74 7.55 7.10 6.02
6.80 6.69 5.97 75 7.79 7.26 6.06
- -------------------------------------------------------------------------------
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
- -------------------- ----------------- ------------- -----------------
Before 1920 +2 1960-1969 -3
1920-1929 +1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ETC. ETC.
<PAGE>
10.04 A VARIABLE PAYMENT OPTION WITH A 6.0% ASSUMED INTEREST RATE
- -------------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
- -------------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- -------------------------------------------------------------------------------
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- -------------------------------------------------------------------------------
60 $6.05 $5.98 $5.78 $5.86
61 6.13 6.06 5.84 5.93
62 6.23 6.14 5.90 6.01
63 6.33 6.23 5.95 6.10
64 6.44 6.33 6.01 6.18
65 6.56 6.43 6.07 6.28
66 6.69 6.54 6.13 6.37
67 6.82 6.65 6.19 6.48
68 6.97 6.78 6.24 6.59
69 7.13 6.90 6.30 6.70
70 7.30 7.04 6.35 6.83
71 7.49 7.18 6.40 6.96
72 7.70 7.33 6.45 7.10
73 7.92 7.49 6.50 7.24
74 8.16 7.65 6.54 7.40
75 8.43 7.82 6.58 7.56
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- -------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds to Survivor
- -------------------------------------------------------------------------------
Certain Period Certain Period
- -------------------------------------------------------------------------------
Joint
None 120 240 Age None 120 240
- -------------------------------------------------------------------------------
$5.61 $5.61 $5.57 60 $6.05 $5.98 $5.79
5.68 5.67 5.63 61 6.14 6.06 5.84
5.75 5.74 5.69 62 6.23 6.15 5.90
5.82 5.82 5.75 63 6.34 6.24 5.96
5.90 5.89 5.81 64 6.45 6.33 6.01
5.99 5.98 5.87 65 6.56 6.43 6.07
6.08 6.07 5.94 66 6.69 6.54 6.13
6.18 6.17 6.00 67 6.82 6.66 6.19
6.29 6.27 6.07 68 6.97 6.77 6.24
6.41 6.38 6.14 69 7.13 6.90 6.30
6.53 6.50 6.20 70 7.30 7.03 6.35
6.67 6.63 6.27 71 7.48 7.17 6.40
6.81 6.76 6.33 72 7.67 7.32 6.45
6.97 6.90 6.39 73 7.89 7.47 6.50
7.14 7.05 6.44 74 8.11 7.62 6.54
7.33 7.21 6.50 75 8.36 7.79 6.57
- -------------------------------------------------------------------------------
Age Adjustment Table
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
- -------------------- ----------------- ------------- -----------------
Before 1920 +2 1960-1969 -3
1920-1929 +1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ETC. ETC.
<PAGE>
ARTICLE 11
ANNUITY PURCHASE RATES UNDER A FIXED PAYMENT OPTION
- --------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
- --------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
--------------------------------------------------------
60 $4.42 $4.38 $4.22 $4.18
61 4.52 4.47 4.29 4.26
62 4.62 4.56 4.36 4.34
63 4.73 4.66 4.43 4.42
64 4.85 4.77 4.50 4.51
65 4.97 4.89 4.57 4.60
66 5.11 5.01 4.64 4.69
67 5.25 5.13 4.71 4.79
68 5.41 5.27 4.78 4.90
69 5.57 5.41 4.85 5.01
70 5.75 5.56 4.91 5.13
71 5.95 5.71 4.98 5.25
72 6.16 5.88 5.04 5.38
73 6.38 6.05 5.09 5.52
74 6.63 6.23 5.14 5.66
75 6.90 6.42 5.19 5.81
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- ---------------------------------------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds to Survivor
---------------------------------------------------------------------------------------------------------
Certain Period Certain Period
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joint
None 120 240 Age None 120 240
- ---------------------------------------------------------------------------------------------------------
$4.01 $4.01 $3.98 60 $4.43 $4.38 $4.22
4.09 4.08 4.05 61 4.52 4.47 4.29
4.17 4.16 4.12 62 4.63 4.57 4.36
4.25 4.25 4.19 63 4.74 4.67 4.43
4.34 4.34 4.26 64 4.85 4.78 4.50
4.44 4.43 4.34 65 4.98 4.89 4.57
4.54 4.54 4.42 66 5.11 5.01 4.64
4.66 4.64 4.50 67 5.26 5.13 4.71
4.77 4.76 4.58 68 5.41 5.27 4.78
4.90 4.88 4.66 69 5.57 5.41 4.85
5.04 5.01 4.74 70 5.75 5.55 4.91
5.18 5.15 4.82 71 5.94 5.70 4.98
5.34 5.30 4.89 72 6.14 5.86 5.03
5.51 5.45 4.96 73 6.35 6.03 5.09
5.69 5.62 5.03 74 6.59 6.20 5.14
5.89 5.79 5.09 75 6.84 6.38 5.18
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Age Adjustment Table
<TABLE>
<CAPTION>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
------------- ----------------- ------------- -----------------
<S> <C> <C> <C>
Before 1920 + 2 1960-1969 -3
1920-1929 + 1 1970-1979 -4
1930-1939 0 1980-1989 -5
1940-1949 -1 1990-1999 -6
1950-1959 -2 ETC. ETC.
</TABLE>
<PAGE>
ANNUITY
CONTRACT
Flexible Premium Deferred
Variable Annuity and/or Market Value Adjusted Annuity
With Benefit Payment Options
Nonparticipating
If you have any questions concerning
this Contract, please
contact your Lincoln National Life
representative or the Home Office of LNL.
THE LINCOLN NATIONAL
LIFE INSURANCE COMPANY
1300 South Clinton Street
P.O. Box 7866
Fort Wayne, Indiana 46802
888-868-2583
<PAGE>
<TABLE>
<S> <C>
==============================
- -------------- The Lincoln National Life
Logo ChoicePlus Bonus Insurance Company
- -------------- Variable Annuity Application Fort Wayne, Indiana
==============================
====================================================================================================================================
Instructions: Please type or print. ANY ALTERATIONS TO THIS APPLICATION MUST BE INITIALED BY THE CONTRACT OWNER.
- ------------------------------------------------------------------------------------------------------------------------------------
1a Contract Owner
- ------------------------------------------------------------------------------------------------------------------------------------
_______________________________________ Social Security number/TIN [_][_][_]-[_][_]-[_][_][_][_]
Full legal name or trust name*
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
_______________________________________
Street address
Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
_______________________________________
City State ZIP
Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
Month Day Year [_] Yes [_] No
_______________________________________
Trustee name*
Note: Maximum age of Contract Owner is 85. *This information is required for trusts.
- ------------------------------------------------------------------------------------------------------------------------------------
1b Joint Contract Owner
- ------------------------------------------------------------------------------------------------------------------------------------
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
_______________________________________
Full legal name [_] Male [_] Female
Note: Maximum age of Joint Contract Owner is 85. Date of birth [_][_] [_][_] [_][_]
Month Day Year [_] Spouse [_] Non-spouse
- ------------------------------------------------------------------------------------------------------------------------------------
2a Annuitant (If no Annuitant is specified, the Contract Owner, or Joint Owner if younger, will be the Annuitant.)
- ------------------------------------------------------------------------------------------------------------------------------------
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
_______________________________________
Full legal name Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
_______________________________________
Street address Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
_______________________________________
City State ZIP
Note: Maximum age of Annuitant is 85.
- ------------------------------------------------------------------------------------------------------------------------------------
2b Contingent Annuitant
- ------------------------------------------------------------------------------------------------------------------------------------
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
_______________________________________
Full legal name
Note: Maximum age of Annuitant is 85.
- ------------------------------------------------------------------------------------------------------------------------------------
3 Beneficiary(ies) of Contract Owner (List additional beneficiaries on separate sheet. If listing children, use full legal
names.)
- ------------------------------------------------------------------------------------------------------------------------------------
__________________________________________________ ____________________________________ ________________ _________%
Full legal name [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
or trust name*
__________________________________________________ ____________________________________ ________________ _________%
Full legal name [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
or trust name*
__________________________________________________ ____________________________________ ________________ _________%
Full legal name [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
or trust name*
__________________________________________________ Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
Trustee name* Month Day Year [_] Yes [_] No
*This information is required for trusts.
To specify an annuity payment option for your beneficiary, please complete the Beneficiary Payment Options form (29953CP).
- ------------------------------------------------------------------------------------------------------------------------------------
4 Type of Lincoln ChoicePlus(SM) Variable Annuity Contract
- ------------------------------------------------------------------------------------------------------------------------------------
Nonqualified: [_] Initial Contribution OR [_] 1035 Exchange
Tax-Qualified (must complete plan type): [_] Initial Contribution, Tax Year ______ OR [_] Transfer OR [_] Rollover
Plan Type (check one): [_] Roth IRA [_] Traditional IRA
</TABLE>
Form 29365 BONUS 4/00 CP-APP
Page 1
<PAGE>
- ------------------------------------------------------------------------
5a Allocation (This section must be completed.)
- ------------------------------------------------------------------------
Initial minimums:
Nonqualified $10,000 Qualified $2,000
Future contributions will follow the allocation below. If
DCA option is selected, the entire amount of each future
contribution will follow the allocation in Section 5b.
If no allocations are specified in Section 5a or 5b, the entire
amount will be allocated to the Money Market Fund pending
instructions from the contract owner.
- ------------------------------------------------------------------------
Total initial contribution amount $ _______________
Total DCA amount $ _______________
(enter amount in Section 5b)
Remaining amount to be allocated $ _______________
- ------------------------------------------------------------------------
INTO THE FUND(S) BELOW
- ------------------------------------------------------------------------
Use whole percentages
______________% Delaware Delchester Series
______________% Delaware Emerging Markets Series
______________% Delaware Growth & Income Series
______________% Delaware REIT Series
______________% Delaware Select Growth Series
______________% Delaware Small Cap Value Series
______________% Delaware Social Awareness Series
______________% Delaware Trend Series
______________% AIM V.I. Capital Appreciation Fund
______________% AIM V.I. Growth Fund
______________% AIM V.I. International Fund
______________% AIM V.I. Value Fund
______________% Alliance Capital Growth
______________% Alliance Capital Growth & Income
______________% Alliance Capital Premier Growth
______________% Alliance Capital Technology
______________% American Funds Global Small Cap
______________% American Funds Growth
______________% American Funds Growth & Income
______________% American Funds International
______________% Bankers Trust Equity 500 Index
______________% Liberty Newport Tiger
______________% Fidelity VIP Equity Income Portfolio
______________% Fidelity VIP Growth Portfolio
______________% Fidelity VIP Growth Opportunities Portfolio
______________% Fidelity VIP Overseas Portfolio
______________% Franklin Templeton Small Cap
______________% Franklin Templeton Global Growth
______________% Franklin Templeton International
______________% Franklin Templeton Mutual Shares
______________% Lincoln National Bond Fund
______________% Lincoln National Money Market Fund
______________% MFS Emerging Growth Series
______________% MFS Research Series
______________% MFS Total Return Series
______________% MFS Utilities Series
Fixed Account: ___________ % 5 years
__________ % 1 year ___________ % 7 years
___________% 3 years ___________ % 10 years
% Total (must = 100%)
==============
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
5b Dollar Cost Averaging (Complete only if electing DCA.)
- ------------------------------------------------------------------------
$2,000 minimum required.
- ------------------------------------------------------------------------
Total amount to DCA: $ _____________________
OR
MONTHLY amount to DCA: $ _____________________
- ------------------------------------------------------------------------
OVER THE FOLLOWING PERIOD: _____________________
MONTHS (6-60)
- ------------------------------------------------------------------------
FROM THE FOLLOWING HOLDING ACCOUNT (check one):
[_] 1 Year Fixed Account (Only available for 12 months or less.)
[_] Delaware Delchester Series
[_] Lincoln National Money Market *The DCA holding account
[_] Lincoln National Bond Fund and the DCA fund elected
cannot be the same.
- ------------------------------------------------------------------------
INTO THE FUND(S) BELOW
- ------------------------------------------------------------------------
Use whole percentages
______________% Delaware Delchester Series
______________% Delaware Emerging Markets Series
______________% Delaware Growth & Income Series
______________% Delaware REIT Series
______________% Delaware Select Growth Series
______________% Delaware Small Cap Value Series
______________% Delaware Social Awareness Series
______________% Delaware Trend Series
______________% AIM V.I. Capital Appreciation Fund
______________% AIM V.I. Growth Fund
______________% AIM V.I. International Fund
______________% AIM V.I. Value Fund
______________% Alliance Capital Growth
______________% Alliance Capital Growth & Income
______________% Alliance Capital Premier Growth
______________% Alliance Capital Technology
______________% American Funds Global Small Cap
______________% American Funds Growth
______________% American Funds Growth & Income
______________% American Funds International
______________% Bankers Trust Equity 500 Index
______________% Liberty Newport Tiger
______________% Fidelity VIP Equity Income Portfolio
______________% Fidelity VIP Growth Portfolio
______________% Fidelity VIP Growth Opportunities Portfolio
______________% Fidelity VIP Overseas Portfolio
______________% Franklin Templeton Small Cap
______________% Franklin Templeton Global Growth
______________% Franklin Templeton International
______________% Franklin Templeton Mutual Shares
______________% Lincoln National Bond Fund
______________% Lincoln National Money Market Fund
______________% MFS Emerging Growth Series
______________% MFS Research Series
______________% MFS Total Return Series
______________% MFS Utilities Series
==============% Total (must = 100%)
- ------------------------------------------------------------------------
Future contributions will not automatically start a new DCA
program. Instructions must accompany each DCA contribution.
- ------------------------------------------------------------------------
Page 2
<PAGE>
- -------------------------------------------------------------------------------
5c Cross-Reinvestment or Portfolio Rebalancing
- -------------------------------------------------------------------------------
To elect either of these options, please complete the Cross-Reinvestment
form (28051CP) or the Portfolio Rebalancing form (28887CP).
- --------------------------------------------------------------------------------
6 Death Benefit Option
- --------------------------------------------------------------------------------
[_] I/We hereby elect the 5% Step-Up* death benefit option. I/We understand
that if this benefit is not elected, my/our death benefit will be the
Enhanced Guaranteed Minimum Death Benefit.
* The 5% Step-Up option may only be elected if the Contract Owner, Joint
Owner (if applicable), and Annuitant are all under age 80.
- --------------------------------------------------------------------------------
7 Automatic Withdrawals
- --------------------------------------------------------------------------------
Note: Withdrawals exceeding 10% of the greater of total contract value or
premium payments per contract year may be subject to contingent
deferred sales charges.
---------------------------------------------------------------------------
[_] Please provide me with automatic withdrawals based on ___% (may be
between 1-10%) of the greater or total contract value or premium
payments,payable as follows:
[_] Monthly [_] Quarterly [_] Semiannually [_] Annually
Begin withdrawals in [_][_] [_][_]
Month Year
---------------------------------------------------------------------------
---------------------------------------------------------------------------
[_] Please provide me with automatic withdrawals
of $_________________
[_] Monthly [_] Quarterly [_] Semiannually [_] Annually
Begin withdrawals in [_][_] [_][_]
Month Year
---------------------------------------------------------------------------
Note: If no tax withholding selection is made, Federal taxes will be
withheld at a rate of 10%.
ELECT ONE: [_] Do withhold taxes
Amount to be withheld $___________________ OR _________%
[_] Do not withhold taxes
ELECT ONE: [_] Send check to address of record
OR [_] Send check to the following alternate address:
[_] Direct deposit
For direct deposit into your
bank account, the Electronic
Fund Transfer Authorization
form (27326CP) must be
completed and submitted with ______________________________
a voided check or a savings ______________________________
deposit slip. ______________________________
- --------------------------------------------------------------------------------
8 Automatic Bank Draft
- --------------------------------------------------------------------------------
__________________________________________________________________
Print account holder name(s) EXACTLY as shown on bank records
__________________________________________________________________
_______________________________________________________ ATTACH VOIDED CHECK
Bank name ABA number
___________________________________________________________________________
Bank street address City State ZIP
Automatic bank draft start date: [_][_] [_][_] [_][_]
Month Day Year
(1-28)
_____________________________________________________ $___________________
Checking account number Monthly amount
I\We hereby request and authorize you to pay and charge to my/our accounts,
checks or electronic fund transfer debits processed by and payable to the
order of Lincoln Life, P.O. Box 7866, Fort Wayne, IN 46801-7866, provided
there are sufficient collected funds in said account to pay the same upon
presentation. It will not be necessary for any officer or employee of
Lincoln Life to sign such checks. I/We agree that your rights in respect to
each such check shall be the same as if it were a check drawn on you and
signed personally by me/us. This authority is to remain in effect until
revoked by me/us, and until you actually receive such notice I/we agree
that you shall be fully protected in honoring any such check or electronic
fund transfer debit. I/We further agree that if any such check or
electronic fund transfer debit be dishonored, whether with or without cause
and whether intentionally or inadvertently, you shall be under no liability
whatsoever even though such dishonor results in the forfeiture of insurance
or investment loss to me/us.
- --------------------------------------------------------------------------------
9 Telephone/Internet Authorization (Check box if this option is desired.)
- --------------------------------------------------------------------------------
[_] I/We hereby authorize and direct Lincoln Life to accept instructions
via telephone or the internet from any person who can furnish proper
identification to exchange units from subaccount to subaccount, change the
allocation of future investments, and/or clarify any unclear or missing
administrative information contained on this application at the time of
issue. I/We agree to hold harmless and indemnify Lincoln Life and their
affiliates and any mutual fund managed by such affiliates and their
directors, trustees, officers, employees and agents for any losses arising
from such instructions.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
10 Replacement Will the proposed contract replace any existing annuity or life
insurance contract?
- --------------------------------------------------------------------------------
ELECT ONE: [_] No [_] Yes If yes, complete the 1035 Exchange or
Qualified Retirement Account Transfer form.
(Attach a state replacement form if required by the state in which the
application is signed.)
<TABLE>
<S> <C>
_________________________________________________________________________________________________
Company name
_________________________________________________________________________________________________
Plan name Year issued
======================================================================================================
</TABLE>
Fraud Warning Residents of all states except Virginia please note:
Any person who knowingly, and with intent to defraud any insurance company
or other person, files or submits an application or statement of claim
containing any materially false or deceptive information, or conceals, for
the purpose of misleading, information concerning any fact material
thereto, commits a fraudulent insurance act, which is a crime and subjects
such person to criminal and civil penalties.
- --------------------------------------------------------------------------------
11 Signatures
- --------------------------------------------------------------------------------
All statements made in this application are true to the best of my/our
knowledge and belief, and I/we agree to all terms and conditions as shown.
I/We acknowledge receipt of current prospectuses for Lincoln ChoicePlus(SM)
Bonus and verify my/our understanding that all payments and values provided
by the contract, when based on investment experience of the funds in the
Series, are variable and not guaranteed as to dollar amount. I/We
understand that all payments and values based on the fixed account are
subject to a market value adjustment formula that may increase or decrease
the value of any transfer, partial surrender, or full surrender from the
fixed account made prior to the end of a guaranteed period. Under penalty
of perjury, the Contract Owner(s) certifies that the Social Security (or
taxpayer identification) number(s) is correct as it appears in this
application.
<TABLE>
<S> <C> <C>
----------------------------------------------------------------------------------------
Signed at (city) State Date [_][_] [_][_] [_][_]
Month Day Year
----------------------------------------------------------------------------------------
Signature of Contract Owner Joint Contract Owner (if applicable)
------------------------------------- ------------------------------------------------
Signed at (city) State Date [_][_] [_][_] [_][_]
Month Day Year
______________________________________________________________________________________
Signature of Annuitant (Annuitant must sign if Contract Owner is a trust or custodian.)
</TABLE>
================================================================================
FINANCIAL ADVISER MUST COMPLETE REVERSE SIDE (PAGE 5)
================================================================================
Page 4
<PAGE>
================================================================================
THE FOLLOWING SECTIONS MUST BE COMPLETED BY THE SECURITIES DEALER OR
FINANCIAL ADVISER. Please type or print.
- --------------------------------------------------------------------------------
12 Insurance in Force Will the proposed contract replace any existing annuity or
life insurance contract?
- --------------------------------------------------------------------------------
ELECT ONE: [_] No [_] Yes If yes, please list the insurance in force on the
life of the proposed Contract Owner(s) and Annuitant(s):
(Attach a state replacement form if required by the state in which the
application was signed.)
<TABLE>
<CAPTION>
<S> <C>
_____________________________________________________________________________________________ $________________
Company name Year issued Amount
- --------------------------------------------------------------------------------
13 Additional Remarks
- --------------------------------------------------------------------------------
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
- --------------------------------------------------------------------------------
14 Dealer Information
- --------------------------------------------------------------------------------
Option: [_] 1 [_] 2 [_] 3 [_] 4 Note: Licensing appointment with Lincoln Life is required for this
application to be processed. If more than one representative,
please indicate names and percentages in Section 13.
___________________________________________________________________________ [_][_][_]-[_][_][_]-[_][_][_][_]
Registered representative's name (print as it appears on NASD licensing) Registered representative's telephone number
___________________________________________________________________________ [_][_][_]-[_][_]-[_][_][_][_]
Client account number at dealer (if applicable) Registered representative's SSN
________________________________________________________________________________________________________________________________
Dealer's name
________________________________________________________________________________________________________________________________
Branch address City State ZIP
________________________________________________________________________________________________________________________________
Branch number Representative number
[_] CHECK IF BROKER CHANGE OF ADDRESS
- --------------------------------------------------------------------------------
15 Representative's Signature
- --------------------------------------------------------------------------------
The representative hereby certifies that he/she witnessed the signature(s) in section 11 and that all information contained in
this application is true to the best of his/her knowledge and belief.
________________________________________________________________________________________________________________________________
Signature
===================================================================================================================================
Send completed application - with a check made payable to Lincoln Life - to your investment dealer's
home office or to:
----------------------
Logo Express Mail:
---------------------- Lincoln Life Lincoln Life
P.O. Box 7866 Attention: ChoicePlus Operations
Fort Wayne, IN 46801-7866 1300 South Clinton Street
Fort Wayne, IN 46802
If you have any questions regarding this application, please call Lincoln Life at 888 868-2583.
</TABLE>
Page 5
<PAGE>
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.,
AND
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ----------- ----
<S> <C>
Section 1. Available Funds ....................................................2
1.1 Availability . ............................................................2
1.2 Addition, Deletion or Modification of Funds ...............................2
1.3 No Sales to the General Public ............................................2
Section 2. Processing Transactions ............................................2
2.1 Timely Pricing and Orders ..............................................2
2.2 Timely Payments ........................................................3
2.3 Applicable Price .......................................................3
2.4 Dividends and Distributions ............................................4
2.5 Book Entry .............................................................4
Section 3. Costs and Expenses .................................................4.
3.1 General ...................................................................4
3.2 Parties To Cooperate ......................................................4
Section 4. Legal Compliance ...................................................4
4.1 Tax Laws ...............................................................4
4.2 Insurance and Certain Other Laws .......................................7
4.3 Securities Laws ........................................................7
4.4 Notice of Certain Proceedings and Other Circumstances ..................8
4.5 LIFE COMPANY To Provide Documents; Information About AVIF ............. 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY .............10
Section 5. Mixed and Shared Funding ..........................................11
5.1 General ...............................................................11
5.2 Disinterested Directors ...............................................12
5.3 Monitoring for Material Irreconcilable Conflicts ......................12
5.4 Conflict Remedies .....................................................13
5.5 Notice to LIFE COMPANY ................................................14
5.6 Information Requested by Board of Directors ...........................14
5.7 Compliance with SEC Rules .............................................14
5.8 Other Requirements ....................................................14
Section 6. Termination .......................................................15
6.1 Events of Termination .................................................15
6.2 Notice Requirement for Termination ....................................16
6.3 Funds To Remain Available .............................................16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ----------- ----
<S> <C>
6.4 Survival of Warranties and Indemnifications ..............................16
6.5 Continuance of Agreement for Certain Purposes ............................16
Section 7. Parties To Cooperate Respecting Termination .......................17
Section 8. Assignment ........................................................17
Section 9. Notices ...........................................................17
Section 10. Voting Procedures ................................................18
Section 11. Foreign Tax Credits ..............................................18
Section 12. Indemnification ..................................................18
12.1 Of AVIF and AIM by LIFE COMPANY .........................................18
12.2 Of LIFE COMPANY by AVIF and AIM .........................................20
12.3 Effect of Notice ........................................................23
12.4 Successors ..............................................................23
Section 13. Applicable Law ...................................................23
Section 14. Execution in Counterparts ........................................23
Section 15. Severability .....................................................23
Section 16. Rights Cumulative ................................................24
Section 17. Headings .........................................................24
Section 18. Confidentiality ..................................................24
Section 19. Trademarks and Fund Names ........................................25
Section 20. Parties to Cooperate .............................................26
</TABLE>
ii
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the __ day of __________,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"),
The Lincoln National Life Insurance Company, an Indiana life insurance company
("LIFE COMPANY"), on behalf of itself and each of its segregated asset accounts
listed in Schedule A hereto, as the parties hereto may amend from time to time
(each, an "Account," and collectively, the "Accounts"); and the principal
underwriter of the Accounts and the Contracts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of thirteen separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the " 1933 Act") and are currently sold to one or more
separate accounts of life insurance companies to fund benefits under variable
annuity contracts and variable life insurance policies; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts" or Policies") as
set forth on Schedule A hereto, as the Parties hereto may amend from time to
time, which Contracts, if required by applicable law, will be registered under
the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each
of which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Policies will be registered as securities under the
1933 Act (or exempt therefrom); and
1
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Policies; and
WHEREAS, LIFE COMPANY is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 (" 1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase
and redemption at net asset value and with no sales charges, subject to the
terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Policies, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund or Fund resulting from a
deletion or modification. Schedule A, as amended from time to time, is
incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
LIFE COMPANY with the net asset value per Share for each Fund by 6:00 p.m.
Central Time on each Business Day.
2
<PAGE>
As used herein, "Business Day" shall mean any day on which (i) the New York
Stock Exchange is open for regular trading and (ii) AVIF calculates the Fund's
net asset value.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values and
to process transactions that receive that same Business Day's Account unit
values. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
9:00 a.m. Central Time the following Business Day; PROVIDED, however, that AVIF
shall provide additional time to LIFE COMPANY in the event that AVIF is unable
to meet the 6:00 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of
redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Policies (collectively, "Policy transactions") and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by AVIF or its designated agent of the orders. For
purposes of this Section 23(a), LIFE COMPANY shall be the designated agent of
AVIF for receipt of orders relating to Policy transactions on each Business Day
and receipt by such designated agent shall constitute receipt by AVIF; PROVIDED
that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next
following Business Day or such later time as computed in accordance with Section
2.1 (b) hereof.
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(b) All other Share purchases and redemptions by LIFE COMPANY will be
effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund. LIFE
COMPANY hereby elects to reinvest all dividends and capital gains distributions
in additional Shares of the corresponding Fund at the ex-dividend date net asset
values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by
the Parties that the ex-dividend date and the payment date with respect to any
dividend or distribution will be the same Business Day. LIFE COMPANY reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear all expenses incident to its
performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified as
a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will use
its best efforts to qualify and to maintain qualification of each Fund as a RIC.
AVIF will notify LIFE 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.
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(b) AVIF represents that it will use its best efforts to comply and to
maintain each Fund's compliance with the diversification requirements set forth
in Section 817(h) of the Code and Section 1.817-5(b) of the regulations under
the Code. AVIF will notify LIFE COMPANY immediately upon having a reasonable
basis for believing that a Fund has ceased to so comply or that a Fund might not
so comply in the future. In the event of a breach of this Section 4. 1 (b) by
AVIF, it will take all reasonable steps to adequately diversify the Fund so as
to achieve compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of LIFE
COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has
failed to comply with the diversification requirements of Section 817(h) of the
Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise
to any claim against AVIF or its affiliates as a result of such a failure or
alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of Section 18
as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged
failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability
of AVIF or its affiliates resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury
Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and
accounting advisors to participate in any conferences, settlement
discussions or other administrative or judicial proceeding or
contests (including judicial appeals thereof) with the IRS, any
Participant or any other claimant regarding any claims that could
give rise to liability to AVIF or its affiliates as a result of
such a failure or alleged failure; PROVIDED, however, that LIFE
COMPANY will retain control of the conduct of such conferences
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY to the IRS,
any Participant or any other claimant in connection with any of
the foregoing proceedings or contests (including, without
limitation, any such materials to be submitted to the IRS pursuant
to Treasury Regulations Section 1.817-5(a)(2)), (a) shall be
provided by LIFE COMPANY to AVIF (together with any supporting
information or analysis); subject to the confidentiality
provisions of Section 18, at least ten (10) business days or such
shorter period to which the Parties hereto agree prior to the day
on which such proposed materials are to be submitted, and (b)
shall not be submitted by LIFE
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COMPANY to any such person without the express written consent of
AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF shall
reasonably request (including, without limitation, by permitting
AVIF and its accounting and legal advisors to review the relevant
books and records of LIFE COMPANY) in order to facilitate review
by AVIF or its advisors of any written submissions provided to it
pursuant to the preceding clause or its assessment of the validity
or amount of any claim against its arising from such a failure or
alleged failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its
affiliates (a) compromise or settle any claim, (b) accept any
adjustment on audit, or (c) forego any allowable administrative or
judicial appeals, without the express written consent of AVIF or
its affiliates, which shall not be unreasonably withheld, PROVIDED
that LIFE COMPANY shall not be required, after exhausting all
administrative penalties, to appeal any adverse judicial decision
unless AVIF or its affiliates shall have provided an opinion of
independent counsel to the effect that a reasonable basis exists
for taking such appeal; and PROVIDED FURTHER that the costs of any
such appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if LIFE COMPANY fails to comply
with any of the foregoing clauses (i) through (vii), and such
failure could be shown to have materially contributed to the
liability.
Should AVIF or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, LIFE
COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the
name of LIFE COMPANY in, and to control the conduct of, such conferences,
discussions, proceedings, contests or appeals and all administrative or judicial
appeals thereof, and in that event AVIF or its affiliates shall bear the fees
and expenses associated with the conduct of the proceedings that it is so
authorized to control; PROVIDED, that in no event shall LIFE COMPANY have any
liability resulting from AVIF's refusal to accept the proposed settlement or
compromise with respect to any failure caused by AVIF. As used in this
Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
(d) LEE COMPANY represents and warrants that the Contracts currently are
and will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
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(e) LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. LIFE COMPANY will use its best efforts to continue to
meet such definitional requirements, and it will notify AVIF immediately upon
having a reasonable basis for believing that such requirements have ceased to be
met or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best. efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by LIFE COMPANY, including, the furnishing of information not otherwise
available to LIFE COMPANY which is required by state insurance law to enable
LIFE COMPANY to obtain the authority needed to issue the Contracts in any
applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing under the laws of the State of Indiana
and has full corporate power, authority and legal right to execute, deliver and
perform its duties and comply with its obligations under this Agreement, (ii) it
has legally and validly established and maintains each Account as a segregated
asset account under Indiana Insurance Law and the regulations thereunder, and
(iii) the Contracts comply in all material respects with all other applicable
federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power, authority and right to execute, deliver and perform its
duties and comply with its obligations under this agreement.
