<PAGE>
Lincoln ChoicePlus Access
As filed with the Securities and Exchange Commission on May 26, 2000
Registration No.: 811-09763
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 1 [X]
LINCOLN NEW YORK SEPARATE ACCOUNT N FOR VARIABLE ANNUITIES
(Exact Name of Registrant)
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
120 Madison Street, Suite 1700
Syracuse, NY 13202
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(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (315) 428-8400
ROBERT O. SHEPPARD
120 Madison Street, Suite 1700
Syracuse, New York 13202
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(Name and Address of Agent for Service)
Copy to:
Mary Jo Ardington, Esq.
Lincoln National Life Insurance Co.
1300 S. Clinton Street
Fort Wayne, IN 46801
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration Statement.
Title of Securities: Interests in a separate account under individual
flexible payment 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 Access
Lincoln New York Separate
Account N for Variable Annuities
Home Office: Servicing Office:
Lincoln Life & Annuity Company of New York
P.O.Box 7866
120 Madison Street, Suite 1700 1300 South Clinton Street
Syracuse, NY 13202 Fort Wayne, IN 46801
www.lincolnlife-ny.com
This Prospectus describes the individual flexible premium deferred variable an-
nuity contract that is issued by Lincoln Life & Annuity Company of New York
("LNY"). It is primarily for use with nonqualified and qualified retirement
plans under Section 408 (IRAs) of the tax code. Generally, you do not pay fed-
eral income tax on the contract's growth until it is paid out. The contract is
designed to accumulate contract value and to provide retirement income that you
cannot outlive or for an agreed upon time. These benefits may be a variable or
fixed amount or a combination of both. If you die before the annuity commence-
ment date, we will pay your beneficiary a death benefit. In the alternative,
you may choose to receive a death benefit upon the death of the annuitant.
The minimum initial purchase payment for the contract is $25,000. 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 you put all your purchase payments into 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 market
value adjustment (MVA) may be applied to any surrender, withdrawal or transfer
from the fixed account before the expiration date of a guaranteed period.
All purchase payments for benefits on a variable basis will be placed in Lin-
coln New York Separate Account N for Variable Annuities (variable annuity ac-
count [VAA]). The VAA is a segregated investment account of LNY. 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
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
1
<PAGE>
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 prospectuses for the funds that are attached, and keep both
prospectuses 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.
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
Life & Annuity Company of New York, P.O. Box 7866, Fort Wayne, Indiana 46801,
or call 1-888-868-2583. The SAI and other information about LNY and Account 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
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<S> <C>
Special terms 3
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Expense tables 4
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Summary 7
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Condensed financial information 7
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Investment results 7
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Financial statements 8
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Lincoln Life & Annuity Company of
New York 8
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Variable annuity account (VAA) 8
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Investments of the variable annuity account 8
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Charges and other deductions 11
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The contract 12
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</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Annuity payouts 16
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Fixed side of the contract 17
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Federal tax matters 19
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Voting rights 22
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Distribution of the contracts 22
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Return privilege 22
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State regulation 23
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Records and reports 23
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Other information 23
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Statement of additional information table of contents for Variable
Annuity Account N Lincoln ChoicePlus Access 24
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</TABLE>
Special terms
(We have italicized the terms that have special meaning throughout the Pro-
spectus.)
Account or variable annuity account (VAA) -- The segregated investment ac-
count, Lincoln New York Separate Account N for Variable Annuities, into which
LNY 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 made after
the annuity commencement date 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.
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.
Lincoln Life -- The Lincoln National Life Insurance Company.
LNY (we, us, our) -- Lincoln Life & Annuity Company of New York.
Purchase payments -- Amounts paid into the contract.
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
4:00 p.m. New York time) on each day that the NYSE is open for trading (valua-
tion date) and ending at the close of such trading on the next valuation date.
3
<PAGE>
Expense tables
Account N annual expenses for ChoicePlus Access subaccounts:*
(as a percentage of average account value):
<TABLE>
<CAPTION>
Enhanced
Guaranteed
Minimum
Death Benefit
(EGMDB)
<S> <C>
Mortality and expense risk charge 1.50%
Administrative charge .15%
-----
Total annual charge for each subaccount 1.65%
</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)
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<S> <C> <C> <C> <C> <C>
AFIS Global Small Capitalization Fund (class 2) 0.78% 0.25 0.03% 1.06%
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AFIS Growth Fund (class 2) 0.38 0.25 0.01 0.64
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AFIS Growth-Income Fund (class 2) 0.34 0.25 0.01 0.60
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AFIS International Fund (class 2) 0.55 0.25 0.05 0.85
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AIM V.I. Capital Appreciation Fund 0.62 N/A 0.11 0.73
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AIM V.I. Growth Fund 0.63 N/A 0.10 0.73
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AIM V.I. International Equity Fund 0.75 N/A 0.22 0.97
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AIM V.I. Value Fund 0.61 N/A 0.15 0.76
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Alliance Growth Portfolio (class B) 0.75 0.25 0.12 1.12
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Alliance Growth and Income Portfolio (class B) 0.63 0.25 0.09 0.97
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Alliance Premier Growth Portfolio (class B) 1.00 0.25 0.04 1.29
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Alliance Technology Portfolio (class B) 0.71 0.25 0.24 1.20
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Delaware Premium Emerging Markets Series
(Service class)/1/ 1.19 0.15 0.28 1.62
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Delaware Premium Growth and Income Series
(Service class)/1/ 0.60 0.15 0.11 0.86
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Delaware Premium High Yield Series (formerly
Delchester) (Service class)/1/ 0.65 0.15 0.07 0.87
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Delaware Premium REIT Series (Service class)/1/ 0.64 0.15 0.21 1.00
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Delaware Premium Select Growth Series (Service 0.75 0.15 0.06 0.96
class)/1/
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Delaware Premium Small Cap Value Series
(Service class)/1/ 0.75 0.15 0.10 1.00
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Delaware Premium Social Awareness Series
(Service class)/1/ 0.70 0.15 0.15 1.00
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Delaware Premium Trend Series (Service 0.15 0.07 0.97
class)/1/ 0.75
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Deutsche VIT Equity 500 Index Fund/2/ 0.14 N/A 0.16 0.30
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Fidelity VIP Equity-Income Portfolio (Service 0.25 0.10 0.83
class 2)/3/ 0.48
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Fidelity VIP Growth Portfolio (Service class 0.25 0.10 0.93
2)/3/ 0.58
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Fidelity VIP Overseas Portfolio (Service class 0.25 0.18 1.16
2)/3/ 0.73
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Fidelity VIP III Growth Opportunities Portfolio 0.25 0.13 0.96
(Service class 2)/3/ 0.58
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Franklin Mutual Shares Securities Fund (class 0.25 0.19 1.04
2)/4/,/9/ 0.60
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Franklin Small Cap Securities Fund (class 0.25 0.27 1.07
2)/5/,/9/ 0.55
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Liberty Variable Trust Newport Tiger Fund 0.49 N/A 0.31 1.21
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Lincoln National Bond Fund 0.45 N/A 0.08 0.53
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Lincoln National Money Market Fund 0.48 N/A 0.11 0.59
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MFS Variable Trust Emerging Growth Series 0.20 0.09 1.04
(Service class)/6/ 0.75
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MFS Variable Trust Research Series (Service 0.20 0.11 1.06
class)/6/ 0.75
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MFS Variable Trust Total Return Series (Service 0.20 0.15 1.10
class)/6/ 0.75
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MFS Variable Trust Utilities Series (Service 0.20 0.16 1.11
class)/6/ 0.75
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Templeton Growth Securities Fund formerly 0.25 0.05 1.13
Global Growth (class 2)/7/,/8/,/9/ 0.83
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Templeton International Securities Fund (class 0.25 0.19 1.13
2)/9/,/10/ 0.69
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</TABLE>
4
<PAGE>
(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 5% annual return:
<TABLE>
<CAPTION>
1 year 3 years
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<S> <C> <C>
AFIS Global Small Capitalization Fund 27 84
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AFIS Growth Fund 23 72
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AFIS Growth-Income Fund 23 70
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AFIS International Fund 25 78
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AIM V.I. Capital Appreciation Fund 24 74
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AIM V.I. Growth Fund 24 74
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AIM V.I. International Equity Fund 27 81
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AIM V.I. Value Fund 24 75
- -------------------------------------------------------------------------------
Alliance Growth and Income Portfolio 27 81
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Alliance Growth Portfolio 28 86
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Alliance Premier Growth Portfolio 30 91
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Alliance Technology Portfolio 29 88
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Delaware Premium Emerging Markets Series 33 101
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Delaware Premium Growth and Income Series 25 78
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Delaware Premium High Yield Series (formerly Delchester) 26 78
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Delaware Premium REIT Series 27 82
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Delaware Premium Select Growth Series 26 81
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Delaware Premium Small Cap Value Series 27 82
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Delaware Premium Social Awareness Series 27 82
- -------------------------------------------------------------------------------
Delaware Premium Trend Series 27 81
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Deutsche VIT Equity 500 Index Fund 20 61
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Fidelity VIP Equity-Income Portfolio 25 77
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Fidelity VIP Growth Portfolio 26 80
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Fidelity VIP Overseas Portfolio 26 81
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Fidelity VIP III Growth Opportunities Portfolio 28 87
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Franklin Mutual Shares Securities Fund 27 84
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Franklin Small Cap Securities Fund 27 84
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Liberty Variable Trust Newport Tiger Fund 29 89
- -------------------------------------------------------------------------------
Lincoln National Bond Fund 22 68
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Lincoln National Money Market Fund 23 70
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MFS Variable Trust Emerging Growth Series 27 84
- -------------------------------------------------------------------------------
MFS Variable Trust Research Series 27 84
- -------------------------------------------------------------------------------
MFS Variable Trust Total Return Series 28 85
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MFS Variable Trust Utilities Series 28 86
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Templeton Growth Securities Fund (formerly Global Growth) 28 86
- -------------------------------------------------------------------------------
Templeton International Securities Fund 28 86
- -------------------------------------------------------------------------------
</TABLE>
We provide this example to help you understand the direct and indirect costs
and expenses of the contract.