4.3 SECURITIES LAWS.
(a) LIFE COMPANY represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Indiana law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the
1940 Act, (iv) each Account does and will comply in all material respects with
the requirements of the 1940 Act and the rules thereunder, to the extent
required; (v) each Account's 1933 Act registration statement relating to the
Contracts (to the extent required), together with any amendments thereto, will
at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend any registration
statement for its Contracts under the 1933 Act and for its Accounts under the
1940 Act from time to time to the
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extent required in order to effect the continuous offering of its Policies or as
may otherwise be required by applicable law, and (vii) each Account Prospectus
will at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Maryland
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIFs 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF 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 reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
l2b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(I) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify LIFE COMPANY of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933 Act
or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings against AVIF, AIM or the
investment adviser to AVIF for that purpose or for any other purpose relating to
the registration or offering of AVIF's Shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Shares of any Fund in
any state or jurisdiction, including, without limitation, any circumstances in
which (a) such Shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law, or (b) such law
precludes the use of such Shares as an underlying investment medium of the
Policies issued or to be issued by LIFE COMPANY. AVIF will make every reasonable
effort to prevent the issuance, with respect to any Fund, of any such stop
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order, cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to each Account's registration statement under the
1933 Act relating to the Policies or each Account Prospectus, (ii) any request
by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Policies,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF
(a) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts and to one (1)
or more Funds, within twenty (20) calendar days of the filing of such document
with the SEC or other regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least ten (10)
Business Days prior to its use or such shorter period as the Parties hereto may,
from time to time, agree upon. No such material shall be used if AVIF or its
designated agent objects to such use within five (5) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon. AVIF hereby designates AIM as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Policies other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF or AIM.
(d) LIFE COMPANY shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF and its affiliates that is intended
for use only by brokers
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or agents selling the Policies (I.E., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and neither
AVIF nor any of its affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, 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, signs or billboards, motion pictures, or other public media, (E.G.,
on-line networks such as the Internet or other electronic messages), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other 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 the NASD rules, the 1933 Act or the 1940 Act.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of
all SEC registration statements, AVIF Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to one (1) or more
Funds, within twenty (20) calendar days of the filing of such document with the
SEC or other regulatory authorities.
(b) AVIF will provide to LIFE COMPANY camera ready copies of all AVIF
prospectuses relating to the Funds and printed copies, in an amount specified by
LIFE COMPANY, of AVIF statements of additional information, proxy materials,
periodic reports to shareholders and other materials required by law to be sent
to Participants who have allocated any Contract value to a Fund. AVIF will
provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE
COMPANY, as the case may be, to print and distribute such materials within the
time required by law to be furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which LIFE COMPANY, or any of its respective affiliates is named, or
that refers to the Policies, at least ten (10) Business Days prior to its use or
such shorter period as the Parties hereto may, from time to time, agree upon. No
such material shall be used if LIFE COMPANY or its designated agent objects to
such use within five (5) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time, agree upon. LIFE
COMPANY shall receive all such sales literature until such time as it appoints a
designated agent by giving notice to AVIF in the manner required by Section 9
hereof.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning LIFE COMPANY,
each Account, or the Contracts other than (i) the information or representations
contained- in the registration statement,
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including each Account Prospectus contained therein, relating to the Contracts,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by LIFE COMPANY for distribution; or (iii) in
sales literature or other promotional material approved by LIFE COMPANY or its
affiliates, except with the express written permission of LIFE COMPANY.
(e) AIM shall adopt and implement procedures reasonably designed to
ensure that information concerning LIFE COMPANY, and its respective affiliates
that is intended for use only by brokers or agents selling the Policies (I.E.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither LIFE COMPANY, nor any of its respective
affiliates shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (E.G.,
on-line networks such as the Internet or other electronic messages), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other 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 the NASD rules, the 1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain provisions
of the 1940 Act and rules thereunder so that AVIF may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable annuity contracts or variable life insurance policies,
separate accounts of insurance companies unaffiliated with LIFE COMPANY, and
trustees of qualified pension and retirement plans (collectively, "Mixed and
Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVER AVIF hereby notifies LIFE
COMPANY that AVIF has implemented Mixed and Shared Funding and it may be
appropriate to include in the prospectus pursuant to which a Contract is offered
disclosure regarding the potential risks of Mixed and Shared Funding.
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5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board;(b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). LIFE COMPANY agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other 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 Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SECs requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the
Board of Directors in carrying out its responsibilities by providing the Board
of Directors, upon their request, with all information reasonably necessary for
the Board of Directors to consider any issue raised, including information as to
a decision by LIFE COMPANY to disregard voting instructions of Participants.
LIFE
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COMPANY's responsibilities in connection with the foregoing shall be carried out
with a view only to the interests of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts
from AVIF or any Fund and reinvesting such assets in a different
investment medium, including, but not limited to, another Fund of
AVIF, or submitting the question whether such segregation should
be implemented to a vote of all affected Participants and, as
appropriate, segregating the assets of any particular group (E.G.,
annuity Participants, life insurance Participants or all
Participants) that votes in favor of such segregation, or offering
to the affected Participants the option of making such a change;
and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of LIFE COMPANY's
decision
to disregard Participant voting instructions and that decision represents a
minority position or would preclude a majority vote, LIFE COMPANY may be
required, at AVIF's election, to withdraw each Account's investment in AVIF or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six (6) months after AVIF gives
notice to LIFE COMPANY that this provision is being implemented, and until such
withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY
for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to LIFE COMPANY conflicts with
the majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board of
Directors informs LIFE COMPANY that it has determined that such decision has
created a material irreconcilable conflict, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY for the purchase and
redemption of Shares of AVIF. No charge or penalty will be imposed as a result
of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and with
a view only to the interests of Participants.
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(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as the
Board of Directors may reasonably request so that the Board of Directors may
fully carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Directors or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
Mixed and Shared Funding, AVIF agrees that it will comply with the terms and
conditions thereof and that the terms of this Section 5 shall be deemed modified
if and only to the extent required in order also to comply with the terms and
conditions of such exemptive relief that is afforded by any of said rules that
are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4. 1 (b), 4. 1 (d), 4.3(a),
4.4(b), 4.5(a), 5, and 10 of this Agreement.
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SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the
Fund, upon six (6) months advance written notice to the other parties, or, if
later, upon receipt of any required exemptive relief (i.e., a substitution
order) from the SEC, unless otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against
LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, AVIF reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of LIFE COMPANY upon institution of formal proceedings
against AVIF, AIM or the Fund's investment adviser by the NASD, the SEC, or any
state insurance regulator or any other regulatory body regarding AVIFs
obligations under this Agreement or related to the operation or management of
AVIF or the purchase of AVIF Shares, if, in each case, LIFE COMPANY reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on LIFE C OMPANY, or the Subaccount corresponding to the Fund with respect to
which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in accordance
with any applicable federal or state law, or (ii) such law precludes the use of
such Shares as an underlying investment medium of the Policies issued or to be
issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Policies issued by LIFE COMPANY cease to
qualify as annuity contracts or life insurance policies under the Code (other
than by reason of the Fund's
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noncompliance with Section 8 17(h) or Subchapter M of the Code) or if interests
in an Account under the Contracts are not registered, where such registration is
required, and, in all material respects, are not issued or sold in accordance
with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the, effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of LIFE COMPANY, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Policies in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Policies"). Specifically, without limitation, the
owners of the Existing Policies will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Policies. The parties agree that this Section 6.3 will not apply to any
terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof,
this Agreement shall nevertheless continue in effect as to any Shares of that
Fund that are outstanding as of the date of such termination (the
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"Initial Termination Date"). This continuation shall extend to the earlier of
the date as of which an Account owns no Shares of the affected Fund or a date
(the "Final Termination Date") six (6) months following the Initial Termination
Date, except that LIFE COMPANY may, by written notice shorten said six (6) month
period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g),
6.1(h) or 6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6. 1 (a), the termination date specified in the notice of termination. Such
steps may include combining the affected Account with another Account,
substituting other mutual fund shares for those of the affected Fund, or
otherwise terminating participation by the Policies in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 S. Clinton Street
Fort Wayne, IN 46802
Facsimile: (219) 455-1773
Attn: Kelly D. Clevenger
Vice President
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SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
LIFE COMPANY will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. LIFE COMPANY will vote
Shares in accordance with timely instructions received from Participants. LIFE
COMPANY will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
LIFE COMPANY nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. Notwithstanding the foregoing, LIFE COMPANY
reserves the right to vote shares held in any Account in its own right, to the
extent permitted by law. LIFE COMPANY shall be responsible for assuring that
each of its Accounts holding Shares calculates voting privileges in a manner
consistent with that of other Participating Insurance Companies or in the manner
required by the Mixed and Shared Funding exemptive order obtained by AVIF. AVIF
will notify LIFE COMPANY of any changes of interpretations or amendments to
Mixed and Shared Funding exemptive order it has obtained. AVIF will comply with
all provisions of the 1940 Act requiring voting by shareholders, and in
particular, AVIF either will provide for annual meetings (except insofar as the
SEC may interpret Section 16 of the 1940 Act not to require such meetings) or
will comply with Section 16(c) of the 1940 Act (although AVIF 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, AVIF will act in accordance with
the SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the SEC may promulgate
with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
LIFE COMPANY agrees to indemnify and hold harmless AVIF, AIM, their affiliates,
and each person, if any, who controls AVIF, AIM, or their affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of LIFE COMPANY or actions
in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified
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Parties may become subject under any statute, regulation, at common law
or otherwise; PROVIDED, the Account owns shares of the Fund and insofar
as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising 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 LIFE COMPANY by or on behalf of AVIF
for use in any Account's 1933 Act registration statement, any
Account Prospectus, the Contracts, or sales literature or
advertising or otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement to any of the,
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained-in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of LIFE COMPANY or its affiliates and
on which such persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of LIFE COMPANY or its respective
affiliates or persons under their control (including, without
limitation, their employees and "persons associated with a
member", as that term is defined in paragraph (q) of Article I of
the NASD's By-Laws), in connection with the sale or distribution
of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to AVIF, AIM or their affiliates by or on
behalf of LIFE COMPANY or its affiliates for use in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY to perform the
obligations, provide the services and furnish the materials
required of it under
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the terms of this Agreement, or 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; or
(v) arise as a result of failure by the Policies issued by LIFE
COMPANY to qualify as annuity contracts or life insurance policies
under the Code, otherwise than by reason of any Fund's failure to
comply with Subchapter M or Section 817(h) of the Code.
(b) LIFE COMPANY shall not be liable under this Section 12.1 with respect
to any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of that Indemnified Party's reckless disregard of obligations or
duties (i) under this Agreement, or (ii) to AVIF or AIM.
(c) LIFE COMPANY shall not be liable under this Section 12.1 with respect
to any action against an Indemnified Party unless AVIF or AIM 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 action 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 action 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 Section 12. 1. Except as
otherwise provided herein, 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 and also shall be entitled to assume the
defense thereof, with counsel approved by the Indemnified Party named in the
action, which approval shall not be unreasonably withheld. After notice from
LIFE COMPANY to such Indemnified Party of LIFE COMPANY's election to assume the
defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY
and shall bear the fees and expenses of any additional counsel retained by it,
and LIFE COMPANY will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
12.2 OF LIFE COMPANY BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY,
its affiliates, and each person, if any, who controls LIFE COMPANY or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers, (collectively, the "Indemnified Parties" for
purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and/or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise;
PROVIDED, the Account owns shares of the Fund and insofar as such losses,
claims, damages, liabilities or actions:
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(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus or sales literature or
advertising of AVIF (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 AVIF or its affiliates
by or on behalf of LIFE COMPANY or its affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, or in
sales literature or advertising or otherwise for use in connection
with the sale of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of AVIF, AIM or their
affiliates and on which such persons have reasonably relied) or
the negligent, illegal or fraudulent conduct of AVIF, AIM or their
affiliates or persons under its control (including, without
limitation, their employees and "persons associated with a member"
as that term is defined in Section (q) of Article I of the NASD
By-Laws), in connection with the sale or distribution of AVIF
Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any amendment
or supplement to any of the foregoing, 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 in conformity with information furnished to LIFE COMPANY
or its affiliates by or on behalf of AVIF or AIM for use in any
Account's 1933 Act registration statement, any Account Prospectus,
sales literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by AVIF in this
Agreement or arise out of or result from any other material breach
of this Agreement by AVIF.
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(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of AVIF and/or AIM) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses) to which the Indemnified Parties
may become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M of
the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY, each
Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in w riting within a reasonable time after
the summons or other first legal process giving information of the nature of the
action 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 AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM shall bear
the fees and expenses of any additional counsel retained by it, and AVIF and AIM
will not be liable to such Indemnified Party under this Agreement for any legal
or other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof, other than reasonable costs of
investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, LIFE COMPANY or any other Participating Insurance Company or
any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any
22
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representation, warranty, and/or covenant made by LIFE COMPANY hereunder or by
any Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by LIFE
COMPANY or any Participating Insurance Company to maintain its segregated asset
account (which invests in any Fund) as a legally and validly established
segregated asset account under applicable state law and as a duly registered
unit investment trust under the provisions of the 1940 Act (unless exempt
therefrom); or (iii) the failure by LIFE COMPANY or any Participating Insurance
Company to maintain its variable annuity contracts or life insurance policies
(with respect to which any Fund serves as an underlying funding vehicle) as
annuity contracts or life insurance policies under applicable provisions of the
Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12. 1 (c) or 12.2(d) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to be
an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest liability
with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
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SECTION 16. RIGHTS CUMULATIVE
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, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of LIFE COMPANY or
any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LEE COMPANY's performance of its duties under this Agreement are the
valuable property of the LEE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties' customers who
also maintain accounts directly with AVIF, AVIF w ill hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the "AVIF Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the AVIF
Protected Parties' customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with AVIF's prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in- immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
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SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of
AVIF, owns all right, title and interest in and to the name, trademark and
service mark "AIM" and such other trade names, trademarks and service marks as
may be set forth on Schedule B, as amended from time to time by written notice
from AIM to LIFE COMPANY (the "AIM licensed marks" or the "licensor's licensed
marks") and is authorized to use and to license other persons to use such marks.
LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to
use the AIM licensed marks in connection with LIFE COMPANY's performance of the
services contemplated under this Agreement, subject to the terms and conditions
set forth in this Section 19.
(b) The grant of license to LIFE COMPANY and its affiliates ( the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that LIFE COMPANY shall have the right to continue to
service any outstanding Contracts bearing any of the AIM licensed marks. Upon
AIM's elective termination of this license, LIFE COMPANY and its affiliates
shall immediately cease to issue any new annuity or life insurance Policies
bearing any of the AIM licensed marks and shall likewise cease any activity
which suggests that it has any right under any of the AIM licensed marks or that
it has any association with AIM, except that LIFE COMPANY shall have the right
to continue to service outstanding Contracts bearing any of the AIM licensed
marks.
(c) The licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld.
(d) During the term of this grant of license, a licensor may request that
a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor's
approval shall not be unreasonably withheld, and the licensor, when requesting
reconsideration of a prior approval, shall assume the reasonable expenses of
withdrawing and replacing such disapproved materials. The licensee shall obtain
the prior written approval of the licensor for the use of any new materials
developed to replace the disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the
best of the knowledge of the licensee, the licensor's licensed marks are valid
and enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
25
<PAGE>
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD, the IRS and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
26
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: By:
-------------------------------- --------------------------------
Nancy L. Martin Name: Robert H. Graham
Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: By:
-------------------------------- --------------------------------
Nancy L. Martin Name: Michael J. Cemo
Assistant Secretary Title: President
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, on behalf of itself and its
separate accounts and as principal underwriter for its separate accounts
Attest: By:
-------------------------------- --------------------------------
Name: Steven Kluever Name: Kelly D. Clevenger
Title: Assistant Vice President Title: Vice President
27
<PAGE>
SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Flexible Premium Variable Life Account R
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance Policy
LN605LL/LN6l5LL/LN6l7LL
and state variations thereof
The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance Policy On the Lives of Two Insureds
LN650LL
and state variations thereof
28
<PAGE>
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM ______________________________ Fund
AIM and Design
AIM
29
<PAGE>
SCHEDULE C
EXPENSE ALLOCATIONS
<TABLE>
<CAPTION>
DESCRIPTION LIFE COMPANY AIM/AVIF
<S> <C> <C>
REGISTRATION
Prepare and file Account registration Fund registration statements
registration statements(1) statements
Payment of fees Account fees Fund fees
PROSPECTUSES
Typesetting Account Prospectuses Fund Prospectuses
Account Prospectuses, and Fund Prospectuses distributed
Printing Fund Prospectuses (but not for to existing Participants(2)
existing PARTICIPANTS)
SAIS
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
SUPPLEMENTS (TO
PROSPECTUSES OR SAIs
Typesetting and Printing Account Supplements, and Fund Supplements to existing
Fund Supplements (but not for ParticipantS(2)
existing Participants)
</TABLE>
(1) Includes all filings and costs necessary to keep registrations
current and effective; including, without limitation, filing Forms N-SAR and
Rule 24F-2 Notices as required by law.
(2) With respect to any AVIF material printed in combination with any
non-AVIF materials, total costs of typesetting and printing shall be prorated as
between AIM/AVIF on the one hand and LIFE COMPANY on the other based on (a) the
ratio of the number of pages of the combined prospectus, report, or other
document, for each Fund listed on Schedule A hereto to the total number of pages
in such combined prospectus, report, or other document; and (b) the ratio of the
number of Participants who invest in all Funds of AVIF to the total number of
Participants.
30
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION LIFE COMPANY AIM/AVIF
<S> <C> <C>
FINANCIAL REPORTS
Typesetting Account Reports Fund Reports to existing
Participants(2)
Printing Account Reports, and Fund
Reports (not to existing
Participants)
MAILING AND DISTRIBUTION
To Contract owners Account and Fund
Prospectuses, SAIs,
Supplements and Reports
To Offerees Account and Fund
Prospectuses, SAIs,
Supplements and Reports
PROXIES
Typesetting, printing and Account and Fund Proxies Fund Proxies where the
mailing of proxy where the matters submitted matters submitted are
solely
solicitation materials and are solely Account-related Fund-related
voting instruction
solicitation materials and Account Proxies even where
tabulation of proxies to the matters submitted are
Participants solely Fund-related
OTHER (SALES-RELATED)
Contract owner Account-related items and\
communication Fund-related items
Distribution Policies
Administration Account (Policies)
</TABLE>
(2) With respect to any AVIF material printed in combination with any
non-AVIF materials, total costs of typesetting and printing shall be prorated as
between AIM/AVIF on the one hand and LIFE COMPANY on the other based on (a) the
ratio of the number of pages of the combined prospectus, report, or other
document, for each Fund listed
on Schedule A hereto to the total number of pages in such combined prospectus,
report, or other document; and (b) the ratio of the number of Participants who
invest in all Funds of AVIF to the total number of Participants.
31
<PAGE>
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 16, 1998, by and
among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware Corporation and The Lincoln National Life
Insurance Company, an Indiana life insurance company, is hereby amended as
follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced
with the following:
SCHEDULE A
<TABLE>
<CAPTION>
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
<S> <C> <C>
AIM V.I. Capital Appreciation Fund Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
AIM V.I. Diversified Income Fund Account N Flexible Premium Variable Annuity Contracts
AIM V.I. Growth Fund AN425LL
AIM V.I. International Equity Fund Lincoln Life Flexible Premium and state variations thereof
AIM V.I. Value Fund Variable Life Account M
- The Lincoln National Life Insurance Company:
Lincoln Life Flexible Premium Flexible Premium Variable Life Insurance
Variable Life Account R Policy LN605LULN615LULN617LULN680
and state variations thereof
- The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance
Policy On the Lives of Two Insureds LN650LL
and state variations thereof
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule A to be executed in its name and behalf of its duly authorized officer
on the date specified below. All other terms and provisions of the Agreement not
amended herein shall remain in full force and effect.
Effective Date: 10-14-99
----------
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: By:
Name: Nancy L.Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
(SEAL)
SAAGR\PAA51AV1.doc
100699(1)hg 1 of 2
<PAGE>
A I M DISTRIBUTORS, INC.
Attest: By:
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Attest: By:
Name: Steven M. Kluever Name: Kelly D. Clevenger
Title: Assistant Vice President Title: Vice President
(SEAL)
SAAGR\PAA51AV1, doc
100699(1)hg 2 of 2
<PAGE>
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 16,1998, by and
among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware Corporation and The Lincoln National Life
Insurance Company, an Indiana life insurance company, is hereby amended as
follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with
the following:
SCHEDULE A
<TABLE>
<CAPTION>
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
<S> <C> <C>
AIM V.I. Capital Appreciation Fund Lincoln Life Variable Annuity The Lincoln National Life Insurance Company:
AIM V.I. Diversified Income Fund Account N Flexible Premium Variable Annuity Contracts
AIM V.I. Growth Fund AN425LL
AIM V.I. International Equity Fund Lincoln Life Flexible Premium and state variations thereof
AIM V.I. Value Fund Variable Life Account M
The Lincoln National Life Insurance Company:
Lincoln Life Flexible Premium Flexible Premium Variable Life Insurance
Variable Life Account R Policy LN605LULN615LULN617LL
and state variations thereof
The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance
Policy On the Lives of Two Insureds LN650LL
and state variations thereof
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule A to be executed in its name and behalf of its duly authorized officer
on the date specified below. All other terms and provisions of the Agreement not
amended herein shall remain in full force and effect.
Effective Date:
Attest:
Name: Nancy L. Martin
Title: Assistant Secretary
(SEAL)
PAA28AVI.AGR
111098 (2) rr
AIM VARIABLE INSURANCE FUNDS, INC.
'By: -
Name.- Robert H. Graham
Title: President
1 of 2
<PAGE>
A I M DISTRIBUTORS, IN
Attest:
Name: Nancy L. Martin
Title: Assistant Secretary
(SEAL)
Attest:
Name: Steven M. Kluever
Title: Assistant Vice President
(SEAL)
PAA28AVI.AGR 111098 (2) rr
C.
By:
Name: Michael J. Cemo
Title: President
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
Name: Kelly D. Clevenger
Title: Vice President
2 of 2
<PAGE>
Exhibit A
<TABLE>
<CAPTION>
Funds Available to Name of Separate Accounts
the Separate Accounts Utilizing Some or All of the Funds Policy/Contract Name(s) Policy/Contract Numbers(s)
- --------------------- ---------------------------------- ----------------------- --------------------------
<S> <C> <C> <C>
No Change No Change No Change New Contract Numbers:
Under the 2nd bullet, please
add: LN 660
Under the 3rd bullet, please
add: LN 650
</TABLE>
<PAGE>
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 16, 1998, by and
among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware Corporation and The Lincoln National Life
Insurance Company, an Indiana life insurance company, is hereby amended as
follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced
with the following:
SCHEDULE A
<TABLE>
<CAPTION>
- -------------------------------------- --------------------------------- ----------------------------------------------------------
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES UTILIZING SOME OR SEPARATE ACCOUNTS
ALL OF THE FUNDS
- -------------------------------------- --------------------------------- ----------------------------------------------------------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund Lincoln Life Variable Annuity - The Lincoln National Life Insurance Company:
AIM V.I. Diversified Income Fund Account N Flexible Premium Variable Annuity Contracts
AIM V.I. Growth Fund AN425LL
AIM V.I. International Equity Fund Lincoln Life Flexible Premium and state variations thereof
AIM V.I. Value Fund Variable Life Account M
- The Lincoln National Life Insurance Company:
Lincoln Life Flexible Premium Flexible Premium Variable Life Insurance
Variable Life Account R Policy LN605LL/LN615LL/LN617LL/LN660/
LN680 and state variations thereof
- The Lincoln National Life Insurance Company:
Flexible Premium Variable Life Insurance Policy On
the Lives of Two Insureds LN650LL/LN655 and state
variations thereof
- -------------------------------------- --------------------------------- ----------------------------------------------------------
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule A to be executed in its name and behalf of its duly authorized officer
on the date specified below. All other terms and provisions of the Agreement not
amended herein shall remain in full force and effect.
Effective Date:
----------------
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: By:
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
(SEAL)
1 of 2
<PAGE>
A I M DISTRIBUTORS, INC.
Attest: By:
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Attest: By:
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------- ---------------------------
(SEAL)
2 of 2
<PAGE>
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 11th day of May, 1998, by and between BT
Insurance Funds Trust ("TRUST"), a Massachusetts business trust, Bankers Trust
Company ("ADVISER"), a New York banking corporation, and The Lincoln National
Life Insurance Company ("LIFE COMPANY"), a life insurance company organized
under the laws of the State of Indiana.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the ... 40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, TRUST is comprised of several series funds (each a "Portfolio"),
with those Portfolios currently available being listed on Appendix A hereto; 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 ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, TRUST may also offer its shares to certain qualified pension and
retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC, granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the TRUST to be sold to and held by Variable Contract Separate
Accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans ("Exemptive Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
Separate Accounts to offer Variable Contracts and is desirous of having TRUST as
one of the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act of
1940, as amended (the "Advisers Act") and as such is excluded from the
definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
1
<PAGE>
WHEREAS, ADVISER serves as the TRUST's investment adviser; 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 such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, and ADVISER 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 on Appendix B for investment
of purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in TRUST's Registration Statement.
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 the
designated Separate Account and receipt by such designee shall constitute
receipt by TRUST; provided that LIFE COMPANY receives the order by 4:00 p.m. New
York time and TRUST receives notice from LIFE COMPANY by telephone or facsimile
(or by such other means as TRUST and LIFE COMPANY may agree in writing) of such
order by 9:00 a.m. New York time on the next 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 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, in accordance with the provisions of
this Agreement and TRUST's Registration Statement (in the event of a conflict
between the provisions of this Agreement and the Trust's Registration Statement,
the provisions of the Registration Statement shall govern.) For purposes of this
Section 1.3, LIFE COMPANY shall be the designee of TRUST for receipt of requests
for redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by TRUST; provided that LIFE COMPANY receives the
request for redemption by 4:00 p.m. New York time and TRUST receives notice from
LIFE COMPANY by telephone or facsimile (or by such other means as TRUST and LIFE
COMPANY may agree in
2
<PAGE>
writing) of such request for redemption by 9:00 a.m. New York time on the next
Business Day.
1.4 TRUST shall furnish, on or before each 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. LIFE COMPANY reserves
the right to change such election. TRUST shall notify LIFE COMPANY or its
designee of the number of shares so issued as payment of such dividends and
distributions.
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 6:30 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 on each day for which such incorrect information was
provided to reflect the correct share net asset value. Any material error in the
calculation of net asset value per share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY.
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 9:00 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account by 2:00 pm 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 by 2:00 pm that day, unless doing so would require
TRUST to dispose of Portfolio securities or otherwise incur additional costs. In
any event, proceeds shall be wired to LIFE COMPANY within the time period
permitted by the '40 Act or the rules, orders or regulations thereunder, and
TRUST shall notify the
3
<PAGE>
person designated in writing by LIFE COMPANY as the recipient for such notice of
such delay by 3:00 p.m. New York Time on 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 advised by ADVISER, TRUST shall so-apply such proceeds
on the same Business Day that LIFE COMPANY transmits such order to TRUST.
1.8 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 Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
TRUSTs Portfolios will not be sold directly to the general public.
1.9 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
TRUST 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 the TRUST
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1. 10 Issuance and transfer of Portfolio shares will -be by book entry
only. Stock certificates will not be issued to LIFE COMPANY or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and validly existing under the laws of Indiana 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 (the ... 34 Act").
2.2 LIFE COMPANY represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts, and that
4
<PAGE>
the Variable Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws (including all applicable
blue sky laws and further that the sale of the variable contracts shall comply
in all material respects with applicable state insurance law suitability
requirements).
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance
policies, endowment or annuity contracts under applicable provisions of the
Code, that it will maintain such treatment and that it will notify TRUST im
mediately Upon having a reasonable basis for believing that the Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal 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, subject to Section 1.9 above, shall amend its registration statement
under the '33 Act and the '40 Act from time to time as required in order to
effect the continuous offering of its shares. TRUST shall register and qualify
its shares for sale in accorda n with the laws of the various states only if and
to the extent deemed advisable by TRUST.
2.6 TRUST and ADVISER each 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 and
will immediately take all reasonable steps to adequately diversify the Portfolio
to achieve compliance.
2.7 TRUST represents and warrants that each Portfolio invested in by the
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8 ADVISER represents and warrants that it shall perform its obligations
hereunder in compliance in all material respects with all applicable state and
federal laws.
2.9 TRUST and ADVISER each represents and warrants that all officers,
employees and agents of the TRUST having access to securities or funds of any
Portfolio shall be covered by a blanket fidelity bond in such minimum amount as
the SEC may prescribe under Section 17 (g) of the '40 act.
5
<PAGE>
Article Ill. 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 and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide LIFE COMPANY, free of charge,
with as many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports and proxy statements for
the shares of the Portfolios as LIFE COMPANY may reasonably request for
distribution to existing Variable Contract owners whose Variable Contracts are
funded by such shares. TRUST or its designee shall provide LIFE COMPANY, at LIFE
COMPANY's expense, with as many copies of the current prospectus (or
prospectuses) for the shares as LIFE COMPANY may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
LIFE COMPANY, TRUST or its designee shall provide such documentation [including
a "camera ready" copy of the current prospectus (or prospectuses) for the
Portfolios used in THE LIFE COMPANY'S Variable Contracts as set in type or, at
the request of LIFE COMPANY, as a diskette in the form sent to the financial
printer] and other assistance as is reasonably necessary in order for the
parties hereto once a year [or more frequently if the prospectus (or
prospectuses), for such Portfolios for the shares is supplemented or amended] to
have the prospectus for the Variable Contracts and the prospectus (or
prospectuses) for the TRUST shares printed together in one document. The
expenses of such printing will be apportioned between LIFE COMPANY and TRUST in
proportion to the number of pages of the Variable Contract and TRUST prospectus,
taking account of other relevant factors affecting the expense of printing, such
as covers, columns, graphs and charts; TRUST shall bear the cost of printing the
TRUST prospectus portion of such document for distribution only to owners of
existing Variable Contracts funded by the' TRUST shares and LIFE COMPANY shall
bear the expense of printing the portion of such documents relating to the
Separate Account; provided, however, LIFE COMPANY shall bear all printing
expenses of such combined documents where used for distribution to prospective
purchasers or to owners of existing Variable Contracts not funded by the shares.
In the event that LIFE COMPANY requests that TRUST or its designee provide
TRUST's prospectus in a "camera ready" or diskette format, TRUST shall be
responsible for providing the prospectus (or prospectuses) in the format in
which it is accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus (or prospectuses) in such format (e.g. typesetting
expenses), and LIFE COMPANY shall bear the expense of adjusting or changing the
format to conform with any of its prospectuses.
6
<PAGE>
3.3 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, proxy statements,
exemptive applications and all amendments or supplements to any of the above
that relate to the Portfolios and any other material constituting sales
literature or advertising under NASD rules, the 40 Act or the 33 Act within 20
days of the date of such material and annual and semi-annual reports and any
amendments or supplements thereto within 80 days of the date of such report or
amendment or supplement thereto. LIFE COMPANY will provide TRUST with at least
one complete copy of all prospectuses, statements of additional information,
proxy statements, exemptive applications and all amendments or supplements to
any of the above that relate to a Separate Account and its investment in Trust
and any other material constituting sales literature or advertising under NASD
rules, the 40 Act or the 33 Act within 20 days of the date of such material and
annual and semi-annual reports and any amendments within 80 days of the date of
such report or amendment or supplement thereto.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and ADVISER, each piece of sales literature or other promotional material in
which TRUST or ADVISER is named, at least ten (10) Business Days prior to its
intended use. No such material will be used if TRUST or ADVISER objects to its
use in writing within seven (7) Business Days after receipt of such material.