For more information, see Charges and other deductions in this Prospectus, and
Management and Organization in the prospectuses 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.
6
<PAGE>
Summary
What kind of contract am I buying? It is an individual variable and/or market
value adjusted annuity contract between you and LNY. This Prospectus describes
the variable side of the contract. See The contracts.
What is the variable annuity account (VAA)? It is a separate account we estab-
lished under New York insurance law, and registered with the SEC as a unit in-
vestment trust. VAA assets are allocated to one or more subaccounts, according
to your investment choices. VAA assets are not chargeable with liabilities
arising out of any other business which LNY may conduct. See Variable annuity
account.
What are my investment choices? Based upon your instruction, the VAA applies
your purchase payments to buy shares in one or more of the investment options.
See Investments of the variable annuity 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 and Investment
advisor.
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
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? We will deduct any applicable pre-
mium tax from purchase payments or contract value at the time the tax is in-
curred or at another time we choose.
We apply an annual charge totaling 1.65% to the daily net asset value of the
VAA. This charge includes 0.15% as an administrative charge and 1.50% as a
mortality and expense risk charge. See Charges and other deductions.
The funds' 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.
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 a
death benefit called the EGMDB. In the alternative, you may choose to receive
a death benefit upon 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, Transfers af-
ter 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 restrictions of any qualified retirement plan for
which the contract was purchased. See Surrenders and withdrawals. A portion of
surrender/withdrawal proceeds may be taxable. In addition, if you decide 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 of the date you first receive the contract. You need to return the
contract, postage prepaid, to our Servicing Office. You assume the risk of any
market drop on purchase payments you allocate to the variable side of the con-
tract. See Return 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 in-
dices 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. Total returns include the reinvestment of all distributions,
which are reflected in changes in unit value. See the SAI for further informa-
tion.
7
<PAGE>
Financial statements
The statutory-basis financial statements of LNY are located in the Statement
of Additional Information (SAI). No financial statements are included for the
VAA because as of December 31, 1999, the account had not yet commenced opera-
tions. If you would like a free copy of the SAI, complete and mail the en-
closed card, or call 1-800-942-5500.
Lincoln Life & Annuity Company of New York
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC). LNC & Lincoln Life are both organized under Indiana law.
LNC's primary businesses are insurance and financial services.
Variable annuity account (VAA)
On March 11, 1999, the VAA was established as an insurance company separate
account under New York 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 LNY. The VAA is a segregated investment account,
meaning that its assets may not be charged with liabilities resulting from any
other business that we may conduct. Income, gains and losses, whether realized
or not, from assets allocated to the VAA are, in accordance with the applica-
ble annuity contracts, credited to or charged against the VAA. They are cred-
ited or charged without regard to any other income, gains or losses of LNY.
The VAA satisfies the definition of a separate account under the federal secu-
rities laws. We do not guarantee the investment performance of the VAA. Any
investment gain or loss depends on the investment performance 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 LNY in addition
to the contracts described in this Prospectus. The other annuity contracts
supported by the VAA generally invest in the same funds as the contracts de-
scribed 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. There is
a separate subaccount which corresponds to each class of each fund of the se-
ries. 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 Manage-
ment, L.P.
American Funds Insurance Series, managed by Capital Research and Management
Company.
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 Manage-
ment. The Emerging Markets Series is managed by Delaware International Advis-
ers 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 affili ate, Delaware Management Business Trust,
during the second or third quarter of 2000. LIM does not expect the merger to
result 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, personnel. 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.