4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least ten (10)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY objects to its use in writing within seven (7) Business Days after
receipt of such material.
4.3 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 or
prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by LIFE COMPANY or its designee, except with the written permission of
LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for
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<PAGE>
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 or ADVISER.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. ("NASD")
rules, the '40 Act, the '33 Act or rules thereunder.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that TRUST has received an order from the SEC
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit TRUST shares to be sold to and held by
Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires TRUST and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. The
TRUST will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings as are
imposed on LIFE COMPANY hereby.
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts and with participants of Qualified Plans investing in TRUST.
An irreconcilable material conflict may arise for a variety of reasons, which
may include: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of TRUST are being managed; (e) a difference in voting instructions
given by Variable Contract owners; (f) a decision by a Participating Insurance
Company
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<PAGE>
to disregard the voting instructions of Variable Contract owners and (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of plan participants.
5.3 LIFE COMPANY will report any potential or existing conflicts of which
it becomes aware to the Board. LIFE COMPANY will be responsible for assisting
the Board in carrying out its duties in this regard by providing the Board with
all information reasonably necessary for the Board to consider any issues
raised. The responsibility includes, but is not limited to, an obligation by the
LIFE COMPANY to inform the Board whenever it has determined to disregard
Variable Contract owner voting instructions. These responsibilities of LIFE
COMPANY will be carried out with a view only to the interests of the Variable
Contract owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting LIFE
COMPANY, LIFE COMPANY, at its expense and to the extent reasonably practicable
(as determined by a majority of the Board's disinterested Trustees), will take
any steps necessary to remedy or eliminate the irreconcilable material conflict,
up to and including; (a) withdrawing the assets allocable to some or all of the
Separate Accounts from TRUST or any Portfolio thereof and reinvesting those
assets in a different investment medium, which may include another Portfolio of
TRUST, or another investment company; (b) submitting the question as to whether
such segregation should be implemented to a vote of all affected Variable
Contract owners and as appropriate, segregating the assets of any appropriate
group (i.e variable annuity, or variable life insurance Contract owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option of
making such a change; and (c) establishing a new registered management
investment company (or series thereof) or managed separate account. If a
material irreconcilable conflict arises because of LIFE COMPANY's decision to
disregard Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, LIFE COMPANY
may be required, at the election of TRUST, to withdraw the Separate Account's
investment in TRUST, and no charge or penalty will be imposed as a result of
such withdrawal. The responsibility to take such remedial action shall be
carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
TRUST or ADVISER (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, LIFE COMPANY
shall not be required by this Section 5.4 to establish a new funding medium for
any Variable Contracts [if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.]
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<PAGE>
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 LIFE COMPANY shall from time to time submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations under this Article V.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as and to the extent the SEC continues to
interpret the '40 Act as requiring pass-through voting privileges for Variable
Contract owners. Accordingly, LIFE COMPANY, where applicable, will vote shares
of the Portfolio held in its 40 Act 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 Separate
Accounts that participates in TRUST calculates voting privileges in a manner
consistent with other Participating Insurance Companies. LIFE COMPANY will vote
shares in a registered Separate Account for which it has not received timely
voting instructions in the same proportion as it votes those shares in that
Separate 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 if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY LIFE COMPANY. LIFE COMPANY agrees to indemnify and
hold harmless TRUST, ADVISER and each of their Trustees, directors, principals,
officers, employees and agents and each person, if any, who controls TRUST or
ADVISER within the meaning of Section 15 of the '33 Act (collectively, the
"Indemnified Parties") 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 or threatened
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 TRUST's shares or the Variable Contracts and:
10
<PAGE>
(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 or sales literature 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 in writing 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 result from (i) 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, or persons under
its control) or (ii) willful misfeasance, bad faith or gross
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 in
writing to TRUST by or on behalf of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material breach
of this Agreement by LIFE COMPANY.
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<PAGE>
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 to the extent that such losses, claims,
damages, liabilities or litigation are attributable to 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.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify LIFE COMPANY of
any such claim shall not relieve LIFE COMPANY from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 INDEMNIFICATION BY TRUST AND ADVISER. TRUST and ADVISER each agree 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") against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of TRUST or ADVISER (which
consent shall not be unreasonably withheld) or litigation or threatened
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of TRUST's shares for 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
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<PAGE>
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 in writing to ADVISER I 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 result from (i) 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 ADVISER or TRUST or persons under its control) or (ii) gross
negligence, bad faith or willful misfeasance of TRUST or ADVISER 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 covering the Variable Contracts, or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished in writing to LIFE COMPANY for inclusion therein by or on behalf of
TRUST; or
(d) arise as a result of (i) a failure by TRUST or ADVISER to provide
substantially the services and furnish the materials under the terms of this
Agreement; or (ii) a failure by a Portfolio(s) invested in by the Separate
Account to comply with the diversification requirements of Section 817(h) of the
Code; or (iii) a failure by a Portfolio(s) invested in by the Separate Account
to qualify as a
regulated investment company" under Subchapter M of the Code; or
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<PAGE>
(e) arise out of or result from any material breach of any representation
and/or warranty made by TRUST or ADVISER in this Agreement or arise out
of or result from any other material breach of this Agreement by TRUST or
ADVISER.
7.5 TRUST and ADVISER shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent that such
losses, claims, damages, liabilities or litigation are attributable to 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.
7.6 TRUST and ADVISER shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified TRUST and ADVISER in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify TRUST and ADVISER
of any such claim shall not relieve TRUST and ADVISER from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, TRUST and ADVISER shall be
entitled to participate at their own expense in the defense thereof. TRUST and
ADVISER also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from TRUST or
ADVISER to such party of TRUST's or ADVISER's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and TRUST and/or ADVISER as the case may be
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
Article Vill. 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 180 days' written notice, unless a shorter time is agreed to by the
parties;
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<PAGE>
(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 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 ADVISER or any sub-adviser by the SEC, the NASD, or any
other regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in LIFE COMPANY's reasonable judgment, after
affording TRUST and ADVISER reasonable opportunity for consultation with
LIFE COMPANY, materially impair TRUST's ability to meet and perform
TRUST's obligations and duties hereunder, or result in material harm to
the Separate Accounts, LIFE COMPANY, or owners of Variable Contracts.
Prompt notice of 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 or ADVISER, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the NASD, or any other
regulatory body, the expected or anticipated ruling, judgment or outcome
of which would, in TRUST's or ADVISER's reasonable judgment, after
affording LIFE COMPANY reasonable opportunity for consultation with TRUST
and ADVISER, 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;
(f) At the option of TRUST if the Variable Contracts cease to- qualify as
annuity contracts or life insurance- contracts, as applicable,
15
<PAGE>
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 or ADVISER's breach of any
material provision of this Agreement, which breach has not been cured to
the reasonable satisfaction of LIFE COMPANY within ten days after written
notice of such breach is delivered to TRUST;
(h) At the option of TRUST or ADVISER, 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 or ADVISER, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such
occurrence without notice;
At the option of LIFE COMPANY, upon 75 days written notice of a vote of Variable
Contract owners having an interest in a Portfolio and upon written approval of
LIFE COMPANY, to substitute the shares of another investment company for the
corresponding shares of a Portfolio in accordance with the terms of the Variable
Contracts;
(k) In the event this Agreement is assigned without the prior written consent
of LIFE COMPANY, TRUST, and ADVISER,
termination shall be effective immediately upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, TRUST at LIFE COMPANY'S option shall continue to make available
additional TRUST shares, as provided below, for so long as TRUST 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 TRUST makes 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. If TRUST shares continue to be
made
16
<PAGE>
available after such termination, the provisions of this Agreement shall remain
in effect and thereafter either TRUST or LIFE COMPANY may terminate the
Agreement, as so continued pursuant to this Section 8.3, upon sixty (60) days
prior written notice to the other party.
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:
BT Insurance Funds Trust c/o First Data Investor Services Group, Inc. One
Exchange Place 53 State Street, Mail Stop BOS865 Boston, MA 02109
AND
c/o BT Alex Brown
One South Street, Mail Stop 1-18-6
Baltimore, MD 21202
Attn: Brian Wixted
If to ADVISER:
Bankers Trust Company
130 Liberty Street, Mail Stop 2355
New York, NY 10006
Attn.: Vinay Mendiratta
17
<PAGE>
If to LIFE COMPANY:
Lincoln National Life Insurance
Kelly D. Clevenger
1300 S. Clinton Street
Fort Wayne, IN 46802-3506
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 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Trustees or officers of TRUST or
any Portfolio shall be personally liable hereunder. No Portfolio shall be liable
for the liabilities of any other Portfolio. All persons dealing with TRUST or a
Portfolio must look solely to the property of TRUST or that Portfolio,
respectively, for enforcement of any claims against TRUST or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with LIFE COMPANY so that it is as if each of the
Portfolios had signed a separate Agreement with LIFE COMPANY and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
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10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
ADVISER and the LIFE COMPANY.
10.10 No failure or delay by a party in exercising any right or remedy
under this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
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.
BT INSURANCE FUNDS TRUST
By:
Name:
Title:
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<PAGE>
BANKERS TRUST COMPANY
By:
Name: Irene S. Greenberg
Title: Vice President
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By:
Name: Kelly D. Clevenger
Title: Vice President
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<PAGE>
Appendix A
BT Insurance Funds Trust Portfolios
Equity 500 Index Fund
Small Cap Index Fund
<PAGE>
APPENDIX B
SEPARATE ACCOUNTS
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE SEPARATE ACCOUNT M
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE SEPARATE ACCOUNT R
<PAGE>
AMENDMENT NO. 2
to the
FUND PARTICIPATION AGREEMENT
AMENDMENT, dated as of May 1, 1999, to the Fund Participation Agreement
dated 11th day of May, 1998 (the "Agreement"), by and between BT Insurance Funds
Trust ("Trust"), Bankers Trust Company ("Adviser"), and The Lincoln National
Life Insurance Company ("Life Company").
WHEREAS, Trust, Life Company and Adviser wish to revise Appendices A and B
to the Agreement;
NOW, THEREFORE, in accordance with Section 10.9 of the Agreement, Trust,
Life Company and Adviser hereby agree as follows:
I. Appendix A to the Agreement is hereby amended, and restated in its
entirety, by the Appendix A attached to this Amendment.
2. Appendix B to the Agreement is hereby amended, and restated in its
entirety, by the Appendix B attached to this Amendment.
Except as expressly set forth above, all other terms and provisions 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.
BT INSURANCE FUNDS TRUST
By
Name:
Title
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By:
Name:
Title: Vice President
BANKERS TRUST COMPANY
By:
Name:
Title:
<PAGE>
APPENDIX A
(Revised effective May 1, 1999)
BT INSURANCE FUNDS TRUST PORTFOLIOS
Equity 500 Index Fund
Small Cap Index Fund
EAFE Equity Index Fund
<PAGE>
APPENDIX B
(Revised effective May 1, 1999)
SEPARATE ACCOUNTS
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT Q
LINCOLN NATIONAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT 53
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE SEPARATE ACCOUNT M
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE SEPARATE ACCOUNT R
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT S
LINCOLN NATIONAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT 36
(EFFECTIVE AUGUST 13, 1999)
<PAGE>
AMENDMENT TO APPENDIX B
AS OF NOVEMBER 1, 1998
Lincoln National Variable Annuity Account C
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Variable Annuity Account N
Lincoln National Variable Annuity Account Q
Lincoln Life Flexible Premium Variable Life Account R
Lincoln National Life Insurance Company Separate Account 27
Lincoln National Life Insurance Company Separate Account 53
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule A to be executed in its name and behalf by its duly authorized officer
on the date specified below.
Date: BT INSURANCE FUNDS TRUST
By: Elizabeth Russell,
Secretary
Date: BANKERS TRUST COMPANY
By: Irene S. Greenberg,
Vice President
Date: THE LINCOLN NATIONAL LIFE INSURANCE COMPANY,
on behalf of itself and its separate accounts
and as principal underwriter for its separate
accounts
By: Kelly D. Clevenger,
Vice President
<PAGE>
Exhibit A
Funds Available to Name of Separate Accounts
THE SEPARATE ACCOUNTS UTILIZING SOME OR ALL OF THE FUNDS
Please amend Please add Lincoln Life Flexible
Appendix A of the FPA Premium Variable Life Account
and Exhibit A of the S and Lincoln National Life
Admin Services Letter Insurance Company Separate
to include the EAFE Account 36
Index Fund
<PAGE>
PARTICIPATION AGREEMENT
BETWEEN
LINCOLN NATIONAL LIFE INSURANCE COMPANY
AND
DELAWARE DISTRIBUTORS, LP
THIS AGREEMENT, made and entered into this 30th day of May, 1996, by
and between the LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana insurance
company (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 or deleted from Schedule 1 from time to time in accordance with the
provisions of Article IX of this Agreement (each such account is herein referred
to as the "Account"), and DELAWARE DISTRIBUTORS, LP, a Delaware limited
partnership (the "Distributor").
WHEREAS, the investment companies set forth on Schedule 2 to this
Agreement and such other investment companies that may be added to Schedule 2
from time to time in accordance with the provisions of Article IX of this
Agreement (such investment companies are herein referred to as the "Funds") are
engaged in business as open-end management investment companies;
WHEREAS, the common stock of each Fund (the "Fund shares") consists of
separate series ("Series") issuing separate classes of shares ("Series shares"),
each such class representing an interest in a particular managed portfolio of
securities and other assets;
WHEREAS, the Company has established the Accounts, to serve as
investment vehicles for the group annuity contracts offered by the Company
("Contracts"). Selection of a particular Account is made by the owner of a
Contract in accordance with the provisions of the applicable Contract;
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");
WHEREAS, the Distributor and each of the Funds have entered into
agreements (the "Fund Distribution Agreement") pursuant to which the Distributor
will distribute Fund shares;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Series shares on behalf of the
Account to fund the Contracts and the Distributor is authorized to sell such
Series shares to the Account at net asset value; and
<PAGE>
NOW, THEREFORE, in consideration of their mutual promises, the
Company, and the Distributor agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Distributor agrees to sell to the Company those Series shares
which the Company orders on behalf of the Account, executing such orders on a
daily basis in accordance with Section 1.4 of this Agreement.
1.2. Each Fund shall make the shares of its Series available for
purchase by the Company on behalf of the Account at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, each Fund shall use reasonable efforts to calculate such net asset
value on each such Business Day. The Company acknowledges that the Board of
Directors of the Funds (the "Fund Board") may suspend or terminate the offering
of a Fund's shares of any Series, 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 of any Series.
1.3. Each Fund shall redeem, at the Company's request, any full or
fractional shares of the Fund held by the Account or the Company, executing such
requests at the net asset value on a daily basis in accordance with Section 1.4
of this Agreement, the applicable provisions of the Investment Company Act of
1940 (the " 1940 Act") and the then currently effective prospectus for such Fund
("Fund Prospectus"). Notwithstanding the foregoing, the Company acknowledges
that the Fund may delay redemption of Fund shares of any Series to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
then currently effective Fund Prospectus.
1.4.
(a) For purposes of Sections 1. 1, 1.2 and 1.3, the Company shall
be the agent of the Distributor for the limited purpose of receiving
redemption and purchase requests from the Account (but not from the general
account of the Company), and receipt on any Business Day by the Company as
such limited agent of the Distributor prior to the time prescribed in the
current Fund Prospectus (which as of the date of execution of this
Agreement is 4 p.m.) shall constitute receipt by the Fund on that same
Business Day, provided that the Fund receives notice of such redemption or
purchase request by 9:30 a.m. Eastern Time 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.
2
<PAGE>
(b) The Company shall pay for shares of each Series on the same
Business Day it places an order with the Fund to purchase those Series
shares for an Account. Payment for Series shares will be made by the
Account or the Company in Federal Funds transmitted to the Fund by wire to
be received by 3:00 p.m. Eastern Time. If payment in federal funds for any
purchase is not received or is received by the Fund after 3: 00 p.m.
Eastern Time on such Business Day, the Company shall promptly, upon the
Fund's request, reimburse the Fund for any charges, costs, fees, interest
or other expenses incurred by the Fund in connection with any advances to,
or borrowings or overdrafts by, the Fund, or any similar expenses incurred
by the Fund, as a result of portfolio transactions effected by the Fund
based upon such purchase request. 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.
(c) Payment for Series shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the Company by wire to
be received by 3:00 p.m. Eastern Time on the Business Day the Fund is
notified of the redemption order of Series shares (unless redemption
proceeds are applied to the purchase of shares of other Series). If payment
in federal funds for any redemption is not received by 3:00 p.m. Eastern
Time on such Business Day, the Fund shall promptly, upon the Company's
request, reimburse the Company for any changes, costs, fees, interest or
other expenses incurred by the Company in connection with any advances to,
or borrowings or overdrafts by the Company, or any similar expenses
incurred by the Company as a result of redemption proceed payments effected
by the Company. The Company acknowledges that the Fund reserves the right
to delay payment of redemption proceeds, but in no event may such payment
be delayed longer than the period permitted under Section 22(e) of the 1940
Act. Neither the Fund nor the Distributor shall bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds;
the Company alone shall be responsible for such action.
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 Series shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any Series shares in the form of additional shares of that Series. The Company
reserves the right, on its behalf and on behalf of the Account, to revoke this
election and to receive all such dividends in cash. The Fund shall notify the
Company of the number of Series shares so issued as payment of such dividends
and distributions.
3
<PAGE>
1.7. The Fund shall use its best efforts to make the net asset value
per share for each Series available to the Company by 6:00 p.m. Eastern Time
each Business Day, and in any event, as soon as reasonably practicable after the
net asset value per share for such Series is calculated, and shall calculate
such net asset value in accordance with the then currently effective Fund
Prospectus. Neither the Fund, any Series, the Distributor, nor 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 or the Distributor or any of their
affiliates.
1.8.
(a) The Company may withdraw the Account's investment in the Fund
or a Series only: (i) as necessary to facilitate Contract owner requests;
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application or (iii) as determined by the
Company in its sole discretion, to be exercised in good faith, in order to
fulfill its fiduciary responsibilities under ERISA.
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that Fund shares may be
sold to other insurance companies and, the cash value of the Contracts may
be invested in other investment companies.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2. 1. The Company represents and warrants that the Contracts and any
certificates thereunder are not registered because they are properly exempt from
registration under the Securities Act of 1933 (" 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 and any
certificates thereunder 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 in
good standing under applicable law, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated investment
account under Indiana insurance laws, and that it has not registered the Account
in proper reliance upon an exclusion from registration under the 1940 Act.
2.2. The Distributor makes no representations as to whether any aspect
of the Funds' operations, including but not limited to, investment policies,
fees, and expenses, complies with the insurance and other applicable laws of the
various states.
2.3. The Distributor represents that the Fund is lawfully organized
and validly existing under the laws of the State of Maryland and it does and
will comply in all material respect with the 1940 Act.
4
<PAGE>
2.4. The Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
Distributor further represents that it will sell and distribute the Fund shares
in accordance with the laws of any applicable state and federal securities laws.
2.5 The Company represents that the Contracts are currently treated as
group annuity contracts under state law and applicable provisions of the
Internal Revenue Code of 1986, as amended and that it will make every effort to
maintain such treatment and that it will notify 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.
ARTICLE 111. PROSPECTUSES; SALES MATERIAL AND OTHER INFORMATION
3. 1. The Distributor shall provide the Company (at the Company's
expense) with as many copies of the current Fund Prospectus as the Company may
reasonably request.
3.2. The Fund Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Distributor, and the Distributor
shall provide such Statement free of charge to the Company and to any
outstanding or prospective Contract owner who requests such Statement.
3.3. The Company shall furnish each piece of sales literature or other
promotional material in which the Fund or the Distributor is named to the
Distributor prior to its use. No such material shall be used, except with the
prior written permission of the Distributor. The Distributor agrees to respond
to any request for approval on a prompt and timely basis. Failure of the
Distributor 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 Distributor.
3.4. The Company shall not give any information or make any
representations or statements on behalf of the Funds or concerning the Funds
other than the information or representations contained in the Funds' effective
registration statement (the "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 Funds, or in sales
literature or other promotional material approved by the Distributor, except
with the prior written permission of the Distributor. The Distributor agrees to
respond to any request for permission on a prompt and timely basis. Failure of
the Distributor 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 Distributor.
3.5. The Distributor shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations approved by the
Company. The Company agrees to respond
5
<PAGE>
to any request for permission on a prompt and timely basis. Failure of the
Company to respond within 10 days of the request by the Distributor shall
relieve the Distributor of the obligation to obtain the prior written permission
of the Company.
3.6. 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, signs or billboards, motion pictures or other public media), sales
literature (Le-, 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 NASD rules, the 1940 Act or the 1933 Act.
ARTICLE IV. VOTING
4.1 Unless otherwise required by applicable federal law, the Company
may vote Fund shares in its sole discretion.
ARTICLE V. FEES AND EXPENSES
5.1 The Distributor shall pay no fee or other compensation to the
Company under this Agreement.
5.2 All expenses incident to performance by the Distributor under this
Agreement shall be paid by the Distributor except as otherwise provided herein.
The Funds shall see to it that all their shares are registered and authorized
for issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by a Fund, in accordance with applicable state laws prior to
their sale. The Funds shall bear the expenses for the cost of registration and
qualification of the Funds' shares, preparation and filing of the Funds'
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 Funds'
shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus and SAI to owners of Contracts issued by the Company. If
required by applicable law, the Distributor, at its expense, shall provide the
Company with copies of the Funds' proxy
6
<PAGE>
material, reports to shareholders, and other communications to shareholders in
such quantity as the Company shall reasonably require for distributing the
Contract owners.
ARTICLE VI. INDEMNIFICATION
6. 1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Fund, the Distributor and each person who controls or is
associated with the Fund 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,
sales literature or other promotional material 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 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 Distributor) for use in the Contracts or
sales literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or any Fund shares;
(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 any
Fund shares;
(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 or the Distributor by or on behalf of the Company; or
7
<PAGE>
(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;
(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 NAV
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.
6.2. 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 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 any Fund shares;
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact by the Distributor (other than
statements or representations
8
<PAGE>
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 its control) or wrongful conduct of the
Distributor or persons under its control with respect to the sale or
distribution of the Contracts or any Fund shares;
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the Contracts or sales literature or other
promotional material for the Contracts (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance upon information
furnished in writing by the Distributor to the Company (or a person
authorized in writing to do so on behalf of the Distributor);
(d) arise out of a failure by the Fund to provide the Company
with accurate information sufficient for it to calculate its accumulation
and/or annuity unit values as required by law; or
(e) arise out of any material breach by the Distributor or the
Fund of this Agreement.
This indemnification will be in addition to any liability which the Distributor
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
6.3. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article VI 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 VI ("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 VI, 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
9
<PAGE>
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 VI. The
indemnification provisions contained in this Article VI shall survive any
termination of this Agreement.
ARTICLE VII. APPLICABLE LAW
7. 1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the principles of conflicts of laws.
7.2. 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 VIII. TERMINATION
8. 1. This Agreement shall terminate:
(a) at the option of any party upon six months advance
written notice to the other parties; or
(b) at the option of the Company if shares of any Series are
not reasonably 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, said termination to be
effective ten days after receipt of notice unless the Fund makes available
a sufficient number of Fund shares to meet the requirements of the
Contracts within said ten-day period; or
(c) at the option of the Distributor upon institution of
formal proceedings against the Company by the NASD, or upon institution of
formal proceedings against the Distributor or the Funds by 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 any Fund shares, or an expected or anticipated
ruling, judgment or
10
<PAGE>
outcome which would, in the Distributor's reasonable judgment, materially
impair the Company's ability to meet and perform the Company's obligations
and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Distributor by the NASD, or upon institution of
formal proceedings against the Distributor or the Funds by the SEC, or any
state securities or insurance commission or any other regulatory body; or
(e) at the option of the Company upon ten days advance
written notice to the Distributor if any 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 counsel satisfactory to such Fund that such Fund may fail
to so qualify; or
(f) at the option of Distributor upon thirty days advance
written notice to the Company, if the Distributor 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 any of the Funds or the Distributor; or
(g) at the option of the Company upon thirty days advance
written notice to the Distributor, if the Company shall determine, in its
sole judgment exercised in good faith, that any of the Funds or the
Distributor shall have been the subject of material adverse change which is
likely to have a material adverse impact upon the business and operations
of the Company.
8.2. NOTICE REQUIREMENT. Except as otherwise provided in Section 8. 1, no
termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties to
this Agreement of its intent to terminate which notice shall set forth the basis
for such termination. Furthermore:
(a) In the event that any termination is based upon the
provisions of Section 8. 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 8. 1 (c) or 8. 1 (d) of this Agreement, such prior
written notice shall be given at least ninety (90) days before the
effective date of termination.
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<PAGE>
8.3. Effect of Termination. Notwithstanding any termination of this
Agreement pursuant to Section 8.1 of this Agreement, the Distributor subject to
Section 1.2, at the option of the Company, shall continue to make available
additional Fund shares, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the Company so elects to make additional
Fund shares available, the owners of the Existing Contracts or the Company,
whichever shall have legal authority to do so, shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts.
ARTICLE IX. 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 or delete Funds. The provisions of this Agreement shall be equally
applicable to each such Contracts and Funds.
ARTICLE X. 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 Company:
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46809
Attn: Pension Product Management
If to the Distributor:
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
Attn: Ms. Minette van Noppen
12
<PAGE>
ARTICLE XI. MISCELLANEOUS
11.1. 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.
11.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
11.3. 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.
11. 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.
11.5. 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.
11.6. In each instance in this Agreement where an action, duty,
responsibility or undertaking is to be performed by the Fund, the Distributor
shall use its best efforts to cause the Fund to perform such action, duty,
responsibility or undertaking.
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<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.
LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Company)
Date: By:
Name:
Title:
DELAWARE DISTRIBUTORS, LP
(Distributor)
By: Delaware Distributors, Inc.
Date: By:
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<PAGE>
SCHEDULE I
Separate Accounts of Lincoln Life Insurance Company
Investing in the Fund
As of May 30, 1996
Lincoln National Life Insurance Company Separate Account 60
Lincoln National Life Insurance Company Separate Account 61
15
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SCHEDULE 2
Participating Funds
As of May 30, 1996
Delaware Group Global and International Funds, Inc.
Global Bond Series - Institutional Class
Delaware Group Decatur Fund, Inc.
Decatur Total Return Series - Institutional Class
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Formation of Separate Account 61
of
The Lincoln National Life Insurance Company
Pursuant to the authority given me by Resolution No. 93-18, dated May 13,
1993, of the Board of Directors of The Lincoln National Life Insurance Company
(the "Company"), I establish a separate account designated The Lincoln National
Life Insurance Company Separate Account 61 ("Account 61") as follows:
1. Account 61 is established to permit contractowners of certain group
annuity contracts (the "Contracts") issued by the Company to designate that
contributions to such Contracts be allocated in whole or in part to Account 61.
Account 61 is a separate investment account under Indiana insurance law.
2. The income, gains and losses from contributions allocated to Account 61
shall, in accordance with the Contracts, be credited to or charged against such
Account 61 without regard to other income, gains, or losses of the Company.
3. The fundamental investment policy of Account 61 shall be to invest and
reinvest contributions allocated to Account 61 in shares of Delaware Group
Decatur Fund, Decatur Total Return Series, a mutual fund. The Decatur Total
Return Series invests primarily in equity securities of U.S. companies.
4. Investments in Account 61 are required to conform at the time they are
made to the categories, conditions, limitations and standards set forth in the
Indiana insurance law (I.C. 27-1-12-2.5), and those limitations and standards
set forth in Prohibited Transaction Exemption 78-19, (redesignated PTE 90-1) 43
FED. REG. 59915 (Dec. 22, 1978), and all other applicable laws and regulations
relating to the investment of qualified pension plan assets in insurance company
separate accounts.
The effective date of Account 61 shall be June 1, 1996, regardless of the
date on which this document was signed.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By
Jon A. Boscia, President
The Lincoln National Life Insurance Company
Dated:
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Formation of Separate Account 60
of
The Lincoln National Life Insurance Company
Pursuant to the authority given me by Resolution No. 93-18, dated May 13,
1993, of the Board of Directors of The Lincoln National Life Insurance Company
(the "Company"), I establish a separate account designated The Lincoln National
Life Insurance Company Separate Account 60 ("Account 60") as follows:
1. Account 60 is established to permit contractowners of certain group
annuity contracts (the "Contracts") issued by the Company to designate that
contributions to such Contracts be allocated in whole or in part to Account 60.
Account 60 is a separate investment account under Indiana insurance law.
2. The income, gains and losses from contributions allocated to Account
60 shall, in accordance with the Contracts, be credited to or charged against
such Account 60 without regard to other income, gains, or losses of the Company.
3. The fundamental investment policy of Account 60 shall be to invest and
reinvest contributions allocated to Account 60 in shares of Delaware Group
Global and International Funds, Global Bond Series, a mutual fund. The Global
Bond Series invests primarily in debt securities of domestic and foreign
governments and corporations.
4. Investments in Account 60 are required to conform at the time they are
made to the categories, conditions, limitations and standards set forth in the
Indiana insurance law (I.C. 27-1-12-2.5), and those limitations and standards
set forth in Prohibited Transaction Exemption 78-19, (redesignated PTE 90-1) 43
FED. REG. 59915 (Dec. 22, 1978), and all other applicable laws and regulations
relating to the investment of qualified pension plan assets in insurance company
separate accounts.
The effective date of Account 60 shall be June 1, 1996, regardless of the
date on which this document was signed.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By
Jon A. Boscia, President
The Lincoln National Life Insurance Company
Dated:
<PAGE>
PARTICIPATION AGREEMENT
AMONG
DELAWARE GROUP PREMIUM FUND, INC.
AND
LINCOLN NATIONAL LIFE INSURANCE CO.