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As compensation for their services to the fund, the investment advisors re-
ceive a fee from the fund, which is accrued daily and paid monthly. This fee
is based on the net assets of each fund, as defined under the Purchase and Re-
demption of Shares, in the prospectuses for the fund.
With respect to a fund, the advisor and/or distributor, or an affiliate there-
of, may compensate LNY (or an affiliate) for administrative, distribution, or
other
services. Some funds may compensate us more than other funds. It is antici-
pated that such compensation will be based on assets of the particular fund
attributable to the contracts along with certain other variable contracts is-
sued or administered by LNY (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 LNY 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 mon-
itor 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 Del-
aware Group REIT Series and Delaware Group Emerging Market Series, which are
non- diversified. Diversified means not owning too great a percentage of the
securities of any one company. An open-end company is one which, in this case,
permits LNY to sell its shares back to the fund when you make a withdrawal,
surrender the contract or transfer from one fund to another. Management in-
vestment 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 portfo-
lios that are managed by the advisor or sub-advisor. There can be no assur-
ance, 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 man-
aged 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 prospectuses for
the funds which are included in this booklet. Please be advised that there is
no assurance 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
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations
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
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securities judged by its investment advisor to be undervalued relative to the
investment advisor's appraisal of the current or projected 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.
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 ex-
penses.
Fidelity VIP Equity-Income Portfolio: Seeks reasonable income by investing
primarily in income-producing equity securities, with some potential for capi-
tal appreciation, seeking a yield that exceeds the composite yield on the se-
curities 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 invest-
ing 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 ac-
tual 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, Indo-
nesia, the Philippines, South Korea and Taiwan.
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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 av-
erage prospects for long-term growth. A committee of investment research ana-
lysts selects the securities for the fund, with individual analysts responsi-
ble 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
domestic 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
invests primarily in equity securities of companies outside the United States,
including emerging markets.
Sale of fund shares by the series
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
transfer all or part of your investment from one subaccount to another, we may
redeem 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 LNY, 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 dividend and capital gain distributions of the funds are automatically re-
invested in shares of the distributing funds at their net asset value on the
date of distribution. Dividends are not paid out to contractowners as
additional 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
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 con-
tract. We cannot substitute shares of one fund for another without the ap-
proval 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 ad-
ministrative services include: processing applications for and issuing the
contracts, processing purchases and redemptions of fund shares as required
(including dollar cost averaging, cross-reinvestment, portfolio rebalancing
and automatic withdrawal services), maintaining records, administering annuity
payouts, furnishing accounting and valuation services (including the calcula-
tion and monitoring of daily subaccount values), reconciling and depositing
cash receipts, providing contract confirmations, providing toll-free inquiry
services and furnishing telephone fund transfer services. The risks we assume
include: the risk that annuitants receiving annuity payouts under the contract
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 will exceed the actual contract value; and
the risk that our costs in providing the services will exceed our revenues
from contract charges (which we cannot change). The amount of a charge may not
necessarily correspond to the costs associated with providing the services or
benefits indicated by the description of the charge.
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Deductions from the VAA for Lincoln ChoicePlus Access
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.65% of the daily net asset value. The charge consists of a 0.15% ad-
ministrative charge and a 1.50% mortality and expense risk charge.
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 gen-
erally depend upon the law of your state of residence. The tax ranges from
zero to 3.5%. Currently there is no premium tax levied for New York residents.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the under-
lying funds that are more fully described in the prospectuses for the funds.
Among these deductions and expenses are 12b-1 fees which reimburse LNY for
certain expenses incurred in connection with certain administrative and dis-
tribution support services provided to the funds.
Additional information
The administrative charges described previously may be reduced or eliminated
for any particular contract. However, these charges will be reduced only to
the extent that we anticipate lower distribution and/or administrative ex-
penses, or that we perform fewer sales or administrative services than those
originally contemplated in establishing the level of those charges. Lower dis-
tribution and administrative expenses may be the result of economies associ-
ated with (1) the use of mass enrollment procedures, (2) the performance of
administrative or sales functions by the employer, (3) the use by an employer
of automated techniques in submitting deposits or information related to de-
posits on behalf of its employees or (4) any other circumstances which reduce
distribution or administrative expenses. The exact amount of administrative
charges applicable to a particular contract will be stated in that contract.
The contract
Purchase of contract
The contract is available in New York. If you wish to purchase a contract, you
must apply for it through a sales representative authorized by us. The com-
pleted application is sent to us and we decide whether to accept or reject it.
If the application is accepted, a contract is prepared and executed by our le-
gally authorized officers. The contract 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 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 immediately. Once the application is com-
plete, the initial purchase payment must be priced within two business days.
Who can invest
To apply for a contract, you must be of legal age in New York 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 89.