AND
DELAWARE DISTRIBUTORS, LP
THIS AGREEMENT, made and entered into this Ist day of May, 1996, by and
between DELAWARE GROUP PREMIUM FUND, INC., a corporation organized under the
laws of Maryland (the "Fund"), and LINCOLN NATIONAL LIFE INSURANCE CO., an
Indiana 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 DELAWARE DISTRIBUTORS, LP, a Delaware limited partnership
(the "Distributor").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts (collectively referred to as "Variable
Insurance Products," the owners of such products being referred to as "Product
owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the common stock of the Fund (the "Fund shares") consists of
separate series ("Series") issuing separate classes of shares ("Series shares"),
each such class representing an interest in a particular managed portfolio of
securities and other assets-, and
WHEREAS, the Fund filed with the Securities and Exchange Commission (the
"SEC") and the SEC has declared effective a registration statement (referred to
herein as the "Fund Registration Statement" and the prospectus contained
therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein as
the "Fund Prospectus") on Form N-lA to register itself as an open-end management
investment company (File No. 811-5162) under the Investment Company Act of 1940,
as amended (the " 1940 Act"), and the Fund shares (File No. 3 3 -143 63) under
the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has filed a registration statement with the SEC to
register under the 1933 Act certain variable annuity contracts described in
Schedule 2 to this Agreement as in effect at the time this Agreement is executed
and such other variable annuity contracts and variable life insurance policies
which may be added to Schedule 2 from time to time in accordance with Article XI
of this Agreement (such policies and contracts shall be referred to herein
collectively as the "Contracts," each such registration statement for a class or
classes of contracts
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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
WHEREAS, each Account, a validly existing separate account, duly authorized
by resolution 'of the Board of Directors of the Company on the date set forth on
Schedule 1, sets aside and invests assets attributable to the Contracts; and
WHEREAS, the Company has registered or will have registered each Account
with the SEC as a unit investment trust under the 1940 Act before any Contracts
are issued by that Account; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, the Distributor and the Fund have entered into an agreement (the
"Fund Distribution Agreement") pursuant to which the Distributor will distribute
Fund shares; and
WHEREAS, Delaware Management Company, 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 Series shares on behalf of each
Account to fund its Contracts and the Distributor is authorized to sell such
Series shares to unit investment trusts such as the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Distributor agree as follows:
ARTICLE 1. SALE OF FUND SHARES
1. 1. The Distributor agrees to sell to the Company those Series shares
which the Company orders on behalf of the Account, executing such orders on a
daily basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make the shares of its Series available for
purchase by the Company on behalf of the Account at the then applicable net
asset value per share on Business Days as defined in Section 1.4 of this
Agreement, and the Fund shall use its best efforts to calculate such net asset
value by 6:00 p.m., E.S.T., on each such Business Day. Notwithstanding any other
2
<PAGE>
provision in this Agreement to the contrary, the Board of Directors of the Fund
(the "Fund Board") may suspend or terminate the offering of Fund shares of any
Series, if such action is required by law or by regulatory authorities having
jurisdiction or if, in THE SOLE discretion of THE FUND BOARD acting in good
faith and in light of its fiduciary duties under Federal and any applicable
state laws, suspension or termination is necessary and in the best interests of
the shareholders of any Series (it being understood that "shareholders" for this
purpose shall mean Product owners).
1.3. The Fund agrees to redeem, at the Company's request, any full or
fractional shares of the Fund held by the Account or the Company, executing such
requests at the net asset value on a daily basis in accordance with Section 1.4
of this Agreement, the applicable provisions of the 1940 Act and the then
currently effective Fund Prospectus. Notwithstanding the foregoing, the Fund may
delay redemption of Fund shares of any Series to the extent permitted by the
1940 Act, any rules, regulations or orders thereunder, or the then currently
effective Fund Prospectus.
1.4.
(a) For purposes of Sections 1. 1, 1.2 and 1.3, the Company shall be
the agent of the Fund for the limited purpose of receiving redemption and
purchase requests from the Account (but not from the general account of the
Company), and receipt on any Business Day by the Company as such limited
agent of the Fund prior to the time prescribed in the current Fund
Prospectus (which as of the date of execution of this Agreement is 4 p.m.,
E.S.T.) shall constitute receipt by the Fund on that same Business Day,
provided that the Fund receives notice of such redemption or purchase
request by 11:00 a.m., E.S.T. on the next following Business Day. For
purposes of this Agreement, "Business Day" shall mean any day on which the
New York Stock exchange is open for trading.
(b) The Company shall pay for shares of each Series on the same day
that it places an order with the Fund to purchase those Series shares for
an Account. Payment for Series shares will be made by the Account or the
Company in Federal Funds transmitted to the Fund by wire to be received by
11: 00 a.m., E. S. T. on the day the Fund is properly notified of the
purchase order for Series shares. If Federal Funds are not received on
time, such funds will be invested, and Series shares purchased thereby will
be issued, as soon as practicable.
(c) Payment for Series shares redeemed by the Account or the Company
will be made in Federal Funds transmitted to the Company by wire on the day
the Fund is notified of the redemption order of Series shares, except that
the Fund reserves the right to delay payment of redemption proceeds, but in
no event may such payment be delayed longer than the period permitted under
Section 22(e) of the 1940 Act. Neither the Fund nor the Distributor shall
bear any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds; the Company alone shall be responsible for such
action.
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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
Series shares. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
Series shares in the form of additional shares of that Series. The Company
reserves the right, on its behalf and on behalf of the Account, to revoke this
election and to receive all such dividends in cash. The Fund shall notify the
Company of the number of Series shares so issued as payment of such dividends
and distributions.
1.7. The Fund shall use its best efforts to make the net asset value per
share for each Series available to the Company by 6 p.m., E.S.T. each Business
Day, and in any event, as soon as reasonably practicable after the net asset
value per share for such Series is calculated, and shall calculate such net
asset value in accordance with the then currently effective Fund Prospectus.
Neither the Fund, any Series, the Distributor, nor the Investment Manager nor
any of their affiliates shall be liable for any information provided to the
Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company to the Fund, the Distributor or the
Investment Manager.
1.8.
(a) The Company may withdraw the Account's investment in the Fund
or a Series only: (I) necessary to facilitate Contract owner requests; (ii)
upon a determination by a majority of the Fund Board, or a majority of
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (x) any Product Owners or (y) the interests
of the Participating Insurance Companies investing in the Fund; (iii) upon
requisite vote of the Contractowners having an interest in the affected
Series to substitute the shares of another investment company for Series
shares in accordance with the terms of the Contracts; (iv) as required by
state and/or federal laws or regulations or judicial or other legal
precedent of general application; or (v) at the Company's sole discretion,
pursuant to an order of the SEC under 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.
4
<PAGE>
(c) The Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action to operate
the Account as a management investment company under the 1940 Act.
1.9. The Fund and the Distributor agree that Fund shares will be sold only
to Participating Insurance Companies and their separate accounts. The Fund and
the Distributor will not sell Fund shares to any insurance company or separate
account unless an agreement complying with Article VII of this Agreement is in
effect to govern such sales. No Fund shares of any Series will be sold to the
general public.
ARTICLE H. 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 27-1-5-1 of the Indiana Insurance Code, and has registered
or, prior to the issuance of any Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
separate account for its Contracts, and that it will maintain such registrations
for so long as any Contracts issued under them are outstanding
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall remain
registered under the 1940 Act for so long as the Fund shares are sold. The Fund
further represents and warrants that it is a corporation duly organized and in
good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). The Fund further represents and warrants that it
will make every effort to continue to qualify and to maintain such qualification
(under Subchapter M or any successor or similar provision), and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
2.4. The Fund represents and warrants that it will comply with Section
817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and at the
time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code. The
Company shall make every effort to maintain such treatment and shall notify the
Fund and the Distributor immediately upon having a reasonable basis
5
<PAGE>
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; and with any state- mandated investment restrictions set
forth on Schedule 3, as amended from time to time by the Company in accordance
with Section 6.6. The Fund, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state. The Company alone shall be responsible for informing the Fund of
any investment restrictions imposed by state insurance law and applicable to the
Fund.
2.7. The Distributor represents and warrants that it is duly registered as
a broker-dealer under the 1934 Act, a member in good standing of the NASD, and
duly registered as a broker dealer under applicable state securities laws; its
operations are in compliance with applicable law, and it will distribute the
Fund shares according to applicable law.
2.8. The Distributor, on behalf of the Investment Manager, represents and
warrants that the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940 and is in compliance with applicable
federal and state securities laws.
2.9. The Fund represents and warrants that it has and maintains a fidelity
bond in accordance with Rule 17g- I under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS, SALES MATERIAL AND OTHER
INFORMATION
3. 1. The Distributor shall provide the Company with as many copies of the
current Fund Prospectus as the Company may reasonably request. If requested by
the Company in lieu thereof, the Fund at its expense shall provide to the
Company a camera-ready copy of the current Fund Prospectus suitable for printing
and other assistance as is reasonably necessary in order for the Company to have
a new Contracts Prospectus printed together with the Fund Prospectus in one
document. See Article V for a detailed explanation of the responsibility for the
cost of printing and distributing Fund prospectuses.
3.2. The Fund Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Distributor (or, in the Fund's
discretion, the Fund Prospectus shall state that such Statement is available
from the Fund), and the Distributor (or the Fund) shall provide such Statement
free of charge to the Company and to any outstanding or prospective Contract
owner who requests such Statement.
3.3. (a) The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and other communications to
shareholders (except proxy material), in each case in a form suitable for
printing. The Fund shall be responsible for the costs of printing and
distributing these materials to Contract owners.
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(b) The Fund at its expense shall be responsible for preparing,
printing and distributing its proxy material. The Company will provide the
appropriate Contractowner names and addresses to the Fund for this purpose.
3.4. The Company shall furnish each piece of sales literature or other
promotional material in which the Fund or the Investment Manager is named to the
Fund or the Distributor prior to its use. No such material shall be used, except
with the prior written permission of the Fund or the Distributor. The Fund and
the Distributor agree to respond to any request for approval on a prompt and
timely basis. 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 permission of the Fund.
3.6. The Fund and the Distributor shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account or the Contracts other than the information or representations contained
in the Contracts Registration Statement or Contracts Prospectus, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or in published reports of the Account which are in the public domain
or approved in writing by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved in writing by the
Company, except with the prior written permission of the Company. The Company
agrees to respond to any request for permission on a prompt and timely basis. If
the Company fails to respond within 10 days of a request by the Fund or the
Distributor, 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 shares, promptly 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, promptly after the filing of such document
with the SEC or other regulatory authorities.
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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 1111, 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 (Lie., any written communication distributed or made
generally available to customers or the public, in print or electronically,
including brochures, circulars, research reports, market letters, form letters,
seminar texts, or reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, Statements of Additional
Information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act or
the 1933 Act.
ARTICLE IV. Voting
4.1 Subject to applicable law and the order referred to in Article VII,
the Fund shall: solicit voting instructions from Contract owners,
4.2 Subject to applicable law and the order referred to in Article VII,
the Company shall:
(a) vote Fund shares of each Series attributable to Contract owners
in accordance with structions or proxies received in timely fashion from such
Contract owners;
(b) vote Fund shares of each Series attributable to Contract owners
for which no instructions have been received in the same proportion as Fund
shares of such Series for which instructions have been received in timely
fashion; and
(c) vote Fund shares of each Series held by the Company on its own
behalf or on behalf of the Account that are not attributable to Contract owners
in the same proportion as Fund shares of such Series for which instructions have
been received in timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. Fees and EXPENSES
All expenses incident to performance by the Fund under this Agreement
(including expenses expressly assumed by the Fund pursuant to this Agreement)
shall be paid by the Fund to the extent permitted by law. Except as may
otherwise be provided in Section 1.4 and Article VII of
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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- I under the 1940 Act.
The Fund is responsible for the cost of printing and distributing Fund
Prospectuses and SAIs to existing Contract owners. (If for this purpose the
Company prints the Fund Prospectuses and SAIs in a booklet containing disclosure
for the Contracts and for underlying funds other than those of the Fund, then
the Fund shall pay only its proportionate share of the total cost to distribute
the booklet to existing Contract owners.)
The Company is responsible for the cost of printing and distributing Fund
prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for
existing Contract owners. The Company shall have the final decision on choice of
printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
6. 1. The Fund undertakes to comply with Subchapter M and Section 817(h) of
the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration Statements under
the 1933 Act and the Account's Registration Statement under the 1940 Act from
time to time as required in order 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- I to finance distribution expenses.
(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.
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(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 November 2, 1987 of the Securities and Exchange Commission
under Section 6 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 or any Series and reinvesting
such assets in a different investment vehicle, including another Series of the
Fund, or submitting the question of whether such segregation should be
implemented to a vote of all affected Contractowners and, as appropriate,
segregating the assets of any particular group (i.e., variable annuity
Contractowners, variable life insurance policyowners, or variable Contractowners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contractowners the option of making
such a change; and (b) establishing a new registered mutual fund or management
separate account, or taking such other action as is necessary to remedy or
eliminate the irreconcilable material conflict.
(b) If the Company disagrees with the Board's determination, the
Company shall file a written protest with the Board, reserving its right to
dispute the determination as between just the Company and the Fund. After
reserving that right the Company, although disagreeing with the Board that it
(the Company) was responsible for the conflict, shall take the necessary steps,
under protest, to remedy the conflict, substantially in accordance with
paragraph (a) just above, for the protection of Contractowners.
(c) As between the Company and the Fund, if within 45 days after the
Board's determination the Company elects to press the dispute, it shall so
notify the Board in writing. The parties shall then attempt to resolve the
matter amicably through negotiation by individuals from each party who are
authorized to settle the controversy.
10
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If the matter has not been amicably resolved within 60 days from the date
of the Company's notice of its intent to press the dispute, then before either
party shall undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance with the CPR Rules
for Non-Administered Arbitration of Business Disputes, by a sole arbitrator;
PROVIDED, HOWEVER, that if one party has requested the other party to seek an
amicable resolution and the other party has failed to participate, the
requesting party may initiate arbitration before expiration of the 60-day period
set out just above.
If within 45 days of the commencement of the process to select an
arbitrator the parties cannot agree upon the arbitrator, then he or she will be
selected from the CPR Panels of Neutrals. The arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of arbitration
shall be Fort Wayne, Indiana. The Arbitrator is not empowered to award damages
in excess of compensatory damages.
(d) If the Board shall determine that the Fund or another insurer was
responsible for the conflict, then the Board shall notify the Company
immediately of that determination. The Fund shall assure the Company that it
(the Fund) or that other insurer, as applicable, shall, at its sole cost and
expense, take whatever steps are necessary to eliminate the conflict.
7.3. If a material irreconcilable conflict arises because of the Company's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
shall withdraw (without charge or penalty) the Account's investment in the Fund,
if the Fund so elects.
7.4 Subject to the terms of Section 7.2 above, the Company shall carry out
the responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict with a view only to the interests of
Contract Owners.
7.5. For purposes of this Article, a majority of the disinterested members
of the Board shall determine whether or not any proposed action adequately
remedies any irreconcilable conflict, but in no event will the Fund be required
to establish a new funding medium for any variable contract, nor will the
Company be required to establish a new funding medium for any Contract if an
offer to do so has been declined by a vote of a majority of affected
Contractowners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless the Fund, the Distributor and each person who controls or is
associated with the Fund (other than another Participating Insurance Company) or
the Distributor within the meaning of such terms under the federal securities
laws and any officer, trustee, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Contracts
Registration Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts themselves(or any
amendment or supplement to any of the foregoing(, or arise out of or are
11
<PAGE>
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if such
statement or omission or such alleged statement or alleged omission was
made in reliance upon and in conformity with information furnished in
writing to the Company by the Fund or the Distributor (or a person
authorized in writing to do so on behalf of the Fund or the Distributor)
for use in the Contracts Registration Statement, Contracts Prospectus or in
the Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(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 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
Fund by or on behalf of the Company; or
(d) arise as a result of any failure by the Company to provide the
services and furnish the materials or to make any payments under the terms
of this Agreement; or
(e) arise out of any material breach by the Company of this Agreement,
including but not limited to any failure to transmit a request for
redemption or purchase of Fund shares on a timely basis in accordance with
the procedures set forth in Article 1; or
(f) arise as a result of the Company's providing the Fund with
inaccurate information, which causes the Fund to calculate its Net Asset
Values incorrectly.
This indemnification will be in addition to any liability which the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the 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:
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 or the Distributor for use in the Fund
Registration Statement, Fund Prospectus (or any amendment or supplement
thereto) or sales literature for the Fund or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the Distributor or the Fund
(other than statements or representations contained in the Fund
Registration Statement, Fund Prospectus or sales literature or other
promotional material of the Fund not supplied by the Distributor or the
Fund or persons under their control) or wrongful conduct of the Distributor
or persons under its control with respect to the sale or distribution of
the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Contract's Registration Statement, Contracts
Prospectus or sales literature or other promotional material for the
Contracts (or any amendment or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in 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 or the Fund to the Company (or a person authorized in writing
to do so on behalf of the Fund or the Distributor); or
(d) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including, but not by way of limitation, a failure, whether unintentional
or in good faith or otherwise: (i) to comply with the diversification
requirements specified in Article VI of this Agreement; and (ii) to provide
the Company with accurate information sufficient for it to calculate its
accumulation and/or annuity unit values in timely fashion as required by
law and by the Contracts Prospectuses); or
(e) arise out of any material breach by the Distributor or the Fund of
this Agreement.
This indemnification will be in addition to any liability which the Distributor
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the 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 ("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
13
<PAGE>
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 Indiana,
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 six months advance written notice
to the other parties; or
(b) at the option of the Company if shares of any Series are not
available to meet the requirements of the Contracts as determined by the
Company. Prompt notice of the election to terminate for such cause shall be
furnished by the Company. Termination shall be effective ten days after the
giving of notice by the Company; or
(c) at the option of the Fund upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission of any
state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the operation of
the Account, the administration of the Contracts or the purchase of Fund
shares, or an expected or anticipated ruling, judgment or outcome which
would, in the Fund's reasonable
14
<PAGE>
judgment, materially impair the Company's ability to perform the
Company's obligations and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the Distributor, the Investment Manager or
any Sub-Investment Manager, by the NASD, the SEC, or any state securities
or insurance commission or any other regulatory body regarding the duties
of the Fund or the Distributor under this Agreement, or an expected or
anticipated ruling, judgment or outcome which would, in the Company's
reasonable judgment, materially impair the Fund's or the Distributor's
ability to perform Fund's or Distributor's obligations and duties
hereunder; or
(e) at the option of the Company upon institution of formal
proceedings against the Investment Manager or Sub-investment Manager by the
NASD, the SEC, or any state securities or insurance commission or any other
regulatory body which would, in the good faith opinion of the Company,
result in material harm to the Accounts, the Company, or Contractowners.
(f) upon requisite vote of the Contract owners having an interest in
the affected Series (unless otherwise required by applicable law) and
written approval of the Company, to substitute the shares of another
investment company for the corresponding Series shares of the Fund in
accordance with the terms of the Contracts; or
(g) at the option of the Fund in the event any of the Contracts are
not registered, issued or sold in accordance with applicable Federal and/or
state law; or
(h) at the option of the Company or the Fund upon a determination by
a majority of the Fund Board, or a majority of disinterested Fund Board
members, that an irreconcilable material conflict exists among the
interests of (i) any Product owners or (ii) the interests of the
Participating Insurance Companies investing in the Fund; or
(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
15
<PAGE>
business or financial condition; or (2) the Company shall have been the
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of either the Fund or the
Distributor; or
(m) at the option of the Company, if the Company shall determine, in
its sole judgment exercised in good faith, that either: (1) the Fund and
the Distributor, or either of them, shall have suffered a material adverse
change in their respective businesses or financial condition; or (2) the
Fund or the Distributor, or both of them, shall have been the subject of
material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Company; or
(n) upon the assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Accounts to another
insurance company pursuant to an assumption reinsurance agreement) unless
the non-assigning party consents thereto or unless this Agreement is
assigned to an affiliate of the Distributor.
10.2. Notice REQUIREMENT. Except as otherwise provided in Section 10. 1, no
termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties to
this Agreement of its intent to terminate which notice shall set forth the basis
for such termination. Furthermore:
(a) In the event that any termination is based upon the provisions of
Article VII or the provisions of Section 10. 1 (a) of this Agreement, such
prior written notice shall be given in advance of the effective date of
termination as required by such provisions; and
(b) in the event that any termination is based upon the provisions
of Section 10. 1 (c) or 10. 1 (d) of this Agreement, such prior written
notice shall be given at least ninety (90) days before the effective date
of termination, or sooner if required by law or regulation.
(c) in the event that any termination is based upon the provisions
of Section 10. 1 (e) of this Agreement, such prior written notice shall be
given at least sixty (60) days before the date of any proposed vote to
replace the Fund's shares.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement, the Fund and the Distributor will, at the
option of the Company, continue to make available additional Fund shares
for so long after the termination of this Agreement as the Company desires,
pursuant to the terms and conditions of this Agreement as provided in
paragraph (b) below, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, if the Company so elects to
make additional Fund shares available, the owners of the Existing Contracts
or the Company, whichever shall have legal authority to do so, shall be
permitted to reallocate investments in the Fund, redeem investments in the
Fund and/or invest in the Fund upon the making of additional purchase
payments under the Existing Contracts.
(b) In the event of a termination of this Agreement pursuant to
Section 10. 1 of this Agreement, the Fund and the Distributor shall
promptly notify the Company whether
16
<PAGE>
the Distributor and the Fund will continue to make Fund shares available
after such termination. If Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in effect
except for Section 10. 1 (a) and thereafter either the Fund or the Company
may terminate the Agreement, as so continued pursuant to this Section 10.3,
upon prior written notice to the other party, such notice to be for a
period that is reasonable under the circumstances but, if given by the
Fund, need not be for more than six months.
(c) The parties agree that this Section 10.3 shall not apply to any
termination made pursuant to Article VII or any conditions or undertakings
incorporated by reference in Article VII and the effect of such Article VII
termination shall be governed by the provisions set forth or incorporated
by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts and to add
new classes of variable annuity contracts and variable fife insurance policies
to be issued by the Company through a Separate Account investing in the Fund.
The provisions of this Agreement shall be equally applicable to each such class
of contracts or policies, unless the context otherwise requires.
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:
Delaware Group Premium Fund, Inc.
Ten Penn Center Plaza
Philadelphia, PA 19103
Attn: Christopher Price
If to the Company:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
If to the Distributor:
Delaware Distributors, Inc.
Ten Penn Center Plaza
Philadelphia, PA 19103
Attn: Keith E. Mitchell
17
<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.
18
<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.
DELAWARE GROUP PREMIUM FUND, INC. (Fund)
Date: By:
Name:
Title:
LINCOLN NATIONAL LIFE INSURANCE CO. (Company)
Date: By:
Name:
Title:
DELAWARE DISTRIBUTORS, LP (Distributor)
Date: By:
Name:
Title:
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.
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.
DELAWARE GROUP PREMIUM FUND, INC. (Fund)
Date: By:
Name:
Title:
LINCOLN NATIONAL LIFE INSURANCE CO. (Company)
Date: By:
Name:
Title:
DELAWARE DISTRIBUTORS, LP (Distributor)
Date: By:
Name:
Title:
19
<PAGE>
SCHEDULE I
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of May 1, 1996
Lincoln National Variable Annuity Account C
Lincoln Life Flexible Premium Variable Life Account K
20
<PAGE>
SCHEDULE 2
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule I
As of May 1, 1996
Multi Fund Variable Annuity Contracts
Multi Fund Variable Life Insurance Contracts
21
<PAGE>
SCHEDULE 3
State-mandated Investment Restrictions
Applicable to the Fund
As of May 1, 1996
The California Department of Insurance has established the following Guidelines
for an underlying portfolio of a Separate Account:
Borrowing. Borrowing limits for any variable contract separate account portfolio
are (1) 10% of net asset value when borrowing for any general purpose; and (2)
25% of net asset value when borrowing as a temporary measure to facilitate
redemptions. Net asset value of a portfolio is the market value of all
investments or assets owned less outstanding liabilities of the portfolio at the
time that any new or additional borrowing is undertaken.
FOREIGN INVESTMENTS - DIVERSIFICATION.
1. A portfolio will be invested in a minimum of five different foreign
countries at all times. However, this minimum is reduced to four when foreign
investments comprise less than 80% of the portfolio's net asset value; to three
when less than 60% of that value; to two when less than 40%; and to one when
less than 20%.
2. Except as set forth in items 3 and 4 below, a Portfolio will have no more
than 20% of its net asset value invested in securities of issuers located in any
one country.
3. A Portfolio may have an additional 15% of its net asset value invested in
securities of issuers located in any one of the following countries: Australia,
Canada, France, Japan, the United Kingdom or Germany.
4. A Portfolio's investments in United States issuers are not subject to the
foreign country diversification guidelines.
22
<PAGE>
AMENDMENT TO SCHEDULE 1
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of May 1, 2000
Lincoln National Variable Annuity Account C
Lincoln Life Flexible Premium Variable Life Account K
Lincoln National Variable Annuity Account L
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Variable Annuity Account N
Lincoln Life Variable Annuity Account Q
Lincoln Life Flexible Premium Variable Life Account R
Lincoln Life Flexible Premium Variable Life Account S
Lincoln National Life Insurance Company Separate Account 53
<PAGE>
AMENDMENT TO SCHEDULE 2
Variable Annuity Contracts and
Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
Multi Fund-Registered Trademark- Individual Variable Annuity Contract
(Registered and non-registered)
Multi Fund-Registered Trademark- Variable Life Insurance Contract
Group Multi Fund-Registered Trademark- Variable Annuity Contract
Delaware-Lincoln New York ChoicePlus Variable Annuity Contract
VUL I Variable Universal Life Insurance Contract
Lincoln VUL Variable Universal Life Insurance Contract
Lincoln VUL(DB) Variable Universal Life Insurance Contract
eAnnuity(TM) Variable Annuity Contract
SVUL I Variable Universal Life Insurance Contract
Lincoln SVUL Variable Universal Life Insurance Contract
Lincoln SVUL II Variable Universal Life Insurance Contract
Lincoln CVUL Variable Universal Life Insurance Contract
Lincoln CVUL Series III Variable Universal Life Insurance Contract
Group Variable Annuity (GVA) I, II, 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.
DELAWARE GROUP PREMIUM FUND (Fund)
Date: By:
---------------- -----------------------
Name:
Title:
LINCOLN NATIONAL LIFE INSURANCE COMPANY
Date: By:
---------------- -----------------------
Steven M. Kluever
Second Vice President
DELAWARE DISTRIBUTORS, LP (Distributor), by
DELAWARE DISTRIBUTORS, INC., General Partner
Date: By:
---------------- -----------------------
Name:
Title:
<PAGE>
AMENDMENT TO SCHEDULE 2
Variable Annuity Contracts and
Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
Multi Fund-Registered Trademark- Individual Variable Annuity Contracts
(Registered and non-registered)
Multi Fund-Registered Trademark- Variable Life Insurance Contracts
Group Multi Fund-Registered Trademark- Variable Annuity Contracts
Delaware-Lincoln ChoicePlus Variable Annuity Contracts
VUL I Variable Universal Life Insurance Contracts
Lincoln VUL Variable Universal Life Insurance Contracts
eAnnuity(TM) Variable Annuity Contracts
SVUL I Variable Universal Life Insurance Contracts
Lincoln SVUL Variable Universal Life Insurance Contracts
Lincoln CVUL Variable Universal Life Insurance Contracts
Lincoln VUL(DB) Variable Universal Life Insurance Contracts
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule 2 to be executed in its name and behalf by its duly authorized officer
on the date specified below.
DELAWARE GROUP PREMIUM FUND, INC. (Fund)
Date: By:
-------------------- -----------------------------
LINCOLN NATIONAL LIFE INSURANCE COMPANY
Date: By:
-------------------- -----------------------------
Steven M. Kluever
Second Vice President
DELAWARE DISTRIBUTORS, LP (Distributor), by
DELAWARE DISTRIBUTORS, INC., General Partner
Date: By:
-------------------- -----------------------------
<PAGE>
AMENDMENT TO SCHEDULE 1
Separate Accounts of Lincoln Life Insurance Company
Investing in the Fund
As of May 1, 1999
Lincoln National Variable Annuity Account C
Lincoln Life Flexible Premium Variable Life Account K
Lincoln Life Flexible Premium Variable Life Account M
Lincoln Life Variable Annuity Account N
Lincoln Life Flexible Premium Variable Life Account R
Lincoln Life Flexible Premium Variable Life Account S
Lincoln National Life Insurance Company Separate Account 53
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule 1 to be executed in its name and behalf by its duly authorized officer
on the date specified below.
DELAWARE GROUP PREMIUM FUND, INC (Fund)
Date: May 26, 1999 By:
------------------- --------------------------------
Jeffrey L. Nick
Chairman/President/Chief Executive
Officer
LINCOLN NATIONAL LIFE INSURANCE COMPANY
Date: June 4, 1999 By:
------------------- --------------------------------
Kelly D. Clevenger
Vice President
DELAWARE DISTRIBUTORS, LP (Distributor), by
DELAWARE DISTRIBUTORS, INC., General Partner
Date: May 26, 1999 By:
------------------- --------------------------------
Bruce D. Barton
President and Chief Executive Officer
--------------------------------
--------------------------------
<PAGE>
AMENDMENT TO SCHEDULE 2
Variable Annuity Contracts and
Variable Life Insurance Policies
Support by Separate Accounts
Listed on Schedule 1
As of May 1, 1999
Multi-Fund -Registered Trademark- Individual Variable Annuity Contracts
(Registered and Non-Registered)
Multi-Fund -Registered Trademark- Variable Life Insurance Contracts
Group Multi-Fund -Registered Trademark- Variable Annuity Contracts
Delaware-Lincoln Accru ChoicePlusVariable Annuity Contracts
VUL I Variable Universal Life Insurance Contracts
Lincoln VUL Variable Universal Life Insurance Contracts
e-Annuity tm Variable Annuity Contracts
SVUL I Variable Universal Life Insurance Contracts
Lincoln SVUL Variable Universal Life Insurance Contracts
CVUL Variable Universal Life Insurance Contracts
<PAGE>
AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
(FORMER TITLE: "AGREEMENT TO PURCHASE SHARES")
BETWEEN
THE LINCOLN NATIONAL LIFE INSURANCE CO.
AND
LINCOLN NATIONAL BOND FUND, INC.
THIS AGREEMENT, made and entered into this 1st day of July, 1998, by
and between Lincoln National Bond Fund, Inc. a corporation organized under the
laws of Maryland (the "Fund"), and THE LINCOLN NATIONAL LIFE INSURANCE CO., an
Indiana 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-lA 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; and
WHEREAS, pursuant to Articles of Merger approved by the Company in
1988, the Company succeeded to all the legal rights and responsibilities of
Lincoln National Pension Insurance Company, the signatory to the original
Agreement to Purchase Shares, which this Agreement amends and restates.
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
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<PAGE>
extent permitted by the 1940 Act, any rules, regulations or orders thereunder,
or the then currently effective Fund Prospectus.
1.4. (a) For purposes of Sections 1.1, 1.2 and 1.3, the
Company shall be the agent of the Fund for the limited purpose
of receiving redemption and purchase requests from the Account
(but not from the general account of the Company), and receipt
on any Business Day by the Company as such limited agent of
the Fund prior to the time prescribed in the current Fund
Prospectus (which as of the date of execution of this
Agreement is 4 p.m., E.S.T.) shall constitute receipt by the
Fund on that same Business Day, provided that the Fund
receives notice of such redemption or purchase request by 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 Email 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.
3
<PAGE>
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
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 Contractowners 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 27-1-5-1 of the Indiana Insurance Code, and has registered
or,
4
<PAGE>
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 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; and with any state- mandated investment restrictions set
forth on Schedule 3, as amended from time to time by the Company in accordance
with Section 6.6. The Fund, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state. The Company alone shall be responsible for informing the Fund of
any investment restrictions imposed by state insurance law and applicable to the
Fund.
2.7. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Fund shall provide the Company with as many copies of the
current Fund
5
<PAGE>
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 Contractowner 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 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
6
<PAGE>
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.
ARTICLE IV. VOTING
4.1. Subject to applicable law and the requirements of Article VII,
the Fund shall solicit voting instructions from Contract owners;
7
<PAGE>
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
6.1. The Fund undertakes to comply with Subchapter M and Section
817(h) of the
8
<PAGE>
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.