Purchase payments
Purchase payments are payable to us at a frequency and in an amount selected
by you in the application. You may change the amount and/or frequency of pur-
chase payments at any time. The minimum initial purchase payment is $25,000.
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 LNY approval. 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 the New
York'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.
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Valuation date
Accumulation and annuity units will be valued once daily at the close of trad-
ing (currently, normally, 4:00 p.m., New York time) on each day the New York
Stock Exchange is open (valuation date). On any date other than a valuation
date, the accumulation unit value and the annuity unit value will not change.
Allocation of purchase payments
Purchase payments allocated to the VAA accounts are placed into the VAA's
subaccounts, each of which invests in shares of the class of its corresponding
fund, according to your instructions.
The minimum amount of any purchase payment which can be put into any one
subaccount is $20. Upon allocation to a subaccount, purchase payments are con-
verted 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 valua-
tion date. The number of accumulation units determined in this way is not
changed by any subsequent change in the value of an accumulation unit. Howev-
er, 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 allocated to the VAA are converted into accumulation units.
This is done by dividing each purchase payment by the value of an accumulation
unit for the valuation period during which the purchase payment is allocated
to the VAA. The accumulation unit value for each subaccount was or will be es-
tablished at the inception of the subaccount. It may increase or decrease from
valuation period to valuation period. The accumulation unit value for a
subaccount for a later valuation period is determined as follows:
(1) The total value of the fund shares held in the subaccount is calculated by
multiplying the number of fund shares owned by the subaccount at the be-
ginning of the valuation period by the net asset value per share of the
fund at 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.
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 LNY. This limit does not apply to
transfers made under a dollar cost averaging, portfolio rebalancing, or cross-
reinvestment program elected on forms available from us. (The SAI contains
more information about these programs.)
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 servicing office or, if a Telephone
Exchange Authorization form (available from us) is on file with us, by a toll-
free telephone call or by the LNY internet site. In order to prevent unautho-
rized or fraudulent telephone transfers, we may require the caller to provide
certain identifying information before we will act upon his or her instruc-
tions. We may also assign the contractowner a Personal Identification Number
(PIN) to serve as identification. We will not be liable for following tele-
phone 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. LNY 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.
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Repeated patterns of frequent transfers are disruptive to the operation of the
subaccounts, and should LNY become aware of such disruptive practices, LNY may
refuse to permit such transfers.
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. However, transfers are limited to
twelve times per contract year unless otherwise authorized by LNY. Transfers
made as part of an automatic transfer program (such as a DCA program) will not
be counted against those 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
transfers 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 benefi-
ciary by filing a written request with our servicing 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, the enhanced guaran-
teed minimum death benefit (EGMDB) paid will be the greatest of: (1) the con-
tract value as of the day on which LNY approves the payment of the claim; (2)
the sum of all purchase payments decreased proportionally by all withdrawals,
partial annuitizations and premium tax incurred, if any; or (3) the highest
contract value which the contract attains on any contract anniversary date
(including the inception date) on ages up to, and including, the deceased's
age 80. The highest contract value is increased by purchase payments and is
decreased proportionally by partial withdrawals, partial annuitizations, and
any premium taxes incurred subsequent to the anniversary date on which the
highest contract value is obtained.
If there are joint owners, upon the death of the first contractowner, LNY will
pay a death benefit to the surviving joint owner. 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. 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, LNY 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 ap-
plies only one time for each contract.
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 contractowner may elect a death benefit payable 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 annui-
tant.
Notification of the election of this death benefit must be received by LNY
within 75 days of the death of the annuitant. If no contractowner is living on
the date of death
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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 an-
nuitant. 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 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 will occur upon receipt of:
(1) proof (e.g. an original certified death certificate), or any other proof
of death satisfactory to us, of the death of the owner; (2) written authoriza-
tion for payment; and (3) our receipt of all required claim forms, fully com-
pleted. If the beneficiary is a minor, court documents appointing 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.
The death benefit payable on the death of the annuitant, will be distributed
either in the form of a lump sum settlement or an annuity payout. The annuity
payout must be settled within 60 days after LNY 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 1940 Act. See Federal tax matters.
Payment will be made in accordance with applicable laws and regulations gov-
erning payment of death benefits.
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.
The amount available upon surrender/withdrawal is the cash surrender value
(contract value less any applicable fees and taxes) at the end of the valua-
tion period during which the written request for surrender/withdrawal is re-
ceived at the Servicing 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 general account in the
same proportion that the amount of withdrawal bears to the total contract val-
ue. Surrenders and withdrawals from the fixed account may be subject to a mar-
ket value adjustment. See fixed side of the contract. Unless prohibited, sur-
render/ withdrawal payments will be mailed within seven days after we receive
a valid written request at the Servicing Office. The payment may be postponed
as permitted by the 1940 Act.
The tax consequences of a surrender/withdrawal are discussed later in this
Prospectus. See Federal tax matters.
We may terminate the contract if withdrawals reduce your contract value below
$2,000 and purchase payments have stopped for a period of 3 full years.
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.
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
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percentage of each purchase payment is 2.50%, plus ongoing annual compensation
of up to 1.00%. Alternate commission schedules are available with lower ini-
tial commission amounts based on purchase payments. At times, additional sales
incentives (up to an annual continuing 0.10% of contract value) may be pro-
vided to dealers maintaining certain sales volume levels. Upon annuitization,
the commissions paid to dealers are a maximum of 3.00% of account annuitized
and/or an annual continuing commission of up to 1.00% (or up to 1.10% for
dealers maintaining certain sales volume levels) of statutory reserves. These
commissions are not deducted from purchase payments or contract value; they
are paid by us.
Ownership
As contractowner, you have all rights under the contract. According to New
York 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 the Employee Retirement Income Security Act (ERISA) of 1974 and
upon written notification to us. Non-qualified contracts may not be collater-
ally assigned. We assume no responsibility for the validity or effect of any
assignment. Consult your tax advisor about the tax consequences of an assign-
ment.
Contractowner questions
The obligations to purchasers under the contracts are those of LNY. Questions
about your contract should be directed to us at 1-800-942-5500.
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 options), each of which is payable on a variable basis, a fixed basis
or a combination 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.
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 minimum number of payouts or provision for a death benefit for beneficia-
ries. However, 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
lifetime of the annuitant and a designated joint annuitant. The payouts con-
tinue 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 Survivor Annuity. This option provides a periodic
payout during the joint lifetime of the annuitant and a designated joint annu-
itant. 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
lifetime 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, mi-
nus (b) the annuity units represented by each payout to the annuitant multi-
plied by the number 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 Servicing Office.
General information
Under the annuity options listed above, you may not make withdrawals. Other
options, 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 bene-
fit to a beneficiary. If you do, the
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beneficiary cannot change this payout option. At death, options are only
available to the extent they are consistent with the requirements of the con-
tract 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 administra-
tive services of .15% will be assessed on all variable annuity payouts, in-
cluding options that may be offered that do not have a life contingency and
therefore no mortality risk.
The annuity commencement date must be on or before the annuitant's 90th birth-
day. You may change the annuity commencement date, change the annuity option
or change the allocation of the investment among subaccounts up to 30 days be-
fore the scheduled annuity commencement date, upon written notice to the Ser-
vicing 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, vari-
able or combination fixed and variable basis, in proportion to the account al-
locations at the time of annuitization) except when a joint life payout is re-
quired 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 beneficiary 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 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.
Annuity payouts assume an investment return of 3%, 4% or 5% per year, as ap-
plied to the applicable mortality table. The higher the assumed interest rate
you choose, the higher your initial annuity payment will be. 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. The higher the
assumed interest rate, the less likely future annuity payments are to in-
crease, or the payments will increase more slowly than if a lower assumed rate
was used. 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
LNY's general account, and do not participate in the investment experience of
the VAA. The general account is subject to regulation and supervision by the
New York Insurance Department.
In reliance on certain exemptions, exclusions and rules, LNY has not regis-
tered interests in the general account as a security under the Securities Act
of 1933 and has not registered the general account as an investment company
under the Investment Company Act of 1940. Accordingly, neither the general ac-
count nor any interests in it are regulated under the 1933 Act or the 1940
Act. LNY has been advised that the staff of the SEC has not made a review of
the disclosures which are included in this Prospectus which relate to our gen-
eral account 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 Prospectus is generally intended to serve as a disclosure document only
for aspects of the contract involving the VAA, and therefore contains only se-
lected information regarding the fixed side of the contract. Complete details
regarding 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 Charges and other deductions. The market
value adjustment will NOT reduce the amount available for a surrender, with-
drawal or transfer to an amount less than the initial amount allocated or
transferred to a fixed account plus interest of 3.0% per year, less account
fees, if any.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE IN LNY'S SOLE DIS-
CRETION. 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. LNY may offer a fixed
subaccount for a period of less than one year for the purpose of dollar cost
averaging. Each purchase payment allocated to
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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 amount will be treated separately for purposes of determining any ap-
plicable market value adjustment. Any amount withdrawn from a fixed subaccount
may be subject to any applicable account fees and premium taxes.