6.6. (a) When appropriate in order to inform the Fund of any
applicable state-mandated investment restrictions with which the
Fund must comply, the Company shall arrange with the Fund to
amend Schedule 3, pursuant to the requirements of Article XI.
(b) Should the Fund 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 VlI. 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
9
<PAGE>
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 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 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 (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 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. Sec. 1-16. The place
of arbitration shall be Fort Wayne, Indiana. The Arbitrator is
not empowered to award damages in excess of
10
<PAGE>
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 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 Contractowner 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 Contractowners.
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
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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 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
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<PAGE>
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:
(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
13
<PAGE>
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 ("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 Indiana,
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
14
<PAGE>
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
(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
15
<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
(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 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
16
<PAGE>
(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 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 Bond Fund, Inc.
17
<PAGE>
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
If to the Company:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Steven M. Kluever
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 Amended and Restated Fund Participation Agreement, as of its
effective date, hereby supersedes any and all prior agreements to purchase
shares between Lincoln Life and the Fund.
18
<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.
LINCOLN NATIONAL BOND FUND, INC.
Signature:
-----------------------------------------------
Name: Kelly D. Clevenger
----------------------------------------------------
Title: President
---------------------------------------------------
LINCOLN NATIONAL LIFE INSURANCE CO. (Company)
Signature:
-----------------------------------------------
Name: Stephen H. Lewis
----------------------------------------------------
Title: Senior Vice President, Lincoln National Life
Insurance Company
---------------------------------------------------
19
<PAGE>
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of July 1, 1998
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT D
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT K
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT Q
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT 53
20
<PAGE>
SCHEDULE 2
Lincoln National Bond Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of July 1, 1998
MULTI FUND VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
MULTI FUND VARIABLE LIFE
ACCRU CHOICEPLUS
GROUP MULTI FUND
MULTI FUND - NON-REGISTERED
21
<PAGE>
SCHEDULE 3
Lincoln National Bond Fund, Inc.
State-mandated Investment Restrictions
Applicable to the Fund
As of July 1, 1998
The California Department of Insurance has established the following Guidelines
for an underlying portfolio of a Separate Account:
BORROWING. The borrowing limit for any FUND is 331/3 percent of total assets.
Entering into a reverse repurchase agreement shall be considered "borrowing" as
that term is used herein.
FOREIGN INVESTMENTS - DIVERSIFICATION
The diversification guidelines to be followed by international and global FUNDS
are as follows:
a. An international FUND or a global FUND is sufficiently diversified if
it is invested in a minimum of three different countries at all times,
and has invested no more than 50 percent of total assets in any one
second-tier country and no more than 25 percent of total assets in any
one third-tier country. First-tier countries are: Germany, the United
Kingdom, Japan, the United States, France, Canada, and Australia.
Second-tier countries are all countries not in the first or third tier.
Third-tier countries are countries identified as "emerging" or
"developing" by the International Bank for Reconstruction and
Development ("World Bank") or International Finance Corporation.
b. A regional FUND is sufficiently diversified if it is invested in a
minimum of three countries. The name of the fund must accurately
describe the FUND.
c. The name of the single country FUND must accurately describe the FUND.
d. An index FUND must substantially mirror the index.
22
<PAGE>
Amendment to
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of May 1, 1999
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT D
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT K
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT Q
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT R
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT S
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT 53
<PAGE>
Amendment to
SCHEDULE 2
Lincoln National Bond Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 1999
MULTI FUND INDIVIDUAL VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
MULTI FUND VARIABLE LIFE
LINCOLN VUL
DELAWARE-LINCOLN CHOICEPLUS
GROUP MULTI-FUND
LINCOLN SVUL
LINCOLN CVUL
MULTI FUND - NON-REGISTERED
<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.
LINCOLN NATIONAL BOND FUND, INC.
Date: By:
---------------------------- ---------------------------
Kelly D. Clevenger
President and Chairman
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By:
---------------------------- ---------------------------
Stephen H. Lewis
Senior Vice President
<PAGE>
Amendment to
SCHEDULE 2
Lincoln National Bond Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
MULTI FUND INDIVIDUAL VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
MULTI FUND VARIABLE LIFE
LINCOLN VUL
DELAWARE-LINCOLN CHOICEPLUS
GROUP MULTI-FUND
LINCOLN SVUL
LINCOLN CVUL
MULTI FUND - NON-REGISTERED
LINCOLN VUL-DB-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule 2 to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN NATIONAL BOND FUND, INC.
Date: By:
---------------------------- ---------------------------
Kelly D. Clevenger
President and Chairman
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By:
---------------------------- ---------------------------
Stephen H. Lewis
Senior Vice President
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated July 1,
1998, by and among The Lincoln National Life Insurance Company and Lincoln
National Bond 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 5, 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 27-1-5-1
of the Indiana Insurance Code, 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 BOND FUND, INC.
Date: By:
---------------------------- ---------------------------
Name: Kelly D. Clevenger
Title: President
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By:
---------------------------- ---------------------------
Name: Stephen H. Lewis
Title: Senior Vice President
<PAGE>
AMENDED AND RESTATED
FUND PARTICIPATION AGREEMENT
(FORMER TITLE: "AGREEMENT TO PURCHASE SHARES")
BETWEEN
THE LINCOLN NATIONAL LIFE INSURANCE CO.
AND
LINCOLN NATIONAL MONEY MARKET FUND, INC.
THIS AGREEMENT, made and entered into this 7th day of June, 1998, by and
between Lincoln National Money Market Fund, Inc. a corporation organized under
the laws of Maryland (the "Fund"), and THE LINCOLN NATIONAL LIFE INSURANCE CO.,
an Indiana 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-lA 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 Email 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 27-1-5-1 of the Indiana Insurance Code, 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.
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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; and with any state- mandated investment restrictions set
forth on Schedule 3, as amended from time to time by the Company in accordance
with Section 6.6. The Fund, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state. The Company alone shall be responsible for informing the Fund of
any investment restrictions imposed by state insurance law and applicable to the
Fund.
2.7. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The 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
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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 Contractowner 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 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.
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<PAGE>
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.
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
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<PAGE>
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
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
8
<PAGE>
required by applicable securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under the
1933 Act and the 1940 Act from time to time as required in order to effect for
so long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by applicable
securities laws of the various states.
6.4. The Company shall be responsible for assuring that any prospectus
offering a Contract that is a life insurance contract where it is reasonably
possible that such Contract would be deemed a "modified endowment contract," as
that term is defined in Section 7702A of the Code, will describe the
circumstances under which a Contract could be treated as a modified endowment
contract (or policy).
6.5. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of Directors, a
majority of whom are not interested persons of the Fund, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
6.6. (a) When appropriate in order to inform the Fund of any
applicable state-mandated investment restrictions with which the
Fund must comply, the Company shall arrange with the Fund to amend
Schedule 3, pursuant to the requirements of Article XI.
(b) Should the Fund 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 VlI. 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
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<PAGE>
agrees with that determination, the Company shall, at its sole
cost and expense, take 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
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 (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 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. 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
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<PAGE>
of that determination. The Fund shall assure the Company that it
(the Fund) or that 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 Contractowner 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 Contractowners.
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
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<PAGE>
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 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
12
<PAGE>
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:
(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
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<PAGE>
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 ("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 Indiana,
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
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<PAGE>
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
(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
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<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
(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 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
16
<PAGE>
(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 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 Money Market Fund, Inc.
17
<PAGE>
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
If to the Company:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Steven M. Kluever
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 Amended and Restated Fund Participation Agreement, as of its
effective date, hereby supersedes any and all prior agreements to purchase
shares between Lincoln Life and the Fund.
18
<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.
LINCOLN NATIONAL MONEY MARKET FUND, INC.
Signature:
----------------------------------------------------------
Name: Kelly D. Clevenger
---------------------------------------------------------------
Title: President
--------------------------------------------------------------
LINCOLN NATIONAL LIFE INSURANCE CO. (Company)
Signature:
----------------------------------------------------------
Name: Stephen H. Lewis
---------------------------------------------------------------
Title: Senior Vice President, Lincoln National Life Insurance Company
--------------------------------------------------------------
19
<PAGE>
SCHEDULE 1
Lincoln National Money Market Fund
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of June 7, 1998
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT D
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT K
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT N
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT Q
LINCOLN LIFE FLEXIBLE VARIABLE LIFE ACCOUNT R
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT 53
20
<PAGE>
SCHEDULE 2
Lincoln National Money Market Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of June 7, 1998
MULTI FUND VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
VUL I
ACCRU CHOICEPLUS
GROUP MULTI FUND
SVUL I
MULTI FUND - NON-REGISTERED
21
<PAGE>
SCHEDULE 3
Lincoln National Money Market Fund
State-mandated Investment Restrictions
Applicable to the Fund
As of June 7, 1998
The California Department of Insurance has established the following Guidelines
for an underlying portfolio of a Separate Account:
BORROWING. The borrowing limit for any FUND is 33 1/3 percent of total assets.
Entering into a reverse repurchase agreement shall be considered "borrowing" as
that term is used herein.
FOREIGN INVESTMENTS - DIVERSIFICATION
The diversification guidelines to be followed by international and global FUNDS
are as follows:
a. An international FUND or global FUND is sufficiently diversified if it is
invested in a minimum of three different countries at all times, and has
invested no more than 50 percent of total assets in any one second-tier
country and not more than 25 percent of total assets in any one
third-tier country. First-tier countries are: Germany, the United
Kingdom, Japan, the United States, France, Canada, and Australia.
Second-tier countries are all countries not in the first or third tier.
Third-tier countries are countries identified as "emerging" or
"developing" by the International Bank for Reconstruction and Development
("World Bank") or International Finance Corporation.
b. A regional FUND is sufficiently diversified if it is invested in a
minimum of three countries. The name of the fund must accurately describe
the FUND.
c. The name of the single country FUND must accurately describe the FUND.
d. An index FUND must substantially mirror the index.
22
<PAGE>
Amendment to
SCHEDULE 2
Lincoln National Money Market Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
MULTI FUND INDIVIDUAL VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
MULTI FUND VARIABLE LIFE
VUL I
LINCOLN VUL
DELAWARE-LINCOLN CHOICE PLUS
GROUP MULTI FUND
SVUL I
LINCOLN SVUL
LINCOLN CVUL
MULTI FUND - NON-REGISTERED
LINCOLN VUL-DB-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule 2 to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN NATIONAL MONEY MARKET
FUND, INC.
Date: By:
---------------------- ----------------------------
Kelly D. Clevenger
President and Chairman
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By:
---------------------- ----------------------------
Stephen H. Lewis
Senior Vice President
<PAGE>
Amendment to
SCHEDULE 1
Lincoln National Money Market Fund, Inc.
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of May 1, 1999
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT D
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT K
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN VARIABLE ANNUITY ACCOUNT N
LINCOLN 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>
Amendment to
SCHEDULE 2
Lincoln National Money Market Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurane Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 1999
MULTI FUND INDIVIDUAL VARIABLE ANNUITY
eANNUITY
EMANCIPATOR LIFE
MULTI FUND VARIABLE LIFE
VUL I
LINCOLN VUL
DELAWARE-LINCOLN CHOICE PLUS
GROUP MULTI FUND
SVUL I
LINCOLN SVUL
LINCOLN CVUL
MULTI FUND - NON-REGISTERED
<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.
LINCOLN NATIONAL MONEY MARKET
FUND, INC.
Date: By:
---------------------- ----------------------------
Kelly D. Clevenger
President and Chairman
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By:
---------------------- ----------------------------
Stephen H. Lewis
Senior Vice President
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated July 1, 1998,
by and among The Lincoln National Life Insurance Company and Lincoln National
Money Market 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 5, 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 27-1-5-1 of the Indiana Insurance Code,
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 MONEY MARKET
FUND, INC.
Date: By:
------------------ --------------------------
Name: Kelly D. Clevenger
------------------------
Title: President
-----------------------
LINCOLN NATIONAL LIFE INSURANCE
COMPANY
Date: By:
------------------ --------------------------
Name: Stephen H. Lewis
------------------------
Title: Senior Vice President
-----------------------
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated July 1, 1998,
by and among The Lincoln National Life Insurance Company and Lincoln National
Money Market 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 5, 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 27-1-5-1 of the Indiana
Insurance Code, 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 MONEY MARKET FUND, INC.
Date: 9/8/99 By: /s/ Kelly D. Clevenger
------------------ ------------------------------------
Name: Kelly D. Clevenger
------------------------------------
Title: President
------------------------------------
LINCOLN NATIONAL LIFE INSURANCE COMPANY
Date: By: /s/ Stephen H. Lewis
------------------ ------------------------------------
Name: Stephen H. Lewis
------------------------------------
Title: Senior Vice President
------------------------------------
<PAGE>
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the lst day of
September, 1996, by and among LINCOLN NATIONAL LIFE INSURANCE COMPANY,
(hereinafter the "Company"), an Indiana 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 Underwriter agree as follows:
ARTICLE 1. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those
shares of the Fund which each Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Fund. For purposes of this Section
1. 1, the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by the
Fund; provided that the
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, 1111, 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 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 light 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 27-1-5-1 of the Indiana Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, win 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
Indiana and all applicable federal and state securities laws
4
<PAGE>
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 l2b-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- 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 Indiana 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 Indiana 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 Indiana 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 Indiana 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 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
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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 (IE., 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 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 Accounts 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,
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<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.l(a). 'Me 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
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<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
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<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, 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 Parry'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.
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<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
(j) at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's
investment adviser or any sub-adviser, by the NASD, the
SEC, or any state securities or insurance 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 National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, Indiana 46802
Attention: Kelly D. Clevenger
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
19
<PAGE>
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 here to 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 Indiana Insurance Commissioner with any non-privileged
information or reports in connection with services provided under this
Agreement which such Commissioner may request in order to ascertain whether the
insurance operations of the Company are being conducted in a manner consistent
with the Indiana Insurance Regulations and any other applicable law or
regulations.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed
and registered to perform the obligations of the Underwriter under this
Agreement.
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 NATIONAL LIFE INSURANCE COMPANY
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND
By:
FIDELITY DISTRIBUTORS CORPORATION
By:
21
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
<S> <C>
Lincoln National Variable Annuity GAC96-1 11
Separate Account L GAC91-101
</TABLE>
22
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE MAY 22, 1998 (PURSUANT TO SECTION 1.6 OF THE AGREEMENT)
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
<S> <C>
Lincoln National Variable Annuity Separate GAC96-1 11
Account L GA.C91-101
Lincoln Life Flexible Premium Variable Life
Account M LN605/615 (VUL)
Lincoln Life Flexible Premium Variable Life
Account R SVUL LN650
</TABLE>
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 NATIONAL LIFE INSURANCE COMPANY
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND
By:
Name:
Title:
FIDELITY DISTRIBUTORS CORPORATION
By:
Name:
Title:
<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 'maybe 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>
Separate Account: Lincoln National Variable Annuity Separate Account L
Product(s) Name: Group Variable Annuity I, II, and III
Funds Available: Fidelity Investments - Asset Manager
Equity-Income
Growth
American Century - Balanced
Capital Appreciation
Dreyfus - S & P 500 Index
Smallcap
Baron - Asset Fund
Calvert Socially Balanced
Janus - Worldwide
Lynch & Mayer - LN Aggressive Growth
Neuberger & Berman - Partners
T. Rowe Price - International
Vantage Global - LN Social Awareness
<PAGE>
Separate Account: Lincoln Life Flexible Premium Variable Life Account M
Product(s) Name: Variable Universal Life - VUL I
Funds Available: Fidelity Investments - Equity-Income
Asset Manager
Investment Grade Bonds
AIM - Capital Appreciation
Diversified Income
Growth
Value
Delaware - Emerging Markets
Smallcap Value
Trend
MFS - Emerging Growth
Total Return
Utilities
Templeton - Asset Allocation
International
Stock
OpCap - Global Equity
Managed
Bankers Trust - S&P 500 Index
Lincoln Investments - LN Money Market
<PAGE>
Separate Account: Lincoln Life Flexible Premium Variable Life Account R
Product(s) Name: Survivorship, Variable Universal Life - SVUL I
Funds Available: Fidelity Investments - Equity-Income
Asset Manager
Investment Grade Bonds
AIM - Capital Appreciation
Diversified Income
Growth
Value
Delaware - Emerging Markets
Smallcap Value
Trend
MFS - Emerging Growth
Total Return
Utilities
Templeton - Asset Allocation
International
Stock
OpCap - Global Equity
Managed
Bankers Trust - S&P 500 Index
Lincoln Investments - LN Money Market
<PAGE>
PARTICIPATION AGREEMENT
AMONG
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
AND
LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the Ist day of
September, 1996, by and among LINCOLN NATIONAL LIFE INSURANCE COMPANY,
(hereinafter the "Company"), an Indiana corporation, on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account hereinafter
referred to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund filed with the Securities and Exchange
Commission (the "SEC") a registration statement on Form N- 1 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 Underwriter is authorized to sell such shares to unit
investmen 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
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1. 1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the
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 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 fun 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 tide 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. 'Me
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. 'Me 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
established each Account, prior to any issuance or sale thereof, as a segregated
asset account under Section 27-1-5-1 of the Indiana Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
Indiana and all applicable federal and state securities laws
4
<PAGE>
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. 'Me 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- 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- 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 Indiana 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 Indiana 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 t he laws of the State of Indiana 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.
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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 Indiana 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 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 cameraready 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
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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.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects to
such use within ten Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares, within 30
days of the filing of such document with the Securities and Exchange Commission
or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations 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
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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 (IE., 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
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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
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<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 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,
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<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
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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
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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
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<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, are related to the operations of the Fund and:
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<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.
83(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
(j) at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's
investment adviser or any sub-adviser, by the NASD, the
SEC, or any state securities or insurance 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 National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, Indiana 46802
Attention: Kelly D. Clevenger
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE X11. MISCELLANEOUS
19
<PAGE>
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 Indiana Insurance Commissioner with any non-privileged
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the insurance
operations of the Company are being conducted in a manner consistent with the
Indiana Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement
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 NATIONAL LIFE INSURANCE COMPANY
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND II
By:
FIDELITY DISTRIBUTORS CORPORATION
By:
21
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
<S> <C>
Lincoln National Variable Annuity GAC96-111
Separate Account L GAC91-101
</TABLE>
22
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE MAY 22, 1998 (PURSUANT TO SECTION 1.6 OF THE AGREEMENT)
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
<S> <C>
Lincoln National Variable Annuity Separate GAC96-111
Account L GAC91-101
Lincoln Life Flexible Premium Variable Life
Account M LN605/615 (VUL)
Lincoln Life Flexible Premium Variable Life
Account R SVUL LN650
</TABLE>
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 NATIONAL LIFE INSURANCE COMPANY
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS
By:
Name:
Title:
FIDELITY DISTRIBUTORS CORPORATION
By:
Name:
Title:
<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.
I 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 win 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 'maybe 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>
Separate Account: Lincoln National Variable Annuity Separate Account L
Product(s) Name: Group Variable Annuity 1, 11, and III
Funds Available: Fidelity Investments - Asset Manager
Equity-Income
Growth
American Century - Balanced
Capital Appreciation
Dreyfus - S & P 500 Index
Smallcap
Baron - Asset Fund
Calvert Socially Balanced
Janus - Worldwide
Lynch & Mayer - LN Aggressive Growth
Neuberger & Berman - Partners
T. Rowe Price - International
Vantage Global - LN Social Awareness
<PAGE>
Separate Account: Lincoln Life Flexible Premium Variable Life Account M
Product(s) Name: Variable Universal Life - VUL I
Funds Available: Fidelity Investments - Equity-Income
Asset Manager
Investment Grade Bonds
AIM - Capital Appreciation
Diversified Income
Growth
Value
Delaware - Emerging Markets
Smallcap Value
Trend
MFS - Emerging Growth
Total Return
Utilities
Templeton - Asset Allocation
International
Stock
OpCap - Global Equity
Managed
Bankers Trust - S&P 500 Index
Lincoln Investments - LN Money Market
<PAGE>
Separate Account: Lincoln Life Flexible Premium Variable Life Account R
Product(s) Name: Survivorship Variable Universal Life - SVUL I
Funds Available: Fidelity Investments - Equity-Income
Asset Manager
Investment Grade Bonds
AIM - Capital Appreciation
Diversified Income
Growth
Value
Delaware - Emerging Markets
Smallcap Value
Trend
MFS - Emerging Growth
Total Return
Utilities
Templeton - Asset Allocation
International
Stock
OpCap - Global Equity
Managed
Bankers Trust - S&P 500 Index
Lincoln Investments - LN Money Market
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE MAY 1, 1999 (PURSUANT TO SECTION 1.6 OF THE AGREEMENT
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account Fidelity Fund (Class)
<S> <C> <C>
Lincoln National Variable Annuity Account C 18829, 25982RSC, 28645 0697 Contrafund - Service
Lincoln National Variable Annuity Separate GAC96-1 11 Asset Manager - Initial
Account L GAC9 1 -101
Lincoln Life Flexible Premium Variable Life LN605/615 (VUL) Asset Manager - Initial
Account M LN 605/660 Investment Grade Bond-Initial
Class
Contrafund - Service Class
Lincoln Life Variable Annuity Account Q 28883,28884,28890,28867, Contrafund - Service Class
28868,28891,28903
Lincoln Life Flexible Premium Variable Life SVUL LN650 Investment Grade Bond-Initial
Class
Account R Asset Manager - Initial Class
Contrafund - Service Class
Lincoln Life Flexible Premium Variable Life LN920/921 Contrafund - Service
Account S Asset Manager - Service Class
Lincoln National Life Insurance Company 19476 Contrafund - Service Class
Separate Account 35
</TABLE>
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by it its seal to be
hereunder affixed hereto as of the date specified below.
Date LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
Name:
Title:
Date VARIABLE INSURANCE TRODUCTS FU S
By:
Name:
Title:
Date FIDELITY DISTRIBUTION
By:
Name
Title:
<PAGE>
Amendment to Schedule C
Effective May 1, 1999
Other investment companies currently available under the separate account listed
in Amended Schedule A:
AIM, American Century, Bankers Trust, Baron, Calvert, Delaware, Dreyfus, Janus,
Kemper, Liberty, Lincoln National, MFS, Neuberger Berman, OpCap, Oppenhiemer, T.
Rowe Price, Templeton
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.
Date LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
Name:-
Title:
Date VARIABLE INSURANCE PRODUCTS FUND 11
By:
Name:-
Title:
Date FIDELITY DISTRIBUTORS CORPORATION
By:
Name:
Title:
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE OCTOBER 15, 1999 (PURSUANT TO SECTION 1.6 OF THE AGREEMENT)
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account Fidelity Fund (Class)
- -------------------------------------- -------------------------------- ---------------------
<S> <C> <C>
Lincoln National Variable Annuity Account C 18829, 25982RSC, 28645 0697 Contrafund - Service Class
Lincoln National Variable Annuity Separate GAC96-111 Asset Manager - Initial Class
Account L GAC91-101
Lincoln Life Flexible Premium Variable Life LN605/615 (VUL) Asset Manager - Initial Class
Account M LN 605/660 Investment Grade Bond - Initial Class
Contrafund - Service Class
LN680 Contrafund - Service Class
Lincoln Life Variable Annuity Account Q 28883, 28884, 28890, 28867, Contrafund - Service Class
28868, 28891, 28903
Lincoln Life Flexible Premium Variable Life SVUL LN650 Investment Grade Bond - Initial Class
Account R Asset Manager - Initial Class
Contrafund - Service Class
Lincoln Life Flexible Premium Variable Life LN920/921 Contrafund - Service Class
Account S Asset Manager - Service Class
Lincoln National Life Insurance Company 19476 Contrafund - Service Class
Separate Account 35
</TABLE>
<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.
Date LINCOLN NATIONAL LIFE INSURANCE COMPANY
---------------------
By:
------------------------
Name: Steven M. Kluever
------------------------
Title: Second Vice President
------------------------
Date VARIABLE INSURANCE PRODUCTS FUNDS II
---------------------
By:
------------------------
Name:
------------------------
Title:
------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
---------------------
By:
------------------------
Name:
------------------------
Title:
------------------------
<PAGE>
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND 111,
FIDELITY DISTRIBUTORS CORPORATION
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the ____ day of
October, 1998 by and among THE LINCOLN NATIONAL LIFE INSURANCE COMPANY,
(hereinafter the "Company"), an Indiana 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) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit
1
<PAGE>
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; 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 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 1. 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
2
<PAGE>
constitute 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 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 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.
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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 night 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 11. 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 27-1-5-1 of the Indiana Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and
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sold in compliance with the laws of the State of Indiana and all applicable
federal and state securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as life insurance policies or annuity insurance contracts under
applicable provisions of the Code; 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
l2b-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 Indiana 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 Indiana to the extent required to perform this
Agreement.
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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 Indiana and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under 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
Indiana and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and 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 111. 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
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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 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
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<PAGE>
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.
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
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<PAGE>
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 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 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.
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<PAGE>
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.
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
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
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<PAGE>
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 (IE., 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.
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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 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.
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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 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
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<PAGE>
(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
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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 or 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
(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
15
<PAGE>
(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 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
16
<PAGE>
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.
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
17
<PAGE>
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 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
18
<PAGE>
(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 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
19
<PAGE>
(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
subadviser, 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 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
20
<PAGE>
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:
The Lincoln National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802
Attention: Kelly D. Clevenger
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1. All person's 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.
21
<PAGE>
12.4. This Agreement may be executed, simultaneously in
two or more counterparts, each of which taken together shall
constitute one and the same instrument.
12.5. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of the Agreement shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other
party and all appropriate governmental authorities (including
without limitation the SEC, the NASD and state insurance
regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or
inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish 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:
(a) the Company's annual statement(prepared under
statutory accounting principles) and annual
report (prepared under generally accepted
accounting principles ("GAAP"), if any), as
soon as practical and in any event within 90
days after the end of each fiscal year;
(b) the Company's quarterly statements
(statutory) (and GAAP, if any), as soon as
practical and in any event within 45 days
after the end of each quarterly period:
22
<PAGE>
(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.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
Kelly D. Clevenger
Vice President
VARIABLE INSURANCE PRODUCTS FUND III
By:
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Kevin J. Kelly
Vice President
23
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND-ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded By Separate Account Fidelity Fund (Class)
- -------------------------------------- -------------------------- ---------------------
<S> <C> <C>
Lincoln Life Variable Annuity AN425LL Growth Opportunities -
Annuity Account N Initial Class
</TABLE>
(November 3, 1997)
24.
<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. Under-writer 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.)
25
<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 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.
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.
26
<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 approvals and "signing-off' maybe done orally, but must always be
followed up in writing.
27
<PAGE>
SCHEDULE C
Other investment companies currently available under variable
annuities or variable life insurance issued by the Company:
Separate Account: Lincoln National Variable Annuity Separate Account N
Product(s) Name: Delaware-Lincoln ChoicePlus Variable Annuity
Investment Companies
Available: Fidelity, Delaware, MFS, AIM, Lincoln Investments, Kemper, Colonial,
Bankers Trust, Dreyfus. Vantage Global
28
<PAGE>
Amended Schedule A
Separate Accounts and Associated Contracts
Effective October 15, 1999
<TABLE>
<CAPTION>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded by Separate Account Fidelity Fund (Class)
- -------------------------------------- -------------------------- ---------------------
<S> <C> <C>
Lincoln Life Flexible Premium Variable Life LN605/660 Growth Opportunities - Service Class
Account M LN680
Lincoln Life Variable Annuity Account N AN425LL Growth Opportunities - Initial Class
Lincoln Life Flexible Premium Variable Life LN650 Growth Opportunities - Service Class
Account R
</TABLE>
<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.
Date Lincoln National Life Insurance Company
---------------------
By:
------------------------
Name: Steven M. Kluever
------------------------
Title: Second Vice President
------------------------
Date: Variable Insurance Products Fund III
---------------------
By:
------------------------
Name:
------------------------
Title:
------------------------
Date: Fidelity Distributors Corporation
---------------------
By:
------------------------
Name:
------------------------
Title:
------------------------
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE MAY 1, 2000
(PURSUANT TO SECTION 1.6 OF THE AGREEMENT)
<TABLE>
<CAPTION>
Policy Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln National Variable Annuity Account C 18829, 25982RSC, 28645 0697, 18831 Growth - Service Class
(Individual MultiFund)
Lincoln National Variable Annuity Account L GAC91-101; GAC96-111 Equity - Income - Initial Class
GAC96-101 (GVA I, II, III) Growth - Initial Class
Lincoln Life Flexible Premium Variable Life LN605/615 (VUL I) Equity - Income - Initial Class
Account M
LN660 (VUL) Growth - Service Class
LN680 (VULdb) High Income - Service Class
Lincoln Life Variable Annuity Account N AN425 (Choice Plus) Overseas - Initial Class
Equity - Income - Initial Class
Growth - Initial Class
Lincoln Life Variable Annuity Account Q 28883, 28884, 28890, 28867, Growth - Service Class
28868, 28891, 28903
(Group MultiFund)
Lincoln Life Flexible Premium Variable Life LN650 (SVUL) Growth - Service Class
Separate Account R High Income - Service Class
LN655 (SVUL II) Growth - Service Class
High Income - Service Class
Lincoln Life Flexible Premium Variable Life LN920/921 Growth Portfolio
Account S (CVUL) High Income - Service Class
Overseas - Service Class
LN925/926 Growth Portfolio
(CVUL Series III) High Income - Service Class
</TABLE>
<PAGE>
Overseas - Service Class
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 NATIONAL LIFE INSURANCE COMPANY
----------------------
By:
----------------------
Steven M. Kluever
2nd Vice President
Date VARIABLE INSURANCE PRODUCTS FUND
-----------------------
By:
----------------------
Name:
----------------------
Title:
----------------------
Date FIDELITY DISTRIBUTORS CORPORATION
----------------------
By:
----------------------
Name:
----------------------
Title:
----------------------
<PAGE>
AMENDED SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
EFFECTIVE MAY 1, 2000 (PURSUANT TO SECTION 1.6 OF THE AGREEMENT)
<TABLE>
<CAPTION>
Policy Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------------- ----------------------
<S> <C> <C>
Lincoln National Variable Annuity Account C 18829, 25982RSC, 28645 0697 Contrafund - Service Class
(Individual MultiFund)
Lincoln National Variable Annuity Account L GAC96-111; GAC91-101 Asset Manager - Initial Class
(GVA I, II, III) Contrafund - Initial Class
Lincoln Life Flexible Premium Variable Life LN605/615 (VUL I) Asset Manager - Initial Class
Account M Investment Grade Bond - Initial Class
LN660 (VUL) Contrafund - Service Class
LN680 (VULdb) Contrafund - Service Class
Lincoln Life Variable Annuity Account Q 28883, 28884, 28890, 28867, Contrafund - Service Class
28868, 28891, 28903
(Group MultiFund)
Lincoln Life Flexible Premium Variable Life LN650 (SVUL) Investment Grade Bond - Initial Class
Separate Account R Asset Manager - Initial Class
Contrafund - Service Class
LN655 (SVUL II) Contrafund - Service Class
Lincoln Life Flexible Premium Variable Life LN920/921 Contrafund - Service Class
Account S (CVUL) Asset Manager - Service Class
LN925/926 (CVUL Series III) Contrafund - Service Class
Asset Manager - Service Class
Lincoln National Life Insurance Company 19476 Contrafund - Service Class
Separate Account 35
</TABLE>
<PAGE>
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 NATIONAL LIFE INSURANCE COMPANY
By: _______________________
Steven M. Kluever
2nd Vice President
Date__________________ VARIABLE INSURANCE PRODUCTS FUNDS II
By: _______________________
Name: _______________________
Title: _______________________
Date__________________ FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Name: _______________________
Title: _______________________
<PAGE>
Amended Schedule A
Separate Accounts and Associated Contracts
Effective May 1, 2000
<TABLE>
<CAPTION>
Policy Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life Flexible Premium Variable Life LN605/660 (VUL) Growth Opportunities - Service Class
Account M LN680 (VULdb)
Lincoln Life Variable Annuity Account N AN425LL Growth Opportunities - Initial Class
Lincoln Life Flexible Premium Variable Life LN650 (SVUL) Growth Opportunities - Service Class
Separate Account R LN655 (SVUL II)
</TABLE>
<PAGE>
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 NATIONAL LIFE INSURANCE COMPANY
----------------------
By:
-------------------------
Steven M. Kluever
2nd Vice President
Date: VARIABLE INSURANCE PRODUCTS FUND III
----------------------
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Date: FIDELITY DISTRIBUTORS CORPORATION
----------------------
By:
------------------------
Name:
----------------------
Title:
---------------------
87158
<PAGE>
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this _____ day of May 1998, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation
(the "Company") on its own behalf and on behalf of each of the segregated asset
accounts of the Company set forth in Schedule A hereto, as may be amended from
time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the " 1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended and is the Trust's investment
adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid variable
annuity and/or variable life insurance contracts that are allocated to the
Accounts (the Policies and the Accounts covered by this Agreement, and each
corresponding Portfolio covered by this Agreement in which the Accounts invest,
is specified in Schedule A attached hereto as may be modified from time to
time);
<PAGE>
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as
a broker-dealer with the Securities and Exchange Commission (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. (the "NASD");
WHEREAS, the Company, the underwriter for the Policies, is registered as
a broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
MFS, and the Company agree as follows:
ARTICLE 1. SALE AND REDEMPTION OF TRUST SHARES
1. 1. The Trust agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders on that Business Day, as defined
below) and which are available for purchase by such Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the order for the Shares. For purposes of this
Section 1.1, the Company shall be the designee of the Trust for receipt of such
orders from Policy owners and receipt by such designee shall constitute receipt
by the Trust; PROVIDED that the Trust receives notice of such orders 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, Inc. (the "NYSE") is open for
trading and on which the Trust calculates its net asset value pursuant to the
rules of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for purchase at
the applicable net asset value per share by the Company and the Accounts on
those days on which the Trust calculates its net asset value pursuant to rules
of the SEC and the Trust shall calculate such net asset value on each day which
the NYSE is open for trading. Notwithstanding the foregoing, the Board of
Trustees of the Trust (the "Board") may refuse to sell any Shares to the Company
and the Accounts, or suspend or terminate the offering of the Shares 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 its
fiduciary duties under federal and any applicable state laws, necessary in the
best interest of the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust and
MFS (the "Participating Insurance Companies") and their separate accounts,
qualified pension and retirement plans and MFS or its affiliates. The Trust and
MFS will not sell Trust shares to any insurance company or separate account
unless an agreement containing provisions substantially the same as Articles III
and VII of this Agreement is in effect to govern such sales. The Company will
not resell the Shares except to the Trust or its agents.