LNY will notify the contractowner in writing at least 15 but not more than 45
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 LNY receives, prior to the end of a guaranteed
period, a written election by the contractowner. The written election may re-
quest the transfer of the guaranteed period amount to a different fixed
subaccount or to a variable subaccount from among those being offered by LNY.
Transfers of any guaranteed period amount which become effective upon the date
of expiration of the applicable guaranteed period are not subject to the limi-
tation 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. In general, the MVA re-
flects the relationship between the index rate in effect at the time a pur-
chase 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 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 application of the MVA will generally
result in a higher payment at the time of the surrender, withdrawal or trans-
fer. 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.
The MVA is calculated by multiplying the transaction amount by:
(1+A)n
-1 ----
(1+B)n
where:
A = an Index Rate for a Treasury 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 Treasury security with time to maturity equal to
the subaccount's guaranteed period, determined at the time of surrender or
transfer, plus a 0.25% 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
representing direct and indirect costs to LNY associated with liquidating gen-
eral account assets in order to satisfy surrender requests. This adjustment of
0.25% has been added to the denominator of the formula because it is antici-
pated 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 LNY can incur due to the liquidation of general account assets in
order to satisfy surrender requests.
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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.
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 are contracts issued to a corporation or a trust. Exceptions to this rule
exist. For example, the tax code treats a contract as owned by an individual
if the named owner is a trust or other entity that holds the contract as an
agent for an individual. However, this exception does not apply in the case of
any employer that owns a contract to provide deferred compensation for its em-
ployees.
Investments in the VAA must be diversified
For a contract to be treated as an annuity for Federal income tax purposes,
the investments of the VAA must be "adequately diversified." IRS regulations
define standards for determining whether the investments of the VAA are ade-
quately diversified. If the VAA fails to comply with these diversification
standards, 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 un-
derlying investment options 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
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 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 annuity for Fed-
eral 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
until 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 exceeds 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.
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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),
. a beneficiary receives on or after your death, or
. you receive as a series of substantially equal periodic payments for 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 received
as a loan under a contract, and any assignment or pledge (or agreement to as-
sign 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 extent it
exceeds your purchase payments not previously received. The new owner's pur-
chase payments in the contract would then be increased to reflect the amount
included in income.
Loss of interest deduction
After June 8, 1997, if a contract is issued to a taxpayer that is not an indi-
vidual, or if a contract is held for the benefit of an entity, the entity will
lose a portion of its deduction for otherwise deductible interest expenses.
This disallowance does not apply if you pay tax on the annual increase in the
contract value. Entities that are considering purchasing a contract, or enti-
ties that will benefit from someone else's ownership of a contract, should con-
sult a tax advisor.
Qualified retirement plans
We also designed the contracts for use in connection with certain types of re-
tirement plans that receive favorable treatment under the tax code. Contracts
issued to or in connection with a qualified retirement plan are called "quali-
fied contracts." We issue contracts for use with different types of qualified
plans. The Federal income tax rules applicable to those plans are complex and
varied. As a result, this Prospectus does not attempt to provide more than gen-
eral information about 1use 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.
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Types of qualified contracts and terms of contracts
Currently, we issue contracts in connection with the following types of quali-
fied plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
We currently do not but may, in the future, subject to the approval of the New
York Superintendent of Insurance, issue contracts in connection with:
. 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 or-
ganizations ("457 plans").
We will amend contracts to be used with a qualified plan as generally necessary
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 consent.
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 payments.
These limits vary depending on the type of qualified plan and the plan par-
ticipant's specific circumstances, e.g., the participant's compensation.
. Under most qualified plans, e.g., 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.
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 distributions
will include purchase payments that were deductible or excludible from income.
Thus, under many qualified contracts the total amount received is included in
income since a deduction or exclusion from income was taken for purchase pay-
ments. 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 mini-
mum 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 qual-
ified contract that must be included in income. The tax code does not impose
the penalty tax if one of several exceptions applies. The exceptions vary de-
pending 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 dis-
ability (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 apply
to taxable distributions from other qualified plans. However, the specific re-
quirements of the exception may vary.
Transfers and direct rollovers
In many circumstances, money may be moved between qualified contracts and qual-
ified 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 suf-
fer adverse Federal income tax consequences, including paying taxes which might
not otherwise have had to be paid. A qualified advisor should always be con-
sulted before you move or attempt to move funds between any qualified plan or
contract and another qualified plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover
distributions") from section 401(a) plans, section 403(a) or (b) plans, H.R. 10
plans and contracts used in connection with these types of
21
<PAGE>
plans. (The direct rollover rules do not apply to distributions from IRAs or
section 457 plans.) The direct rollover rules require that 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.