-2-
<PAGE>
1.4. The Trust agrees to redeem for cash, on the Company's request, any full or
fractional Shares held by the Accounts (based on orders placed by Policy owners
on that Business Day), executing such requests on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the request
for redemption. For purposes of this Section 1.4, the Company SHALL be the
designee of the Trust for receipt of requests for redemption from Policy owners
and receipt by such designee shall constitute receipt by the Trust; provided
that the Trust receives notice of such request for redemption by 9:30 a.m. New
York time on the next following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company shall be
placed separately for each Portfolio and shall not be netted with respect to any
Portfolio. However, with respect to payment of the purchase price by the Company
and of redemption proceeds by the Trust, the Company and the Trust shall net
purchase and redemption orders with respect to each Portfolio and shall transmit
one net payment for all of the Portfolios in accordance with Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall pay for the Shares by 2:00
p.m. New York time on the next Business Day after an order to purchase the
Shares is made in accordance with the provisions of Section 1. 1. hereof. In the
event of net redemptions, the Trust shall pay the redemption proceeds by 2:00
p.m. New York time on the next Business Day after an order to redeem the shares
is made in accordance with the provisions of Section 1.4. hereof. All such
payments shall be in federal funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the Accounts
or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares' The Company hereby elects to receive all
such dividends and distributions as are payable on a Portfolio's Shares in
additional Shares of that Portfolio, but may revoke that election at any time by
notifying the Trust in writing. The Trust shall notify the Company of the number
of Shares so issued as payment of such dividends and distributions.
1.9. The Trust or its custodian shall make the net asset value per share for
each Portfolio available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:30
p.m. New York time. In the event that the Trust is unable to meet the 6:30 p.m.
time stated herein, it shall provide additional time for the Company to place
orders for the purchase and redemption of Shares. Such additional time shall be
equal to the additional time which the Trust takes to make the net asset value
available to the Company. If the Trust provides materially incorrect share net
asset value information, the Trust shall make an adjustment to the number of
shares purchased or redeemed for the Accounts to reflect the correct net asset
value per share. Any material error in the calculation or reporting of net asset
value per share, dividend or capital gains information shall be reported
promptly upon discovery to the Company.
-3-
<PAGE>
ARTICLE 11. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to registration
thereunder, and that the Policies will be 7 -
issued, sold, and distributed in compliance in all material respects with all
applicable state and federal laws; including without limitation the 1933 Act,
the Securities Exchange Act of 1934, as amended (the " 1934 Act"), and the 1940
Act. The Company further represents and warrants that it is an insurance company
duly organized and validly existing under applicable law and that it has legally
and validly established the Account as a segregated asset account under
applicable law and has registered or, prior to any issuance or sale of the
Policies, will register the Accounts as unit investment trusts in accordance
with the provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Policies, and that it will maintain such
registration for so long as any Policies are outstanding. The Company shall
amend the registration statements under the 1933 Act for the Policies and the
registration statements under the 1940 Act for the Accounts from time to time as
required in order to effect the continuous offering of the Policies or as may
otherwise be required by applicable law. The Company shall register and qualify
the Policies for sales in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are currently and at
the time of issuance will be treated as life insurance policies, endowment or
annuity contracts under applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), that it will maintain such treatment and that it
will notify the Trust or MFS immediately upon having a reasonable basis for
believing that the Policies have ceased to be so treated or that they might not
be so treated in the future.
2.3. The Company represents and warrants that it, as the underwriter for the
Policies, is a member in good standing of the NASD and is a registered
broker-dealer with the SEC. The Company represents and warrants that, to the
extent it sells the Policies directly, it will sell and distribute such policies
in accordance in all material respects with all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 1940 Act.
2.4. The Trust and MFS represent and warrant that the 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 Commonwealth of
Massachusetts and all applicable federal and state securities laws and that the
Trust is and shall remain registered under the 1940 Act. The Trust 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 Trust shall register and qualify the Shares for sale in accordance
with the laws of the various states only if and to the extent deemed necessary
by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell and
distribute the Shares in accordance in all material respects with all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
-4-
<PAGE>
2.6. The Trust 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 and any applicable regulations
thereunder.
2.7. MFS represents and warrants that it is and shall remain duly registered
under all applicable federal securities laws and that it shall perform its
obligations for the Trust in compliance in all material respects with any
applicable federal securities laws and with the securities laws of The
Commonwealth of Massachusetts. MFS represents and warrants that it is not
subject to state securities laws other than the securities laws of The
Commonwealth of Massachusetts and that it is exempt from registration as an
investment adviser under the securities laws of The Commonwealth of
Massachusetts.
2.8. The Company shall submit to the Board such reports, material or data as the
Board may reasonably request from time to time so that it may carry out fully
the obligations imposed upon it by the conditions contained in the exemptive
application pursuant to which the SEC has granted exemptive relief to permit
mixed and shared funding (the "Mixed and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing only
the Portfolios listed in Schedule A hereto) for the Shares as the Company may
reasonably request for distribution to existing Policy owners whose Policies are
funded by such Shares. The Trust or its designee shall provide the Company, at
the Company's expense, with as many copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof, the Trust
or its designee shall provide such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company, as
a diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once each year (or more
frequently if the prospectus for the Shares is supplemented or amended) to have
the prospectus for the Policies and the prospectus for the Shares printed
together in one document; the expenses of such printing to be apportioned
between (a) the Company and (b) the Trust or its designee in proportion to the
number of pages of the Policy and Shares' prospectuses, taking account of other
relevant factors affecting the expense of printing, such as covers, columns,
graphs and charts; the Trust or its designee to bear the cost of printing the
Shares' prospectus portion of such document for distribution to owners of
existing Policies funded by the Shares and the Company to bear the expenses of
printing the portion of such document relating to the Accounts; PROVIDED,
however, that the Company shall bear all printing expenses of such combined
documents where used for distribution to prospective purchasers or to owners of
existing Policies not funded by the Shares. In the event that the Company
requests that the Trust or its designee provides the Trust! s prospectus in a
"camera ready" or diskette format, the Trust shall be responsible for providing
the prospectus in the format in which it or MFS is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (E.G., typesetting expenses), and the Company shall bear the expense of
adjusting or changing the format to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of additional
information for the Shares is available from the Trust or its designee. The
Trust or its designee, at its expense,
-5-
<PAGE>
shall print and provide such statement of additional information to the Company
(or a master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust or its
designee, at the Company's expense, shall print and provide such statement to
the Company (or a master of such statement suitable for duplication by the
Company) for distribution to a prospective purchaser who requests such statement
or to an owner of a Policy not funded by the Shares.
3.3. The Trust or its designee shall provide the Company free of charge copies,
if and to the extent applicable to the Shares, of the Trust's proxy materials,
reports to Shareholders and other communications to Shareholders in such
quantity as the Company shall reasonably require for distribution to Policy
owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or of
Article V below, the Company shall pay the expense of printing or providing
documents to the extent such cost is considered a distribution expense.
Distribution expenses would include by way of illustration, but are not limited
to, the printing of the Shares' prospectus or prospectuses for distribution to
prospective purchasers or to owners of existing Policies not funded by such
Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to include
in the prospectus pursuant to which a Policy is offered disclosure regarding the
potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from Policy
owners; and
(c) vote the Shares in each separate Account for which no instructions have
been received in the same proportion as the Shares of such Portfolio in
such Account for which instructions have been received from Policy
owners;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contract owners. The Company
will in no way recommend action in connection with or oppose or interfere with
the solicitation of proxies for the Shares held for such Policy owners. The
Company reserves the right to vote 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
holding Shares calculates voting privileges in the manner required by the Mixed
and Shared Funding Exemptive Order. The Trust and MFS will notify the Company of
any changes of interpretations or amendments to the Mixed and Shared Funding
Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. 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, MFS, any other investment adviser to the Trust, or any
affiliate of MFS are named, at least ten (10) Business Days
-6-
<PAGE>
prior to its use. No such material shall be used if the Trust, MFS, or their
respective designees reasonably objects to such use within five (5) Business
Days after receipt of such material.
4.2. The Company shall not give any information or make any representations or
statement on behalf of the Trust, MFS, any other investment adviser to the
Trust, or any affiliate of MFS or concerning the Trust or any other such entity
in connection with the sale of the Policies other than the information or
representations contained in the registration statement, prospectus or statement
of additional information for the Shares, as such registration statement,
prospectus and statement of additional information may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust, MFS
or their respective designees, except with the permission of the Trust, MFS or
their respective designees. The Trust, MFS or their respective designees each
agrees to respond to any request for approval on a prompt and timely basis. The
Company shall adopt and implement procedures reasonably designed to ensure that
information concerning the Trust, MFS or any of their affiliates which is
intended for use only by brokers or agents selling the Policies(IE., information
that is not intended for distribution to Policy owners or prospective Policy
owners) is so used, and neither the Trust, MFS nor any of their affiliates shall
be liable for any losses, damages or expenses relating to the improper use of
such broker only materials.
4.3. The Trust 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 the Accounts is named, at least ten (10)
Business Days prior to its use. No such material shall be used if the Company or
its designee reasonably objects to such use within five (5) Business Days after
receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter shall not
give, any information or make any representations on behalf of the Company or
concerning the Company, the Accounts, or the Policies in connection with the
sale of the Policies other than the information: or representations contained in
a registration statement, prospectus, or statement of additional information for
the Policies, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or in
reports for the Accounts, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company. The Company or its designee agrees to respond to any request for
approval on a prompt and timely basis. The parties hereto agree that this
Section 4.4. is neither intended to designate nor otherwise imply that MFS is an
underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or the
Trust, as appropriate) will each provide to the other 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 (in the case of the Trust) to the
Policies, or (in the case of the Company) to the Trust or its Shares, within
twenty (20) days after the filing of such document with the SEC or other
regulatory authorities. The Company and the Trust shall also each promptly
inform the other of the results of any examination by the SEC (or other
regulatory authorities) that relates to the Policies, the Trust or its Shares,
and the party that was the subject of the examination shall provide the other
party with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
-7-
<PAGE>
4.6. The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of any
material change in the Trusts registration statement, particularly any change
requiring change to the registration statement or prospectus or statement of
additional information for any Account. The Trust and MFS will cooperate with
the Company so as to enable the Company to solicit proxies from Policy owners or
to make changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and MFS will make
reasonable efforts to attempt to have changes affecting Policy prospectuses
become effective simultaneously with the annual updates for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
and sales literature (such as brochures, circulars, reprints or excerpts or any
other advertisement, sales literature, or published articles), distributed or
made generally available to customers or the public, educational or training
materials or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Trust,
except that if the Trust or any Portfolio adopts and implements a plan pursuant
to Rule 12b- I under the 1940 Act to finance distribution and Shareholder
servicing expenses, then, subject to obtaining any required exemptive orders or
regulatory approvals, the Trust may make payments to the Company or to the
underwriter for the Policies if and in amounts agreed to by the Trust in
writing. Each party, however, shall, inaccordance with the allocation of
expenses specified in Articles III and V hereof, reimburse other parties for
expenses initially paid by one party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from otherwise
agreeing to perform, and arranging for appropriate compensation for, other
services relating to the Trust and/or to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of the Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of the Trusts proxy materials and reports to Shareholders; setting in
type and printing its prospectus and statement of additional information (to the
extent provided by and as determined in accordance with Article III above);
setting in type and printing the proxy materials and reports to Shareholders (to
the extent provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by any
federal or state law with respect to its Shares; all taxes on the issuance or
transfer of the Shares; and the costs of distributing the Trusts prospectuses
and proxy materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any, under
Rule 12b- I under the 1940 Act. The Trust shall not bear any expenses of
marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares' prospectus
or prospectuses in connection with new sales of the Policies and of distributing
the Trust's
-8-
<PAGE>
Shareholder reports to Policy owners. The Company shall bear all expenses
associated with the registration, qualification, and filing of the Policies
under applicable federal securities and state insurance laws; the cost of
preparing, printing and distributing the Policy prospectus and statement of
additional information to other than existing Policy owners; and the cost of
preparing, printing AND distributing annual individual account statements for
Policy owners as required by state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of the Trust
will meet the diversification requirements of Section 817 (h) (1) of the Code
and Treas. Reg. 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, as they may be amended
from time to time (and any revenue rulings, revenue procedures, notices, and
other published announcements of the Internal Revenue Service interpreting these
sections), as if those requirements applied directly to each such Portfolio.
6.2. The Trust and MFS represent that each Portfolio will elect to be qualified
as a Regulated Investment Company under Subchapter M of the Code and that they
will maintain such qualification (under Subchapter M or any successor or similar
provision), and will notify the Company if it appears that any Portfolio will
not so qualify.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable annuity contract owners and the variable life insurance policy owners
of the Company and/or affiliated companies ("contract owners") investing in the
Trust. The Board shall have the sole authority to determine if a material
irreconcilable conflict exists, and such determination shall be binding on the
Company only if approved in the form of a resolution by a majority of the Board,
or a majority of the disinterested trustees of the Board. The Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board in
carrying out its responsibilities under the conditions set forth in the Trust's
exemptive application pursuant to which the SEC has granted the Mixed and Shared
Funding Exemptive Order by providing the Board, as it may reasonably request,
with all information necessary for the Board to consider any issues raised and
agrees that it will be responsible for promptly reporting any potential or
existing conflicts of which it is aware to the Board including, but not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. The Company also agrees that if it is
determined by a majority of the Trustees, or a majority of the disinterested
Trustees, that a material irreconcilable conflict exists, the Company shall, at
its own 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 material irreconcilable conflict, which steps include:
(a) withdrawing 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 to a vote of all affected contract owners whether to withdraw assets
from the Trust or any Portfolio and reinvesting such
-9-
<PAGE>
assets in a different investment medium and, as appropriate, segregating the
assets attributable to any appropriate group of contract owners that votes in
favor of such segregation, or offering to any of the affected contract owners
the option of segregating the assets attributable to their contracts or
policies, and (b) establishing a new registered management investment company
and segregating the-assets underlying the Policies, unless a majority of Policy
owners materially adversely affected by the conflict have voted to decline the
offer to establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable conflict,
the Company will withdraw from investment in the Trust each of the Accounts
designated by the disinterested trustees 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 to remedy any such material irreconcilable
conflict as determined by a majority of the disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees, officers and
each person, if any, who controls the Trust or MFS within the meaning of Section
15 of the 1933 Act, and any agents or employees of the foregoing (each an
"Indemnified Party," or 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 expenses (including reasonable counsel fees) to which any Indemnified Party
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
Shares or the Policies 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,
prospectus or statement of additional information for the Policies or
contained in the Policies or sales literature or other promotional
material for the Policies (or any amendment or
-10-
<PAGE>
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 reasonable reliance upon and in
conformity with information furnished to the Company or its designee by
or on behalf of the Trust or MFS for-use in the registration statement,
prospectus or statement of additional information for the Policies or in
the Policies or sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or
other promotional material of the Trust not supplied by the Company or
its designee, or persons under its control and on which the Company has
reasonably relied) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the Policies or
Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus,
statement of additional information, or sales literature or other
promotional literature of the Tr-ust, 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 Trust by
or on behalf of the Company; or
(d) 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;
or
(e) arise as a result of any failure by the Company to provide the services
and furnish the materials under the terms of this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. INDEMNIFICATION BY THE TRUST
The Trust 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, and any agents or employees of
the foregoing (each an "Indemnified Party," or 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 Trust) or expenses (including reasonable counsel fees) to which
any Indemnified Party may become subject under any statute, at common law or
otherwise, insofar as such losses, claims,
-11-
<PAGE>
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Shares or the Policies 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,
prospectus, statement of additional information or sales literature or
other promotional material of the Trust (or any amendment or supplement
to any of the foregoing), or arise oat 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 statement 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 reasonable reliance upon and in conformity with
information furnished to the Trust, MFS, the Underwriter or their
respective designees by or on behalf of the Company for use in the
registration statement, prospectus or statement of additional information
for the Trust or in sales literature or other promotional material for
the Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Policies or Shares;
or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or
other promotional material for the Policies not supplied by the Trust,
MFS, the Underwriter or any of their respective designees or persons
under their respective control and on which any such entity has
reasonably relied) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or distribution of the Policies or
Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus,
statement of additional information, or sales literature or other
promotional literature of the Accounts or relating to the Policies, 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 Trust, MFS or the
Underwriter; or
(d) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement (including a failure,
whether unintentional or in good faith or other-wise, to comply with the
diversification requirements specified in Article VI of this Agreement)
or arise out of or result from any other material breach of this
Agreement by the Trust; or
(e) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share or
dividend or capital gain distribution rate; or
(f) arise as a result of any failure by the Trust to provide the services and
furnish the materials under the terms of the Agreement;
-12-
<PAGE>
as limited by and in accordance with the provisions of this Article Vill.
8.3. In no event shall the Trust be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, the Company, or any Participating Insurance Company or any Policy
holder, with respect to any losses, claims, damages, liabilities or expenses
that arise out of or result from (i) a breach of any representation, warranty,
and/or covenant made by the Company hereunder or by any Participating Insurance
Company under an agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by the Company or any Participating
Insurance Company to maintain its segregated asset account (which invests in any
Portfolio) as a legally and validly established segregated asset account under
applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by
the Company or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which any
Portfolio serves as an underlying funding vehicle) as life insurance, endowment
or annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance, willful
misconduct, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
notice of commencement of any action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this section,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Party otherwise than under this section.In case any
such action is brought against any Indemnified Party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its respective
officers, directors, trustees, employees or 1933 Act control persons in
connection with the Agreement, the issuance. or sale of the Policies, the
operation of the Accounts, or the sale or acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article Vill. The
indemnification provisions contained in this Article Vill shall survive any
termination of this Agreement.
ARTICLEIX. APPLICABLE LAW
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<PAGE>
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 and
the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to tills Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one, some,
or all Portfolios:
(a) at the option of any party upon six (6) months' advance written notice to
the other parties; or
(b) at the option of the Company to the extent that the Shares of Portfolios
are not reasonably available to meet the requirements of the Policies or
are not "appropriate funding vehicles" for the Policies, as reasonably
determined by the Company. Without limiting the generality of the
foregoing, the Shares of a Portfolio would not be "appropriate funding
vehicles" if, for example, such Shares did not meet the diversification
or other requirements referred to in Article VI hereof, or if the Company
would be permitted to disregard Policy owner voting instructions pursuant
to Rule 6e-2 or 6e-3(T) under the 1940 Act. Prompt notice of the election
to terminate for such cause and an explanation of such cause shall be
furnished to the Trust by the Company; or
(c) at the option of the Trust or MFS upon institution of formal proceedings
against the Company by the NASD, the SEC, or any insurance department or
any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Policies, the operation of the
Accounts, -or the purchase of the Shares; or
(d) at the option of the Company upon institution of formal proceedings
against the Trust or MFS by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body regarding the Trust's
or MFS' duties under this Agreement or related to the sale of the Shares;
or
(e) at the option of the Company, the Trust or MFS upon receipt of any
necessary regulatory approvals and/or the vote of the Policy owners
having an interest in the
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<PAGE>
Accounts (or any subaccounts) to substitute the shares of another investment
company for the corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30) days' prior
written notice to the Trust of the Date of any proposed vote or other action
taken to replace the Shares; or
(f) termination by either the Trust or MFS by written notice to the Company,
if either one or both of the Trust or MFS respectively, shall determine,
in their sole judgment exercised in good faith, that the Company has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement; or
(g) termination by the Company by written notice to the Trust and MFS, if the
Company shall determine, in its sole judgment exercised in good faith,
that the Trust or MFS has suffered a material adverse change in this
business, operations, financial condition or prospects since the date of
this Agreement; or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written consent
of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11. 1 (a) may be exercised for
cause or for no cause. Termination by any party pursuant to any of
Section I 1.1(b) through Section 11. l(i) shall not take effect until the
terminating party shall have provided written notice to the other party.
11.4. Except as necessary to implement Policy owner initiated transactions, or
as required by state insurance laws or regulations, the Company shall not redeem
the Shares attributable to the Policies (as opposed to the Shares attributable
to the Company's assets held in the Accounts), and the Company shall not prevent
Policy owners from allocating payments to a Portfolio that was otherwise
available under the Policies, until thirty (30) days after the Company shall
have notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this Agreement,
for all Policies in effect on the effective date of termination of this
Agreement (the "Existing Policies"), except as otherwise provided under Article
VII of this Agreement. Specifically, without limitation, the owners of the
Existing Policies shall be permitted to transfer or reallocate investment under
the Policies, redeem investments in any Portfolio and/or invest in the Trust
upon the making of additional purchase payments under the Existing Policies.
-15-
<PAGE>
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail, overnight courier or facsimile 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:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Facsimile No.: (617) 954-6624
Attn: Stephen E. Cavan, Secretary
If to the Company:
The Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, Indiana 46802-3506
Facsimile No.: (219) 455-1773
Attn: Kelly D. Clevenger
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Facsimile No.: (617) 954-6624
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the owners
of the Policies and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement or
as otherwise required by applicable law or regulation, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until such
time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.4. 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.
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<PAGE>
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in connection
with inquiries by appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) relating to
this Agreement or the transactions contemplated hereby.
13.7. 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.
13.8. A copy of the Trust's Declaration of Trust is on file with the Secretary
of State of The Commonwealth of Massachusetts. The Company acknowledges that the
obligations of or arising out of this instrument are not binding upon any of the
Trust's trustees, officers, employees, agents or shareholders individually, but
are binding solely upon the assets and property of the Trust in accordance with
its proportionate interest hereunder. The Company further acknowledges that the
assets and liabilities of each Portfolio are separate and distinct and that the
obligations of or arising out of this instrument are binding solely upon the
assets or property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its proportionate
interest hereunder, and the Company agrees not to proceed against any Portfolio
for the obligations of another Portfolio.
-17-
<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 above.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By its authorized officer,
By:
Title:
MFS VARIABLE INSURANCE TRUST, on behalf of the
Portfolios
By its authorized officer and not individually,
James R. Bordewick, Jr. Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY.
By its authorized officer,
By:
Jeffrey L. Shames
Chairman and Chief Executive Officer
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<PAGE>
As of May 1998
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<S><C>
NAME OF SEPARATE POLICIES FUNDED PORTFOLIOS
ACCOUNT AND DATE BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
ESTABLISHED BY BOARD OF DIRECTORS
Lincoln Life Flexible Flexible Premium Variable Life MFS Emerging Growth Series
Premium Variable Life MFS Total Return Series
Separate Account M MFS Utilities Series
Lincoln Life Flexible
Premium Variable Life
Separate Account R
</TABLE>
-19-
<PAGE>
Amendment to Schedule A as of November 1, 1998
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED BY BOARD OF DIRECTORS
Lincoln Life Flexible Premium Variable Life Separate Account M
Lincoln Life Variable Annuity Account N
Lincoln Life Flexible Premium Variable Life Separate Account R
POLICIES/CONTRACTS FUNDED BY SEPARATE ACCOUNT
Flexible Premium Variable Life
Variable Annuity Contracts
PORTFOLIOS APPLICABLE TO SOME OR ALL OF THE POLICIES
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
MFS Research Series
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to Schedule A to be executed in its name and behalf by its duly authorized
officer on the date specified below.
Date: The Lincoln National Life Insurance Company
By its authorized officer,
By:
Kelly D. Clevenger,
Vice President
Date: MFS Variable Insurance Trust, on behalf of the Portfolios
By its authorized officer and not individually
By:
James R. Bordewick, Jr.,
Assistant Secretary
Date: Massachusetts Financial Services Company,
By its authorized officer,
By:
Jeffrey L. Shames,
Chairman and Chief Executive Officer
<PAGE>
AMENDMENT NO. 3 TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of the
22nd day of May 1998, and as amended on May 1, 1999, by and among MFS Variable
Insurance Trust, The Lincoln National Life Insurance Company and Massachusetts
Financial Services Company, the parties do hereby agree to an amended Schedule A
as attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to the Participation Agreement to be executed in its name and on its behalf by
its duly authorized representative. The Amendment shall take effect on
October 15, 1999.
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By its authorized officer,
By:
---------------------------------
Title:
------------------------------
MFS VARIABLE INSURANCE TRUST,
ON BEHALF OF THE PORTFOLIOS
By its authorized officer,
By:
---------------------------------
James R. Bordewick, Jr.
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By:
---------------------------------
Jeffrey L. Shames
Chairman and Chief Executive Officer
<PAGE>
As of October 15, 1999
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lincoln Life Flexible / / Variable Universal Life I MFS Emerging Growth Series
Premium Variable Life / / Lincoln Variable Universal Life MFS Total Return Series
Separate Account M / / Lincoln Variable Universal MFS Utilities Series
Life Death Benefit (VUL)
Lincoln Life Flexible / / Survivorship Variable MFS Emerging Growth Series
Premium Variable Life Universal Life I MFS Total Return Series
Separate Account R / / Lincoln Survivorship Variable MFS Utilities Series
Universal Life
Lincoln Life Variable Annuity / / Variable Annuity Contracts MFS Emerging Growth Series
Account N MFS Total Return Series
MFS Utilities Series
MFS Research Series
Lincoln Life Flexible / / Corporate Specialty Markets MFS Total Return Series
Premium Variable Life COLI Product (CVUL) MFS Utilities Series
Separate Account S MFS Capital Opportunities Series
MFS Research Series
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
And
OCC DISTRIBUTORS
THIS AGREEMENT, made and entered into this 15 day of May 1998 by and
among The Lincoln National Life Insurance Company, an Indiana Corporation
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule I to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), OCC ACCUMULATION
TRUST, an open-end diversified management investment company organized tinder
the laws of the State of Massachusetts (hereinafter the "Fund") and OCC
DISTRIBUTORS, a Delaware general partnership (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially
identical to this Agreement (hereinafter "Participating Insurance Companies");
and
<PAGE>
WHEREAS, beneficial interests in the Fund are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (alternatively referred to as the "SEC" or the "Commission") dated
February 22, 1995 (File No. 812-9290), granting Participating Insurance
Companies and variable annuity separate accounts and variable life insurance
separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and qualified
pension and retirement plans (hereinafter the "Mixed and 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" 193 3 Act"); and
WHEREAS, the Company has registered or will register certain variable
annuity contracts and variable life insurance policies (the "Contracts") under
the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of Indiana, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
2
<PAGE>
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 named in
Schedule 2 on behalf of the Accounts named in Schedule 2 to fund the Contracts
and the Underwriter 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,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE AND REDEMPTION OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which the Company orders on behalf of each Account, executing such orders
on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the order for the shares of the Fund. For
purposes of this Section 1.1, the Company shall be the designee of the Fund for
receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Eastern Time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the SEC.
3
<PAGE>
1.2. The Company shall pay for Fund shares on the next Business Day
after it places an order to purchase Fund shares in accordance with Section 1. 1
hereof Payment shall be in federal funds transmitted by wire.
1.3. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by Participating Insurance
Companies and their separate accounts on those days on which the Fund calculates
its net asset value pursuant to rules of the SEC; provided, however, that the
Board of Trustees of the Fund (hereinafter the "Directors") 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 Directors,
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 any Portfolio.
1.4. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are permitted
under applicable provisions of the Internal Revenue Code of 1986, as amended,
(the "Internal Revenue Code"), and regulations promulgated thereunder, the sale
to which will not impair the tax treatment currently afforded the contracts. No
shares of any Portfolio will be sold to the general public.
1.5. 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, and VII of this Agreement are in
effect to govern such sales. The Fund shall make available upon written request
from the Company (i) a list of all other Participating
4
<PAGE>
Insurance Companies and (ii) a copy of the Participation Agreement executed by
any other Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, upon the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For purposes
of this Section 1.6, 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 the Fund receives notice of request for
redemption by 10:00 a.m. Eastern Time on the next following Business Day.
Payment shall be in federal funds transmitted by wire to the Company's account
as designated by the Company in writing from time to time, on the same Business
Day the Fund receives notice of the redemption order from the Company, except
that the Fund reserves the right to delay payment of redemption proceeds in the
event that portfolio holdings other than cash equivalents must be liquidated to
pay the 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 Underwriter shall bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds; the Company alone shall be
responsible for such action. If notification of redemption is received after
10:00 a.m. Eastern Time, payment for redeemed shares will be made on the next
following Business Day.
1.7. The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule 2 offered by the then current prospectus of the
Fund in accordance with the provisions of such prospectus.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders
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<PAGE>
for Fund shares will be recorded in an appropriate title for each Account or the
appropriate subaccount of each Account.
1.9. The Fund shall furnish notice as soon as reasonably practicable 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 dividends and
distributions as are payable on the Portfolio shares in the form of additional
shares of that Portfolio. The Company reserves the right to revoke this election
and to receive all such dividends and distributions in cash. The Fund shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:30 p.m.,
Eastern Time, each business day. Any material error in the calculation of net
asset value per share, dividend or capital gain information shall be reported
promptly to the Company upon discovery by the Fund and the Company shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value.
ARTICLE H. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act and that the Contracts will be issued and sold
in compliance with all applicable federal and state laws. 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 as a segregated asset account under applicable state
law and has
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<PAGE>
registered each Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as segregated investment accounts for the
Contracts, and that it will maintain such registration for so long as the 1940
Act requires. The Company shall amend the registration statement under the 1933
Act for the Contracts and the registration statement under the 1940 Act for the
Account from time to time as required in order to effect the continuous offering
of the Contracts or as may otherwise be required by applicable law. The Company
shall register and qualify the Contracts for sale in accordance with the
securities laws of the various states only if and to the extent deemed necessary
by the Company.
2.2. The Company represents that it believes that the Contracts are
currently and at the time of issuance will be treated as annuity contracts or
life insurance policies under applicable provisions of the Internal Revenue Code
and that it will make every effort to maintain such treatment and that it will
notify the Fund and the 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.
2.3. 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 as long as the Fund shares are sold. 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.
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2.4. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue 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.
2.5. The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply to
the Fund. 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 and regulations of any state. The
Company alone shall be responsible for informing the Fund of any investment
restrictions imposed by state insurance laws which are applicable to the Fund.
To the extent feasible and consistent with market conditions, the Fund will
adjust its investments to comply with the aforementioned state insurance laws
upon written notice from the Company of such requirements and proposed
adjustments, it being agreed and understood that in any such case the Fund shall
be allowed a reasonable period of time under the circumstances after receipt of
such notice to make any such adjustment.
2.6. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule l2b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. To the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to
have its Board of Trustees, a majority of whom are not interested persons of the
Fund, formulate and approve any plan under Rule l2b-I to finance distribution
expenses.
8
<PAGE>
2.7. The Underwriter represents and warrants that it is a member in
good standing of the National Association of Securities Dealers, Inc., ("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
all applicable federal and state 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 Massachusetts and that it does and will comply with
applicable provisions of the 1940 Act.
2.9. The Underwriter represents and warrants that the Fund's Adviser,
OpCap Advisors, is and shall remain duly registered under federal securities
laws and that the Adviser will perform its obligations to the Fund in accordance
with the laws of Massachusetts 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 having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(I) adopted pursuant to the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid Bond includes coverage for larceny and embezzlement and is issued by a
reputable bonding company.
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,- in an amount not less
than $5 million. The aforesaid includes coverage for larceny and
9
<PAGE>
embezzlement and is issued by a reputable bonding company. The Company agrees to
make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company, at the Company's
expense, with as many copies of the Fund's current prospectus or, if requested
by the Company, a version of the Fund's prospectus that includes only the
Portfolios of the Fund that are used to fund the Company's contracts, as the
Company may reasonably request for use with prospective contractowners and
applicants. The Underwriter shall print and distribute, at the Fund's or
Underwriter's expense, as many copies of said prospectus as necessary for
distribution to existing contractowners or participants. If requested by the
Company in lieu thereof, the Fund shall provide such documentation including a
final copy of a current prospectus set in type at the Fund's expense and other
assistance as is reasonably necessary in order for the Company at least annually
(or more frequently if the Fund prospectus is amended more frequently) to have
the new prospectus for the Contracts and the Fund's new prospectus printed
together in one document. In such case the Fund shall bear its share of expenses
as described above.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or alternatively from
the Company (or, in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund), and the Underwriter (or the Fund) shall
provide such Statement, at its expense, to the Company-and to any owner of or
participant under a Contract who requests such Statement or, at
10
<PAGE>
the Company's expense, to any prospective contractowner and applicant who
requests such statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, if any, reports to shareholders and other communications
to shareholders in such quantity as the Company shall reasonably require and
shall bear the costs of distributing them to existing contractowners or
participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or
participants;
(ii) vote the Fund shares held in an Account in accordance
with in structions received from contractowners or
participants; and
(iii) vote Fund shares held in an Account for which no timely
instructions have been received, in the same proportion
as Fund shares of such Portfolio for which instructions
have been received from the Company's contractowners or
participants;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contractowners. 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 other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular as required, the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the SEC interpretation of the requirements
of
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<PAGE>
Section 16(a) with respect to periodic elections of directors 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 the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Fund's adviser or the Underwriter is named, at
least fifteen business days prior to its use. No such material shall be used if
the Fund or the Underwriter reasonably objects in writing 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 by
the Underwriter, except with the permission of the Fund or the Underwriter. The
Fund and the Underwriter agree to respond to any request for approval on a
prompt and timely basis.
4.3. The Fund or the Underwriter 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 or its separate account is
named, least fifteen business days prior to its use. No such material shall be
used if the Company reasonably objects in writing to such use within ten
business days after receipt of such material.
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<PAGE>
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 contractowners or participants,
or in sales literature or other promotional material approved by the Company,
except with the permission of the Company. The Company agrees to respond to any
request for approval on a prompt and timely basis.
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 20 days after
the filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, 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 Fund, within
20 days after 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, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or
13
<PAGE>
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (ie., 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,
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, subject to obtaining any required exemptive orders or other
regulatory approvals, 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. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this Agreement
shall be paid by the Fund to the extent permitted by law. All Fund shares will
be duly authorized for issuance and registered in accordance with applicable
federal law and to the extent deemed advisable by the Fund, in accordance with
applicable state law, prior to 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, Fund proxy materials
and reports, setting in- type, printing and distributing the prospectuses, the
proxy materials and reports to
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<PAGE>
existing shareholders and contractowners, the preparation of all statements and
notices required by any federal or state law, all taxes on the issuance or
transfer of the Fund's shares, and any expenses permitted to be paid or assumed
by the Fund pursuant to a plan, if any, under Rule by 12b- I under the 1940 Act.
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 Internal Revenue Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will comply with Section 817(h) of
the Internal Revenue Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or fife insurance
contracts and any amendments or other modifications to such Section or
Regulations in accordance with guidelines provided by the Company prior to the
execution of this Agreement and as necessary thereafter. In the event of a
breach of this Article VI by the Fund, it will take all reasonable steps (a) to
notify the Company of such breach and (b) to adequately diversify the Fund so as
to achieve compliance with the grace period afforded by Treasury
Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor
the Fund for the existence of any material irreconcilable conflict among the
interests of the contractowners of all separate accounts investing in the Fund.
An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public
15
<PAGE>
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference in
voting instructions given by Participating Insurance Companies or by variable
annuity contract and variable fife insurance contractowners; or (f) a decision
by an insurer to disregard the voting instructions of contractowners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof. A majority of the Fund
Board shall consist of persons who are not "interested" persons of the Fund.
7.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. As set forth in the Mixed and Shared Funding Exemptive
Order, the Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board in
carrying out its responsibilities under the Mixed and Shared Funding Exemptive
Order, by providing the Fund Board upon its request with all information
reasonably necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the Fund
Board whenever contractowner voting instructions are disregarded. The Fund Board
shall record in its minutes or other appropriate records, all reports received
by it and all action with regard to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a majority
of its disinterested Directors, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested Directors), take whatever steps are necessary to
16
<PAGE>
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 contractowners and, as appropriate, segregating the assets
of any appropriate group (ie., variable annuity contractowners or variable fife
insurance contractowners, of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contractowners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict
with the majority of contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement with respect to such
Account. Any such withdrawal and termination must take place within 90 days
after the Fund gives written notice to the Company that this provision is being
implemented. Until the end of such 90 day 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 particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Account's investment in the Fund and
terminate this Agreement with respect to such Account. Any such withdrawal and
termination must take place within 90 days after the Fund gives written notice
to the Company that this provision is being implemented. Until the end of such
90 day
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<PAGE>
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 1.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund or the Underwriter 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 contractowners materially adversely
affected by the irreconcilable material conflict.
7.7. The Company shall from time to time submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so that the
Fund Board may fully carry out the duties imposed upon it as delineated in the
Mixed and Shared Funding Exemptive Order, and said reports, materials and data
shall be submitted more frequently if deemed appropriate by the Fund Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3 (T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, (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
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<PAGE>
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, and each of the Fund's or the Underwriter's directors, officers,
employees or agents and each person, if any, who controls or is associated with
the Fund or the Underwriter within the meaning of such terms under the federal
securities laws (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:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Contracts or contained in the Contracts or
sales literature or other promotional material 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 in light
of the circumstances in which they were made; provided that this
agreement to indemnify shall not apply as to any indemnified party
if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund
for use in the registration statement, prospectus or statement of
additional information for the Contracts or in the Contracts or
sales literature or other promotional material for the Contracts
(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
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(ii) arise out of or as a result of untrue statements or
representations by or on behalf of the Company (other than
statements or representations contained in the Fund registration
statement, Fund prospectus, Fund statement of additional
information or sales literature or other promotional material of
the Fund not supplied by the Company or persons under its control)
or willful malfeasance, 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 the Fund registration statement, Fund
prospectus, statement of additional information 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 a
statement or omission was made in reliance upon and in conformity
with information furnished to the Fund by or on behalf of the
Company or persons under its control; or
(iv) 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
(v) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8. 1 (b) and 8.3 hereof This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the party seeking
indemnification.
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(c) 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
(a) The Underwriter, on its own behalf and on behalf of the Fund,
agrees to indemnify and hold harmless the Company and each of its directors,
officers, employees or agents and each person, if any, who controls or is
associated with the Company within the meaning of such terms under the federal
securities laws (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, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Fund or sales literature or
other promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances in which they were made;
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, prospectus or statement of
additional information for the Fund or in sales literature
or other promotional material of the Fund (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 Contracts
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<PAGE>
or in the Contract or Fund registration statement, the
Contract or Fund prospectus, statement of additional
information, or sales literature or other promotional
material for the Contracts or of the Fund not supplied by
the Underwriter or the Fund or persons under the control of
the Underwriter or the Fund respectively) or willful
malfeasance, bad faith or gross negligence of the
Underwriter or the Fund or persons under the control of
the Underwriter or the Fund respectively, 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, statement of additional information
or sales literature or other promotional material 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 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
Company by or on behalf of the Underwriter or the Fund or
persons under the control of the Underwriter or 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 and procedures related thereto specified in
Article VI of this Agreement except if such failure is a
result of the Company's failure to comply with the
notification procedures specified in Article VI); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or
the Fund in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Underwriter or the Fund;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the party seeking
indemnification.
22
<PAGE>
(c) The indemnified parties will promptly notify the Underwriter of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of THE Contracts or the operation of the Account.
8.3. INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article VIE
("indemnifying party" for the purpose of this Section 8.3) shall not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("indemnified party" for the purpose of this Section 8.3) unless such
indemnified party shall have notified the indemnifying party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other
23
<PAGE>
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or 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 VHI shall survive any
termination of this Agreement.
8.4. CONTRIBUTION
In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in this Article VIII is due in
accordance with its terms but for any reason is held to be unenforceable with
respect to a party entitled to indemnification ("indemnified party" for purposes
of this Section 8.4) pursuant to the terms of this Article VIII, then each party
obligated to indemnify pursuant to the terms of this Article VIII shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and litigations in such proportion
as is appropriate to reflect the relative benefits received by the parties to
this Agreement in connection with the offering of Fund shares to the Account and
the acquisition, holding or sale of Fund shares by the Account, or if such
allocation is not permitted
24
<PAGE>
by applicable law, in such proportions as is appropriate to reflect the relative
net benefits referred to above but also the relative fault of the parties to
this Agreement in connection with any actions that lead to such losses, claims,
damages, liabilities or litigations, as well as any other relevant equitable
considerations.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon six months' advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company if shares of the Portfolios
delineated in Schedule 2 are not reasonably available to meet the requirements
of the Contracts as determined 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
25
<PAGE>
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the FUND shares, which the Fund
reasonably believes would have a material adverse effect on the Company's
ability to perform its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body, which the
Company reasonably believes would have a material adverse effect on the Fund's
or the Underwriter's ability to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals and/or the vote of the contractowners having
an interest in the Account (or any subaccount) to substitute the shares of
another investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media. The Company will give
30 days prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) all contractowners of variable insurance
products of all separate accounts of (ii) the interests of the Participating
Insurance Companies investing in the Fund as delineated in Article VII of this
Agreement; or
(g) at the option of the Company if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code, or under any
26
<PAGE>
successor or similar provision, or if the Company reasonably believes that the
Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof, or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines 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
or financial condition since the date of this Agreement; or
(k) at the option of the Fund or Underwriter, if the Fund or
Underwriter respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement; or
(1) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without notice.
10.2. NOTICE REQUIREMENT
(a) In the event that any termination of this Agreement is
based upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to
27
<PAGE>
terminate this Agreement for cause shall be furnished by the party terminating
the Agreement to the non-terminating parties, with said termination to be
effective upon receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.10) or 10.1(k), prior written notice of
the election to terminate this Agreement for cause shall be famished by the
party terminating this Agreement to the nonterminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 16. 1 (a) may be exercised for any reason or
for no reason.
10.4. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, and subject to Section 1.3 of this Agreement,
the Company may require the Fund and the Underwriter to, -continue to make
available additional shares of the Fund 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, 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 10.4 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.
28
<PAGE>
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10. 1 (a) and
thereafter the Fund, the Underwriter, or the Company may terminate the
Agreement, as so continued pursuant to this Section 10.4, upon 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 or Underwriter, need not be for more
than 90 days.
10.5. Except as necessary to implement contractowner initiated or
approved transactions, or as required by state insurance laws or regulations,
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), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
90 days after the Company shall have notified the Fund or Underwriter of its
intention to do so.
ARTICLE XI. NOTICES
Any notice shall be deemed duly given only if sent by hand, evidenced by
written receipt or by 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. All
notices shall be deemed given three business days after the date received or
rejected by the addressee. If to the Fund:
Mr. Bernard H. Garil
President
OpCap Advisors
200 Liberty Street
New York, NY 10281
If to the Company:
29
<PAGE>
Kelly D. Clevenger
The Lincoln National Life Insurance Company
1300 S. Clinton Street
Fort Wayne, IN 46802-3 506
If to the Underwriter:
Mr. Thomas E. Duggan
Secretary
OCC Distributors
200 Liberty Street
New York, NY 10281
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
Directors, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party hereto shall
treat as confidential all information reasonably identified as such in writing
by any other party hereto (including without limitation the names and addresses
of the owners of the Contracts) and, except as contemplated by this Agreement,
shall not disclose, disseminate or utilize such confidential information until
such time as it may come into the public domain without the express prior
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
other-wise 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.
30
<PAGE>
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. This Agreement shall not be assigned by any party hereto without
the prior written consent of all the parties.
12.7. 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 each other and such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.8. 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.
12.9. The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund.
31
<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 representative as
of the date and year first WRITTEN above.
COMPANY:
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
SEAL By:
FUND:
OCC ACCUMULATION TRUST
SEAL By:
UNDERWRITER:
OCC DISTRIBUTORS
By:
32
<PAGE>
SCHEDULE I
Participation Agreement
Among
OCC Accumulation Trust, The Lincoln National Life Insurance Company
and
OCC Distributors
The following separate accounts of The Lincoln National Life Insurance
Company are permitted in accordance with the provisions of this Agreement to
invest in Portfolios of the Fund shown in Schedule 2:
Lincoln Life Flexible Premium Variable Life Separate Account M
Lincoln Life Flexible Premium Variable Life Separate Account R
May 15, 1998
<PAGE>
SCHEDULE 2
Participation Agreement
Among
OCC Accumulation Trust, The Lincoln National Life Insurance Company
and
OCC Distributors
The Separate Account(s) shown on Schedule I may invest in the following
Portfolios of the OCC Accumulation Trust:
Global Equity Portfolio
Managed Portfolio
May 15, 1998
<PAGE>
AMENDMENT TO THE PARTICIPATION AGREEMENT
DATED MAY 15,1998
BY AND AMONG
OCC ACCUMULATION TRUST,
OCC DISTRIBUTORS AND
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
This is an amendment to the May 15, 1998 Participation Agreement
("Agreement") among OCC Accumulation Trust, OCC Distributors, and The Lincoln
National Life Insurance Company.
The following separate accounts of The Lincoln National Life Insurance
Company are permitted in accordance with the provisions of this Agreement to
invest in Portfolios of the Fund shown in Schedule 2:
Lincoln Life Flexible Premium Variable Life Separate' Account M
Lincoln Life Premium Variable Life Separate Account R
Lincoln Life Variable Annuity Account N
October 7, 1998
OCC ACCUMULATION TRUST
By:
Name
Title:
OCC DISTRIBUTORS
By:
Name:
Title:
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By:
Name:
Title:
<PAGE>
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC. AND
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT made as of May 22, 1998, among Templeton Variable
Products Series Fund (the "Trust"), an open-end management investment company
organized as a business trust under Massachusetts law, Franklin Templeton
Distributors, Inc., a California corporation, the Trust's principal underwriter
("Underwriter"), and The Lincoln National Life Insurance Company, a life
insurance company organized as a corporation under Indiana law (the "Company"),
on its own behalf and on behalf of each segregated asset account of the Company
set forth in Schedule A, as may be amended from time to time (the "Accounts").
WITNESSETH:
WHEREAS, -the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its Shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Underwriter desire that Trust shares be
used as an investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
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, and certain of those series, named in
Schedule B, (the "Portfolios") are to be made available for purchase by the
Company for the Accounts; and
WHEREAS, the Trust has received an order from the SEC, dated November
16, 1993 (File No. 812-8546), 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) 0 5) and 6e-3 M (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 "Shared Funding Exemptive
Order");
<PAGE>
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised; and has
registered or will register certain variable annuity contracts and variable life
insurance policies, listed on Schedule C attached hereto (the "Contracts"),
under which the portfolios are to be made available as investment vehicles under
the 1933 Act unless such interests under the Contracts in the Accounts are
exempt from registration under the 1933 Act and the Trust has been so advised;
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 one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission 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. (NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act");
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 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 parties
agree as follows:
ARTICLE 1.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1. For purposes of this Article 1, the Company shall be the Trust's
agent for receipt of purchase orders and requests for redemption relating to
each Portfolio from each Account, provided that the Company notifies the Trust
of such purchase orders and requests for redemption by 9:00 a.m. Eastern time
on the next following Business Day, as defined in Section 1.3.
1.2. The Trust agrees to make shares of the Portfolios available to
the Accounts for purchase at the net asset value per share next computed after
receipt of a purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of the Trust
describing Portfolio purchase
2
<PAGE>
procedures on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC, and the Trust shall use its best efforts to
calculate Such net asset value on each day on which the New York Stock Exchange
("NYSE") is open for trading. The Company will transmit orders from time to time
to the Trust for the purchase of shares of the Portfolios. 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 if, 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, such action is
deemed in the best interests of the shareholders of such Portfolio.
1.3 The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than 2:00 P.M. Eastern time on the
next Business Day after the Trust receives the purchase order. Payment shall be
made in federal funds transmitted by wire to the Trust or its designated
custodian. Upon receipt by the Trust of the federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust for this purpose. "Business Day" shall mean any day
on which the NYSE is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC.
1.4 The Trust will redeem for cash 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 describing Portfolio redemption
procedures. Redemption with respect to a Portfolio will normally be paid to the
Company for an Account in federal funds transmitted by wire to the Company
before 2:00 p.m. Eastern time on the next Business Day after the receipt of the
request for redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires as when portfolio securities must be
sold, or if extraordinary market conditions exist, but in no event shall
Payment be delayed for a greater period than is permitted by the 1940 Act.
1.5 Payments for the purchase of shares of the Trust's Portfolios by
the Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer on
that Business Day.
1.6 issuance and transfer of the Trust's Portfolio shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7 The Trust Shall furnish, on or before the ex-dividend date, notice
to the
3
<PAGE>
Company of any income dividends or capital gain distributions payable on the
shares of any Portfolio of the Trust. 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 the Portfolio. The Trust shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust shall calculate the net asset value of each Portfolio on
each Business Day, as defined in Section 1.3. The Trust shall make the net
asset value per share for each Portfolio available to the Company or its
designated agent on a daily basis as soon as reasonably practical after the net
asset value per share is calculated (normally by 6:30 p.m. Eastern time).
1.9 The Trust agrees that its Portfolio 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 Shared
Funding Exemptive Order. No shares of any Portfolio will be sold directly to
the general public. The Company agrees that it will use Trust shares only for
the purposes of funding the Contracts through the Accounts listed in Schedule
A, as amended from time to time.
1.10 The Company agrees that all net amounts available under the
Contracts shall be invested in (I) the Company's general account, (ii)
investment companies currently available as funding vehicles for the Contracts
and appearing on Schedules B and D to this Agreement, or (iii) other investment
companies, provided that the Company shall have given the Trust and the
Underwriter sixty (60) days' advance written notice of its intention to add
such other investment companies.
1.11 The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.10 and
Article IV of this Agreement.
1.12 Each party to this Agreement shall have the right to rely on
information or confirmations provided by any other party (or by any affiliate
of any other party), and shall not be liable in the event that an error results
from any incorrect information or confirmations supplied by any other party. If
an error is made in reliance upon incorrect information or confirmations, any
amount required to make a Contract owner's account whole shall be borne by the
party who provided the incorrect information or confirmation.
ARTICLE 11.
OBLIGATIONS OF THE PARTIES; FEES AND EXPENSE
2.1 The 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 the Trust.
The Trust shall bear the costs of
4
<PAGE>
registration -and qualification of its shares of the Portfolios, 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.
2.2 At the option of the Company, the Trust or the Underwriter shall
either (a) provide the Company with as many copies of portions 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, pertaining specifically to the Portfolios 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 and from which information relating
to series of the Trust other than the Portfolios has been deleted to the extent
practicable. The Trust or the Underwriter shall provide the Company with a copy
of its current statement of additional information, including any amendments or
supplements, in a form suitable for duplication by the Company. Expenses of
furnishing such documents for marketing purposes shall be borne by the Company
and expenses of furnishing such documents for current contract owners invested
in the Trust shall be borne by the Trust or the Underwriter. The Company
assumes sole responsibility for ensuring that such materials are delivered to
Contract owners in accordance with applicable federal and state securities
laws.
2.3 The Trust shall bear the costs of preparation, solicitation and
mailing Trust-sponsored proxy materials (or similar materials such as voting
solicitation instructions) to Contract owners, and the Company (at its expense)
shall. provide all necessary information for and otherwise fully cooperate with
the proxy distribution process. The Company shall bear the cost of distributing
all other proxy materials (or similar materials such as voting solicitation
instructions). 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 If and to the extent required by law, the Company shall: (i)
solicit voting instructions from Contract owners; (I!) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares held in a separate account for which no instructions have been
received in the same proportion as Trust shares of such Portfolio in that
separate account for which instructions have been received, so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. The Company
reserves the right to vote Trust shares held in any segregated asset account in
its own right, to the extent permitted by law.
2.5 Except as provided in se section 2.7, the Company shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" or any other Trademark relating to the Trust or Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
the Company shall cease all use of any such name or mark as soon as reasonably
practicable.
5
<PAGE>
2.6 Except as provided in section 2.7, the Trust or Underwriter shall
not use any designation comprised in whole or in part of the names or marks
"Lincoln" or "Lincoln Life" or any other Trademark relating to the Company
without prior written consent, and upon termination of this Agreement for any
reason, the Trust or the Underwriter shall cease all use of any such name or
mark as soon as reasonably practicable.
2.7 The Company shall furnish, or cause to be furnished to the Trust or
its designee, at least one complete copy of each registration statement,
prospectus, statement of additional information, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "disclosure documents"), as well as any report, solicitation for
voting instructions, sales literature and other promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts and
their investment in the Trust prior to its first use with investors. 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 an Adviser is named, at least 10 Business Days prior to its use.
No such material shall be used if the Trust or its designee reasonably objects
to such use within seven Business Days after receipt of such material. For
purposes of this paragraph, "sales literature or other promotional material"
includes, but is not limited to, portions of the following that use any
Trademark related to the Trust or Underwriter or refer to the Trust or
affiliates of the Trust: 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 electronic communication 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 or any other advertisement, sales literature or published article or
electronic communication), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and disclosure documents, shareholder reports and proxy materials.
The Trust shall furnish or cause to be furnished, to the Company or its
designee each piece of sales literature or other promotional material (as
defined above) in which the Company's products are promoted is named, at least
10 Business Days prior to its use. No such material shall be used if the
Company or its designee reasonably objects to such use within five Business
Days after receipt of such material. In addition, in marketing literature
regarding the Trust, the Trust and the Underwriter may include the Company's
name in a list of insurance companies whose separate accounts invest in the
Trust, provided the Company receives a copy of such literature three (3)
business days in advance of first use and does not affirmatively object.
2.8 The Company and its agents shall not give any information or make
any representations or statements on behalf of the Trust or concerning the
Trust, the Underwriter or an Adviser in connection with the sale of the
Contracts other than
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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),
annual and semi-annual 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.
2.9 The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and each
Adviser, in such form as the Company may reasonably require, as the Company
shall reasonably request in connection with the preparation of disclosure
documents and annual and semi-annual reports pertaining to the Contracts.
2.10 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 disclosure documents
for the Contracts (as such disclosure documents 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.
2.11 The Trust Shall require all Participating Insurance Companies to
calculate voting privileges as set forth in section 2.4 and the Company shall
be responsible for assuring that the Accounts calculate voting privileges in
the manner established by the Trust. The Company will in no way recommend or
oppose or interfere with the solicitation of proxies for Portfolio shares held
to fund the Contracts without the prior written consent of the Trust, which
consent may be withheld in the Trust's sole discretion.
2.12 The Trust and Underwriter Shall pay no fee or other compensation
to the Company under this Agreement except as provided on Schedule E, if
attached. Nevertheless, the Trust or the Underwriter or an affiliate may make
payments (other than pursuant to a Rule 12b-1 Plan) to the Company or its
affiliates or to the Contracts' underwriter in amounts agreed to by the
Underwriter in writing and such payments may be made out of fees otherwise
payable to the Underwriter or its affiliates, profits of the Underwriter or its
affiliates, or other resources available to the Underwriter or its affiliates.
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 its state of
incorporation and that it has
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legally and validly established each Account as a segregated asset account under
such law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that, with respect to each
Account, (1) the Company has registered or, prior to any issuance or sale of
the Contracts, will register the Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated asset
account for the Contracts, or (2) if the Account is exempt from registration as
an investment company under Section 3(c) of the 1940 Act, the. Company will
make every effort to maintain such exemption and will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future.
3.3 The Company represents and warrants that, with respect to each
Contract, (1) the Contract will be registered under the 1933 Act, or (2) if the
Contract is exempt from registration under Section 3(a)(2) of the 1933 Act or
under Section 4(2) and Regulation D of the 1933 Act, the Company will make
every effort to maintain such exemption and will notify the Trust and the
Adviser immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future. The Company
further represents and warrants that the Contracts will be sold by broker
dealers, or their registered representatives, who are registered with the
SEC under the 1934 Act and who are members in good standing of the NASD; the
Contracts will be issued and sold in compliance in all material respects with
all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with applicable state insurance suitability
requirements.
For any unregistered Accounts which are exempt from registration under
the '40 Act in reliance upon Sections YOM or 3(c)(7) thereof, the Company
represents and warrants that:
(a) each Account and sub-account thereof has a principal underwriter
which is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended;
(b) Trust shares are and will continue to be the only investment
securities held by the corresponding Account sub-accounts; and
(c) with regard to each Portfolio, Company, on behalf of the
corresponding sub-account, will:
(1) seek instructions from all Contract owners with regard
to the voting of all proxies with respect to Trust
shares and vote such proxies only in accordance with
such instructions or vote such shares held by it in the
same proportion as the vote of all other holders of such
shares; and
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(2) refrain from substituting shares of another security for
such shares unless the SEC has approved such
substitution in the manner provided in Section 26 of the
'40 Act. 1
3.4 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Massachusetts and that it does
and will comply in all material respects with the 1940 Act and the rules and
regulations thereunder.
3.5 The Trust represents and warrants that the Portfolio 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 and at the time of
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 or the Underwriter.
3.6 The Trust represents and warrants that (i) the investments of each
Portfolio will comply with the diversification requirements for variable
annuity, endowment or life insurance contracts set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended ("Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and that (ii) it has adopted such diversification policies, as
reflected in its registration statement, and has contractually obligated each
Portfolio's investment adviser to comply with Trust policies. The Trust will
notify the Company immediately upon having a reasonable basis for believing any
Portfolio has ceased to comply or might not so comply and will in that event
immediately take all reasonable steps to adequately diversify the Portfolio to
achieve compliance within the grace period afforded by Regulation 1.817-5.
3.7 The Trust represents and warrants that it 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 the
Company immediately upon having a reasonable basis for believing it has ceased
to so qualify or might not so qualify in the future.
3.8 The Trust and Underwriter each represents and warrants that should
it ever desire to make any payments to finance distribution expenses pursuant
to Rule 12b-1 under the 1940 Act, the Trustees, including a majority who are
not "interested persons" of the Trust under the 1940 Act ( "disinterested
Trustees" ), will formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
3.9 The Trust represents and warrants that it, its directors,
officers, employees and others dealing with the money or securities, or both,
of a Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in
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an amount not less that the minimum coverage required by Rule 17g-I or other
regulations under the 1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
3.10 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Trust are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust, in an amount not less than $5 million. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is always in
effect, and agrees to notify the Trust and the Underwriter in the event that
Such coverage no longer applies.
3.11 The Underwriter represents that each Adviser is duly organized
and validly existing under applicable corporate law and that it is registered
and will during the term of this Agreement remain registered as an investment
adviser under the Advisers Act.
3.12 The Trust currently intends for one or more Classes to make
payments to finance its distribution expenses, including service fees, pursuant
to a Plan adopted under Rule 12b-1 under the 1940 Act ("Rule 12b-1"), although
it may determine to discontinue such practice in the future. To the extent that
any Class of the Trust finances its distribution expenses pursuant to a Plan
adopted under Rule 12b-1, the Trust undertakes to comply with any then current
SEC and SEC staff interpretations concerning Rule 12b-1 or any successor
provisions.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1 The parties acknowledge that a Portfolio'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 Trust shall promptly inform the Company of any determination by the
Trustees that an irreconcilable material conflict exists and of the
implications thereof.
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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 Shared Funding
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. All communications from the Company to the Trustees
may be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a majority of
the 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 own 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)
withdrawing 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 withdrawal should be implemented to a vote
of all affected Contract owners and, as appropriate, withdrawal of the assets
of any appropriate group (i.e. , annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such withdrawal, 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 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 a
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
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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 or Trust be required to establish a new funding medium for the
Contracts. 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 Shared Funding
Exemptive order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3M are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then 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.
ARTICLE V.
INDEMNIFICATION
5.1 INDEMNIFICATION BY THE COMPANY
(a) 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" and individually the "Indemnified Party"
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, which
consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending
any alleged loss, claim, damage, liability or
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<PAGE>
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 are related to the sale or acquisition of Trust 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 a disclosure document 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
(ii) arise out of or result from statements
or representations (other than statements or
representations contained in and accurate1y derived
from Trust Documents as defined in Section 5.2 (a)(0)
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
(III) 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)(i) 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
(iv) 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
(v) arise out of or result from any material
breach of any
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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.
(b) The Company shall not be liable under this
indemnification provision with respect to any Losses to which
an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this
Agreement or to the Trust or Underwriter, whichever is
applicable. The Company shall also 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.
(c) 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 Trust Shares or
the Contracts or the operation of the Trust.
5.2 INDEMNIFICATION BY THE UNDERWRITER
(a) The Underwriter agrees to indemnify and hold harmless the
Company,
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the underwriter of the Contracts and each of its directors and officers
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" and
individually an "Indemnified Party" for purposes of this Section 5.2)
against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Underwriter,
which consent shall not be unreasonably withheld) 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 become subject under any statute, at common law or
otherwise, insofar as such Losses are related to the sale or acquisition
of the Trust's Shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement, prospectus or sales literature of the Trust (or
any amendment or supplement to any of the foregoing) (collectively, the
"Trust Documents") 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 of such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Underwriter or Trust by or
on behalf of the Company for use in the Registration Statement or
prospectus for the Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the disclosure documents or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Trust, Adviser or Underwriter or persons under their
-control, with respect to the sale or distribution of the Contracts or
Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a disclosure document 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 Trust; or
(iv) arise as a result of any failure by the Trust 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
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<PAGE>
qualification representation specified in Section 3.7 Of this Agreement
and the diversification requirements specified in Section 3.6 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 5.2(b) and 5.2(c) hereof.
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to each Company or the Account,
whichever is applicable.
(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
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.
(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.
5.3 INDEMNIFICATION BY THE TRUST
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<PAGE>
(a) The Trust 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 5.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust, which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, 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 Trust, and 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; as limited by and in accordance with the provisions of
Section 5.3(b) and 5.3(c) hereof. It is understood and expressly stipulated
that neither the holders of shares of the Trust nor any Trustee, officer, agent
or employee of the Trust shall be personally liable hereunder, nor shall any
resort to be had to other private property for the satisfaction of any claim or
obligation hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against any 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 Trust, the Underwriter or each Account, whichever is
applicable.
(c) The Trust 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 Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims 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 Trust of
any such claim shall not relieve the Trust 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 Trust will be entitled to
participate, at its own expense, in the defense thereof. The Trust also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Trust to such party of the
Trust'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
Trust 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.
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(d) The Company and the Underwriter agree promptly to notify the
Trust of the commencement of any litigation or proceedings against it any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, with respect to the operation of either the
Account, -or the sale or acquisition of share of the Trust.
ARTICLE V1.
TERMINATION
6.1 This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios or any reason by ninety (90) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
6.2 This Agreement may be terminated immediately by either the Trust
or the Underwriter following consultation with the Trustees upon written notice
to the Company if :
(a) the Company notifies the Trust or the Underwriter that
the exemption from registration under Section 3(c) of the 1940 Act no
longer applies, or might not apply in the future, to the unregistered
Accounts, or that the exemption from registration under Section 4(2) or
Regulation D promulgated under the 1933 Act no longer applies or might
not apply in the future, to interests under the unregistered Contracts;
Or
(b) either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its
business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity.
6.3 This Agreement may be terminated immediately by the Company upon
written notice to the Trust and the Underwriter:
(a) if the Company Shall determine, in its sole judgment
exercised in good faith, that either the Trust or the Underwriter has
suffered a material adverse change in its business, operations,
financial conditions or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(b) if the Trust and Underwriter fail to promptly remedy a
breach of section 3.6 hereof.
6.4 If this Agreement is terminated for any reason, except under
Article IV (Potential Conflicts) above, the Trust shall, at the option of the
Company, continue to make available additional shares of any Portfolio
and redeem shares of any Portfolio
18
<PAGE>
pursuant to all of the terms and conditions of this Agreement for all Contracts
in effect on the effective date of termination of this Agreement. If this
Agreement is terminated pursuant to Article IV, the provisions of Article IV
shall govern.
6.5 The provisions of Articles 11 (Representations and Warranties) and
V (Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement 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 6.4, except that the Trust and the Underwriter shall
have no further obligation to sell Trust shares with respect to Contracts
issued after termination.
6.6 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract owner initiated
or approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Trust and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust 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 Trust or the Underwriter 90 days notice of its intention to do so.
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 or the Underwriter:
Templeton Variable Products Series Fund or
Franklin Templeton Distributors, Inc.
500 E. Broward Boulevard
Fort Lauderdale, FL 33394-3091
Attention: Barbara J. Green, Trust Secretary
WITH A COPY TO
Franklin Resources, Inc.
19
<PAGE>
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Karen L. Skidmore, Senior Corporate
Counsel
If to the Company:
The Lincoln National Life Insurance Company
1300 South Clinton Street, 2H-02
Fort Wayne, IN 46802
Attention: Kelly D. Clevenger, Vice President
ARTICLE VIIII.
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 the State of Florida. 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. Copies of any
such orders shall be promptly forwarded by the Trust to the Company.
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, 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 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.
8.7 Each party hereto shall treat as confidential the names and
addresses of the
20
<PAGE>
Contract owners and all information reasonably identified as confidential in
writing by any other party hereto, and, except as permitted by this Agreement or
as required by legal process or regulatory authorities, shall not disclose,
disseminate, or utilize such names and addresses and other confidential
information until such time as they may come into the public domain, without the
express written consent of the affected party. Without limiting the foregoing,
no party hereto shall disclose any information that such party has been advised
is proprietary, except such information that such party is required to disclose
by any appropriate governmental authority (including, without limitation, the
SEC, the NASD, and state securities and insurance regulators).
8.8 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.
8.9 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided in Section
1.10.
8.10 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.11 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.
The Company:
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
-------------------------------------------
By its authorized officer
By:
Name:
Title:
The Trust:
TEMPLETON VARIABLE PRODUCTS SERIES FUND
---------------------------------------
By its authorized officer
By:
Name:
Title:
21
<PAGE>
The Underwriter:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
-------------------------------------
By its authorized officer
By:
Name:
Title:
SCHEDULE A
SEPARATE ACCOUNTS OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1. Lincoln Life Flexible Premium Variable Life Account R
Date Established:
SEC Registration Number: 333-43107
2. Lincoln Life Variable Life Account M
Date Established:
SEC Registration Number: 333-42479
22
<PAGE>
SCHEDULE B
TRUST PORTFOLIOS AND CLASSES AVAILABLE
--------------------------------------
<TABLE>
<CAPTION>
<S><C>
TEMPLETON VARIABLE PRODUCTS SERIES ADVISER
---------------------------------- -------
Templeton Asset Allocation Fund Templeton Investment Counsel, Inc.
-Class 1
Templeton international Fund Templeton Investment Counsel, Inc.
-Class 1
Templeton Stock Fund Templeton Investment Counsel, Inc.
-Class 1
</TABLE>
23
<PAGE>
SCHEDULE C
VARIABLE ANNUITY CONTRACTS
ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-------------------------------------------------
<TABLE>
<CAPTION>
<S><C>
REPRESENTATIVE
CONTRACT FORM NUMBER
-------- -----------
1. Lincoln Life Flexible Premium Variable Life Account R
Title: SVUL I Form: LN650LL
SEC Registration Number: 333-43107
2. Lincoln Life Variable Account M
Title: VUL I Form: LN605LL
SEC Registration Number: 333-42479
</TABLE>
24
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
AIM Capital Appreciation Fund
AIM Diversified income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
BT Equity 500 Index Fund
Delaware Emerging Markets Series
Delaware Small Cap Value Series
Delaware Trend Series
Fidelity VIP Equity-Income Portfolio
Fidelity VIP 11 Asset Manager Portfolio
Fidelity VIP 11 Investment Grade Bond Portfolio
Lincoln National Money Market Fund
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
OpCap Global Equity Portfolio
OpCap Managed Portfolio
25
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
The Lincoln National Life Insurance Company, Templeton Variable
Products Series Fund and Franklin Templeton Distributors, Inc. hereby amend
their Fund Participation Agreement dated as of May 22, 1998, and as amended on
May 1, 1999 by:
1. Replacing Schedule A-C of the Agreement with Amended Schedule A-C,
attached;
2. Replacing Schedule D of the Agreement with Amended Schedule D, attached;
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Amendment to Fund Participation Agreement, to be
effective as of October 15, 1999.
LINCOLN NATIONAL LIFE INSURANCE TEMPLETON VARIABLE PRODUCTS SERIES
COMPANY FUND
- ---------------------------------- --------------------------------------
By its authorized officer By its authorized officer
By: By:
------------------------------- --------------------------------------
Name: Steven M. Kluever Name: Karen L. Skidmore
Title: Second Vice President Title: Assistant Vice President and
Assistant Secretary
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
--------------------------------------
By its authorized officer
By:
-----------------------------------
Name: Deborah Gatzek
Title: Senior Vice President and
Assistant Secretary
1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT SVUL I VUL I Lincoln VUL
NAME AND TYPE
- ----------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes Yes Yes
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 811-08579 811-08557 811-08557
NUMBER-1940
ACT
- ----------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE LN650LL LN605LL LN660
FORM NUMBERS LN615 LN615
LN660 LN605
- ----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Lincoln Life Flexible Lincoln Life Flexible Lincoln Life Flexible
NAME/DATE Premium Variable Life Premium Variable Life Premium Separate
ESTABLISHED Account R Account M Account M
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 333-43107 333-42479 333-42479
NUMBER - 1933
ACT
- ----------------------------------------------------------------------------------------------------------------------------
TEMPLETON Templeton Asset Templeton Asset Templeton International
VARIABLE Allocation Fund - Class 1 Allocation Fund - Class 1 Fund - Class 2
PRODUCTS SERIES Templeton Investment Templeton Investment Templeton Investment
FUND ("TVP") - Counsel, Inc. Counsel, Inc. Counsel, Inc.
PORTFOLIOS AND
CLASSES - ADVISER Templeton International Templeton International Templeton Stock Fund -
Fund - Class 1 Fund - Class 1 Class 2
Templeton Investment Templeton Investment Templeton Investment
Counsel, Inc. Counsel, Inc. Counsel, Inc.
Templeton Stock Fund - Templeton Stock Fund -
Class 1 Class 1
Templeton Investment Templeton Investment
Counsel, Inc. Counsel, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
CONTRACT 4 CONTRACT 5 CONTRACT 6
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT CVUL Lincoln SVUL VUL -DB-
NAME AND TYPE
- ------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 811-08579 811-08557
NUMBER -1940
ACT
- ------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE LN920 LN650 LN680
FORM NUMBERS LN921
- ------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Lincoln Life Flexible Lincoln Life Flexible Lincoln Life Flexible
NAME/DATE Premium Variable Life Premium Variable Life Premium Separate Account
ESTABLISHED Account S Account R Account M
- ------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 333-72875 333-43107 333-40745
NUMBER -1933
ACT
- ------------------------------------------------------------------------------------------------------------------
TEMPLETON Templeton Asset Templeton International TVP - Templeton
VARIABLE Allocation Fund - Class 2 Fund - Class 2 International Fund - Class
PRODUCTS SERIES Templeton Investment Templeton Investment 2 (Templeton Investment
FUND ("TVP") - Counsel, Inc. Counsel, Inc. Counsel, Inc.)
PORTFOLIOS AND
CLASSES - ADVISER Templeton International Templeton Stock Fund - TVP - Templeton Stock
Fund - Class 2 Class 2 Fund - Class 2 -
Templeton Investment Templeton Investment Templeton Investment
Counsel, Inc. Counsel, Inc. Counsel, Inc.
Templeton Stock Fund -
Class 2
Templeton Investment
Counsel, Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
AIM Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
AIM International Fund
American Century International
American Century Income and Growth
American Variable Insurance Series
1) Global Small Capitalization Fund - Class 2
2) Growth Fund - Class 2
3) Growth-Income Fund - Class 2
Baron Capital Asset Fund
BT Equity 500 Index Fund
BT Small Cap Index Fund
BT EAFE Index Fund
Delaware Emerging Markets Series
Delaware Small Cap Value Series
Delaware Trend Series
Delaware Delchester Series
Delaware Devon Series
Delaware International Series
Delaware REIT Series
Fidelity VIP Equity-Income Portfolio
Fidelity VIP II Asset Manager Portfolio
Fidelity VIP II Investment Grade Bond Portfolio
Fidelity VIP Growth
Fidelity VIP II Contrafund
Fidelity VIP III Growth Opportunities
Janus Aspen Aggressive Growth
Janus Aspen Balanced
Janus Aspen Worldwide
4
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
Lincoln National Money Market Fund
Lincoln National Bond Fund
Lincoln National Capital Appreciation Fund
Lincoln National Equity-Income Fund
Lincoln National Social Awareness Fund
Lincoln National Global Asset Allocation Fund
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
MFS Capital Opportunities Series
MFS Research
Neuberger Berman Partners Fund
Neuberger Berman Midcap Growth Fund
OpCap Global Equity Portfolio
OpCap Managed Portfolio
Oppenheimer Mainstreet Growth and Income Fund
5
<PAGE>
FranklinTempleton 777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
let 1-800/632-2301
May 18,1999
Steven M. Kluever
Assistant Vice President
Lincoln National Life Insurance Company
1300 South Clinton Street, 4C01
Fort Wayne, IN 46802
Re: Amendment to Fund Participation Agreement with the Templeton Variable
Products Series Fund
Dear Steve:
Enclosed for your records is an original copy of the Amendment to Fund
Participation Agreement by and among The Lincoln National Life Insurance
Company, Franklin Templeton Distributors, Inc. and the Templeton Variable
Products Series Fund.
If you have any questions, feel free to contact me at (650) 312-6244.
Sincerely,
Isaac Ruiz
Variable Insurance Products Paralegal
Enclosures
cc: Scott Campbell
Karen L. Skidmore
Mark Jensen
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
EFFECTIVE AS OF MAY 1, 1999
The Lincoln National Life Insurance Company, Templeton Variable
Products Series Fund and Franklin Templeton Distributors, Inc. hereby amend
their Fund Participation Agreement dated as of May 22, 1998 (the "Agreement"),
by:
Replacing Schedules A, B and C of the Agreement with Amended Schedule A-C,
attached;
2. Replacing Schedule D of the Agreement with Amended Schedule D, attached;
and
3. Adding Schedule E, attached.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Amendment to Fund Participation Agreement, to be
effective as of the date first stated above.
THE LINCOLN NATIONAL LIFE INSURANCE TEMPLETON VARIABLE PRODUCTS SERIES FUND
COMPANY
- ----------------------------------- ---------------------------------------
By its authorized officer By its authorized officer
By: By:
Name: Name:
Title: Title:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
--------------------------------------
By its authorized officer
By:
Name:
Title:
1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A-C
(Cumulative Combined)
AMENDED PURSUANT TO FUND PARTICIPATION AGREEMENT AMENDMENT
EFFECTIVE AS OF MAY 1, 1999
VARIABLE UNIVERSAL LIFE POLICIES
VARIABLE ANNUITY CONTRACTS
ISSUED BY THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------
Contract 1 Contract 2 Contract 3
<S> <C> <C> <C>
Contract/Product SVUL I VUL I Lincoln VUL
Name
Registered (Y/N) Yes Yes Yes
SEC Registration 811-08579 811-08557 811-08557
Number
Representative Form LN650LL LN605LL LN660
Numbers LN615 LN615
LN660 LN605
Separate Account Lincoln Life Flexible Lincoln Life Flexible Lincoln Life Flexible
Name Premium Variable Life Premium Variable Life Premium Separate
Account
Account R Account M M
SEC Registration 333-43107 333-42479 333-42479
Number
Templeton Variable Templeton Asset Templeton Asset Templeton International
Products Series Allocation Fund - Class Allocation Fund - Class Fund - Class 2 (Templeton
Portfolios and Classes 1 (Templeton 1 (Templeton Investment Investment Counsel, Inc.)
Available Under the Investment Counsel, Counsel, Inc.)
Contract (Adviser) Inc.) Templeton Stock Fund -
Templeton International Class 2 (Templeton
Templeton International Fund - Class I Investment Counsel, Inc.)
Fund -Class 1 (Templeton Investment
(Templeton Investment Counsel, Inc.)
Counsel, Inc.)
Templeton Stock Fund -
Templeton Stock Fund Class I (Templeton
- Class 1 (Templeton Investment Counsel,
Investment Counsel, Inc.)
Inc.)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A-C (CONTINUED)
AMENDED PURSUANT TO FUND PARTICIPATION AGREEMENT AMENDMENT
EFFECTIVE AS OF MAY 1, 1999
VARIABLE UNIVERSAL LIFE POLICIES
VARIABLE ANNUITY CONTRACTS
ISSUED BY THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------
Contract 4 Contract 5 Contract 6
<S> <C> <C> <C>
Contract/Product CVUL Lincoln SVUL
Name
Registered (Y/N) Yes Yes
SEC Registration 811-08579
Number
Representative Form LN920 LN650
Numbers LN921
Separate Account Lincoln Life Flexible Lincoln Life Flexible
Name Premium Variable Life Premium Variable Life
Account S Account R
SEC Registration 333-72875 333-43107
Number
Templeton Variable Templeton Asset Templeton International
Products Series Allocation Fund - Class Fund - Class 2
Portfolios and Classes 2 (Templeton (Templeton Investment
Available Under the Investment Counsel, Counsel, Inc.)
Contract (Adviser) Inc.)
Templeton Stock Fund -
Templeton International Class 2 (Templeton
Fund - Class 2 Investment Counsel,
(Templeton Investment Inc.)
Counsel, Inc.)
Templeton Stock Fund
- Class 2 (Templeton
Investment Counsel,
Inc.)
</TABLE>
3
<PAGE>
SCHEDULE D
AMENDED PURSUANT TO FUND PARTICIPATION AGREEMENT AMENDMENT
EFFECTIVE AS OF MAY 1, 1999
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
AIM Capital Appreciation Fund
AIM Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
AIM International Fund
American Century International
American Century Income and Growth
Baron Capital Asset Fund
BT Equity 500 Index Fund RT Small Cap Index Fund
BT EAFE Index Fund
Delaware Emerging Markets Series
Delaware Small Cap Value Series
Delaware Trend Series
Delaware Delchester Series
Delaware Devon Series
Delaware International Series
Delaware REIT Series
Fidelity VIP Equity-Income Portfolio
Fidelity VIP II Asset Manager Portfolio
Fidelity VIP H Investment Grade Bond Portfolio
Fidelity VIP Growth
Fidelity VIP II Contrafund
Fidelity VIP III Growth Opportunities
Janus Aspen Aggressive Growth
Janus Aspen Balanced
Janus Aspen Worldwide
4
<PAGE>
SCHEDULE D (CONTINUED)
AMENDED PURSUANT TO FUND PAR TICIPA TION A GREEMENT AMENDMENT
EFFECTIVE AS OF MAY 1, 1999
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
Lincoln National Money Market Fund
Lincoln National Bond Fund
Lincoln National Capital Appreciation Fund
Lincoln National Equity-Income Fund
Lincoln National Social Awareness Fund
Lincoln National Global Asset Allocation Fund
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
MFS Capital Opportunities Series
MFS Research
Neuberger Berman Partners Fund
Neuberger Berman Midcap Growth Fund
OpCap Global Equity Portfolio
OpCap Managed Portfolio
Oppenheimer Mainstreet Growth and Income Fund
5
<PAGE>
SCHEDULE E
AMENDED PURSUANT TO FUND PARTICIPA TION A GREEMENT AMENDMENT
EFFECTIVE AS OF MAY 1, 1999
RULE 12B-1 PLANS
COMPENSATION SCHEDULE
Each Portfolio named below shall pay the following amounts pursuant to the
terms and conditions referenced below under its Class 2 Rule 12b- I
Distribution Plan, stated as a percentage per year of Class 2's average daily
net assets represented by shares of Class 2.
<TABLE>
<CAPTION>
PORTFOLIO NAME MAXIMUM ANNUAL PAYMENT RATE
- -------------- ---------------------------
<S> <C>
TEMPLETON ASSET ALLOCATION FUND 0.25%
TEMPLETON INTERNATIONAL FUND 0.25%
TEMPLETON STOCK FUND 0.25%
</TABLE>
AGREEMENT PROVISIONS
--------------------
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b- 1 Plan adopted
under the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") you provide administrative and other services which assist
in the promotion and distribution of Eligible Shares or Variable Contracts
offering Eligible Shares, the Underwriter, the Trust or their affiliates
(collectively, "we") may pay you a Rule 12b- I fee. "Administrative and other
services" may include, but are not limited to, furnishing personal services to
owners of Contracts which may invest in Eligible Shares ("Contract Owners"),
answering routine inquiries regarding a Portfolio, coordinating responses to
Contract Owner inquiries regarding the Portfolios, maintaining such accounts or
providing such other enhanced services as a Trust Portfolio or Contract may
require, maintaining customer accounts and records, or providing other services
eligible for service fees as defined under NASD rules. Your acceptance of such
compensation is your acknowledgment that eligible services have been rendered.
All Rule 12b- I fees, shall be based on the value of Eligible Shares owned by
the Company on behalf of its Accounts, and shall be calculated on the basis and
at the rates set forth in the Compensation Schedule stated above. The aggregate
annual fees paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an increase is
approved by shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio's net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined in
the same manner as the Portfolio uses to compute its net assets as set forth in
its effective Prospectus).
6
<PAGE>
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to
the Rule 12b- I fees paid to you pursuant to the Plans. We shall furnish to
the Trustees, for their review on a quarterly basis, a written report of the
amounts expended under the Plans and the purposes for which such expenditures
were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no financial interest in the
Plans or any related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares as provided in the Plan,
on sixty (60) days' written notice, without payment of any penalty. The Plans
may also be terminated by any act that terminates the Underwriting Agreement
between the Underwriter and the Trust, and/or the management or administration
agreement between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc.
or their affiliates and the Trust. Continuation of the Plans is also
conditioned on Disinterested Trustees being ultimately responsible for
selecting and nominating any new Disinterested Trustees. Under Rule 12b-1, the
Trustees have a duty to request and evaluate, and persons who are party to any
agreement related to a Plan have a duty to furnish, such information as may
reasonably be necessary to an informed determination of whether the Plan or any
agreement should be implemented or continued. Under Rule 12b-1, the Trust is
permitted to implement or continue Plans or the provisions of any agreement
relating to such Plans from year- to-year only if, based on certain legal
considerations, the Trustees are able to conclude that the Plans will benefit
each affected Trust Portfolio and class. Absent such yearly determination, the
Plans must be terminated as set forth above. In the event of the termination of
the Plans for any reason, the provisions of this Schedule E relating to the
Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule E, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable
statutes, rules and regulations of all rule 12b-1 fees received from us in the
prospectus of the contracts.
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
The Lincoln National Life Insurance Company, Templeton Variable Products
Series Fund, Franklin Templeton Variable Insurance Products Trust and Franklin
Templeton Distributors, Inc. hereby amend their Fund Participation Agreement
dated as of May 22, 1998, and as amended on May 1, 1999, October 15, 1999 and
December 1, 1999 ("Agreement"), by:
1. Replacing Schedule A-C of the Agreement with amended Schedule A-C,
attached;
2. Replacing Schedule D of the Agreement with amended Schedule D,
attached.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment to Fund Participation Agreement, to be effective as of
April 30, 2000.
<TABLE>
<S><C>
Lincoln National Life Insurance Company Templeton Variable Products Series Fund
- --------------------------------------- ---------------------------------------
By its authorized officer By its authorized officer
By:_______________________________ By:_______________________________
Name: Steve M. Kluever Name: Karen L. Skidmore
Title: 2nd Vice President Title: Assistant Vice President and
Assistant Secretary
Franklin Templeton Variable Insurance Products Trust
----------------------------------------------------
By its authorized officer
By:_______________________________
Name: Karen L. Skidmore
Title: Assistant Vice President and
Assistant Secretary
Franklin Templeton Distributors, Inc.
-------------------------------------
By its authorized officer
By:_______________________________
Name: Phillip J. Kearns
Title: Vice President
</TABLE>
1
<PAGE>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT SVUL I VUL I Lincoln VUL
NAME AND TYPE
- --------------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 811-08579 811-08557 811-08557
NUMBER - 1940 ACT
- --------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE LN650LL LN605LL LN660
FORM NUMBERS LN615
- --------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Lincoln Life Flexible Premium Lincoln Life Flexible Premium Lincoln Life Flexible Premium
NAME/DATE Variable Life Account R Variable Life Account M Variable Life Account M
ESTABLISHED
- --------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 333-43107 333-42479 333-42479
NUMBER - 1933 ACT
- --------------------------------------------------------------------------------------------------------------------------------
TRUST: TEMPLETON TVP - Templeton Asset TVP - Templeton Asset TVP - Templeton
VARIABLE PRODUCTS Allocation Fund - Class 1 Allocation Fund - Class 1 International Fund - Class
SERIES FUND Templeton Investment Templeton Investment 2 - Templeton Investment
("TVP"), FRANKLIN Counsel, Inc. Counsel, Inc. Counsel, Inc.
TEMPLETON VARIABLE
INSURANCE PRODUCTS TVP - Templeton TVP - Templeton TVP - Templeton Stock
TRUST (VIP) - International Fund - Class International Fund - Class Fund - Class 2 - Templeton
PORTFOLIOS AND 1 - Templeton Investment 1- Templeton Investment Investment Counsel, Inc.
CLASSES - ADVISER Counsel, Inc. Counsel, Inc.
TVP - Templeton Stock TVP - Templeton Stock
Fund - Class 1 - Templeton Fund - Class 1
Investment Counsel, Inc. Templeton Investment
Counsel, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CONTRACT 4 CONTRACT 5 CONTRACT 6
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT CVUL Lincoln SVUL Lincoln VUL(DB)
NAME AND TYPE CVUL Series III
- --------------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 811-09241 811-08579 811-08557
NUMBER - 1940 ACT
- --------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE LN920 LN650 LN680
FORM NUMBERS LN921
LN925/926
- --------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Lincoln Life Flexible Lincoln Life Flexible Lincoln Life Flexible Premium
NAME/DATE Premium Variable Life Premium Variable Life Variable Life
ESTABLISHED Account S Account R Account M
- --------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 333-72875 333-43107 333-82663
NUMBER - 1933 ACT
- --------------------------------------------------------------------------------------------------------------------------------
TRUST: TEMPLETON TVP - Templeton Asset TVP - Templeton TVP - Templeton
VARIABLE PRODUCTS Allocation Fund - Class 2 - International Fund - Class International Fund - Class
SERIES FUND Templeton Investment 2 - Templeton Investment 2 - Templeton Investment
("TVP"), FRANKLIN Counsel, Inc. Counsel, Inc. Counsel, Inc.
TEMPLETON VARIABLE
INSURANCE PRODUCTS TVP - Templeton TVP - Templeton Stock TVP - Templeton Stock
TRUST (VIP) - International Fund - Class Fund - Class 2 - Fund - Class 2 - Templeton
PORTFOLIOS AND 2 - Templeton Investment Templeton Investment Investment Counsel, Inc.
CLASSES - ADVISER Counsel, Inc. Counsel, Inc.
TVP - Templeton Stock
Fund - Class 2 -
Templeton Investment
Counsel, Inc.
VIP - Franklin Small Cap
Fund - Class 2 - Franklin
Advisers, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN NATIONAL LIFE INSURANCE COMPANY
-----------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
CONTRACT 7 CONTRACT 8 CONTRACT 9
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT Delaware Lincoln Choice Plus
NAME AND TYPE Variable Annuity
- ----------------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes
- ----------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 811-08517
NUMBER - 1940 ACT
- ----------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE FORM AN425LL
NUMBERS
- ----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Lincoln Life Variable Annuity
NAME/DATE Account N
ESTABLISHED
- ----------------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION 333-40937
NUMBER - 1933 ACT
- ----------------------------------------------------------------------------------------------------------------------------------
TRUST: TEMPLETON TVP - Templeton
VARIABLE PRODUCTS International Fund - Class 2
SERIES FUND - Templeton Investment
("TVP"), FRANKLIN Counsel, Inc.
TEMPLETON VARIABLE
INSURANCE PRODUCTS VIP - Mutual Shares
TRUST (VIP) - Securities Fund - Class 2 -
PORTFOLIOS AND Franklin Mutual Advisers,
CLASSES - ADVISER LLC
VIP - Templeton Global
Growth Fund - Class 2 -
Templeton Investment
Counsel, Inc.
VIP - Franklin Small Cap
Fund - Class 2 - Franklin
Advisers, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
----------------------------------------------
<TABLE>
<S><C>
AIM V.I. Diversified Income Fund Fidelity VIP Equity-Income Portfolio (Initial Class)
AIM V.I. Capital Appreciation Fidelity VIP Growth (Intial & Service Class)
AIM V.I. Growth Fund Fidelity VIP High Income (Service Class)
AIM V.I. Value Fund Fidelity VIP Overseas (Intial & Service Class)
AIM V.I. International Fund Fidelity VIP II Asset Manager Portfolio (Initial & Service Class)
Fidelity VIP II Contrafund (Service Class)
Fidelity VIP II Investment Grade Bond Portfolio (Intial Class)
Fidelity VIP III Growth Opportunities (Initial & Service Class)
Alliance Capital Premier Growth Janus Aspen Series Aggressive Growth
Alliance Capital Growth & Income Janus Aspen Series Balanced
Alliance Capital Growth Janus Aspen Series Worldwide
Alliance Capital Technology Janus Aspen Flexible Income
Janus Aspen Global Technology
American Century V.P. International Liberty Variable Investment Trust
American Century V.P. Income and Growth Newport Tiger Fund
American Variable Insurance Series Lincoln National Money Market Fund
1) Global Small Capitalization Fund - Class 2 Lincoln National Bond Fund
2) Growth Fund - Class 2 Lincoln National Capital Appreciation Fund
3) Growth-Income Fund - Class 2 Lincoln National Equity-Income Fund
4) International - Class 2 Lincoln National Social Awareness Fund
5) Global Growth - Class 2 Lincoln National Global Asset Allocation Fund
6) U.S. Government Bond - Class 2
7) Bond - Class 2
8) High Yield Bond - Class 2
AMT Partners Portfolio
AMT Mid-cap Growth Portfolio MFS Emerging Growth Series
MFS Total Return Series
Baron Capital Asset Fund (Insurance Shares) MFS Utilities Series
MFS Capital Opportunities Series
MFS Research Series
BT EAFE Equity Index Fund
BT Equity 500 Index Fund OpCap Global Equity Portfolio
BT Small Cap Index Fund OpCap Managed Portfolio
Oppenheimer Main Street Growth and Income Fund
Delaware Emerging Markets Series
Delaware Devon Series
Delaware High Yield Series
Delaware Growth & Income
Delaware International Equity Series
Delaware REIT Series
Delaware Select Growth
Delaware Small Cap Value Series
Delaware Social Awareness Series
Delaware Trend Series
</TABLE>
5
<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.