The EGMDB and IRAs
Pursuant to IRS regulations, IRAs may not invest in life insurance contracts.
We do not believe that these regulations prohibit the EGMDB from being pro-
vided under the contracts when we issue the contract as Traditional IRAs or
Roth IRAs. However, the law is unclear and it is possible that the presence of
the EGMDB under a contract issued as a Traditional IRA or Roth IRA could re-
sult 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 & Annuity Company of New York
Under existing Federal income tax laws, LNY does not pay tax on investment in-
come and realized capital gains of the VAA. LNY does not expect that it will
incur any Federal income tax liability on the income and gains earned by the
VAA. We, therefore, do not impose a charge for Federal income taxes. If Fed-
eral 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, and if as a re-
sult 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 fund. Since the fund engages in shared funding, other
persons or entities besides LNY may vote fund shares. See Sale of fund shares
by the series.
Distribution of the contracts
Lincoln Financial Advisors Corporation ("LFA"), an Indiana corporation regis-
tered with the Securities and Exchange Commission as a broker-dealer, is the
distributor and principal underwriter of the contracts. Under an agreement
with LFA, Delaware Distributors, L.P. ("DDLP") will act as wholesaler and will
assist LFA in forming the selling group. DDLP will also perform certain enu-
merated marketing and ancillary functions in support of the selling group. The
contracts will be sold by LFA registered representatives and by properly li-
censed registered representatives of independent broker-dealers which in turn
have selling agreements with LFA and have been licensed by state insurance de-
partments to represent us. LNY will offer the contracts in New York only.
Return privilege
Within the 10 day free-look period after you receive the contract, you may
cancel it for any reason by delivering or mailing it postage prepaid, to the
Servicing Office at P.O. Box 7866, 1300 South Clinton Street, Fort Wayne, In-
diana, 46801. A contract canceled under this provision will be void. With re-
spect to the fixed portion of a contract and the VAA, we will return the con-
tract value as of the date of receipt of the cancellation, plus any premium
taxes which had been deducted. No market value adjustment will apply. A pur-
chaser who participates in the VAA is subject to the risk of a market loss
during the free-look period.
22
<PAGE>
State regulation
As a life insurance company organized and operated under New York law, we are
subject to provisions governing life insurers and to regulation by the New York
Superintendent of Insurance.
Our books and accounts are subject to review and examination by the New York
Insurance Department at all times. A full examination of our operations is con-
ducted by that Department at least every five years.
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 Market
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 Servicing Office,
at least semiannually after the first contract year, reports containing infor-
mation required by that Act or any other applicable law or regulation. Adminis-
tration services necessary for the operation of the VAA and the contracts are
currently provided by Lincoln Life. However, neither the assets of Lincoln Life
nor the assets of LNC support the obligations of LNY under the contracts.
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, LNY and the contracts offered. Statements in this Prospec-
tus about the content of contracts and other legal instruments are summaries.
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.
23
<PAGE>
Statement of additional information table of contents for Separate Account N
<TABLE>
<CAPTION>
Item
- -------------------------------------------
<S> <C>
General information and history of LNY 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-6
- --------------------------------------
Advertising and sales literature B-7
- --------------------------------------
Financial statements B-9
</TABLE>
24
<PAGE>
................................................................................
Please send me a free copy of the current Statement of Additional Information
for Lincoln New York Separate Account N for Variable Annuities (ChoicePlus
Access).
(Please Print)
Name Social Security No.
----------------------------------- ----------------------
Address
-------------------------------------------------------------------------
City State Zip
-------------------------------- ----------------- -----------------
Mail to Lincoln National Life Insurance Company, P.O. Box 7866, Fort Wayne,
Indiana 46801
<PAGE>
Lincoln ChoicePlus Access
Lincoln New York Separate Account N for Variable Annuities (Registrant)
Lincoln Life & Annuity Company of New York (Depositor)
Statement of Additional Information (SAI)
This Statement of Additional Information should be read in conjunction with
the Lincoln ChoicePlus Access Prospectus of Lincoln New York Separate Account
N for Variable Annuities dated , 2000.
You may obtain a copy of the Lincoln ChoicePlus Access Prospectus on request
and without charge.
Please write Lincoln Life & Annuity Company of New York, 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 LNY 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-6
Advertising and sales literature B-7
Financial statements B-9
</TABLE>
This SAI is not a Prospectus.
The date of this SAI is , 2000.
<PAGE>
General information and
history of Lincoln Life & Annuity Company of New York ("LNY")
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC). LNC and Lincoln Life are organized under Indiana law.
LNC's primary businesses are insurance and financial services.
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 (Ex-
change) is currently closed on weekends and on these holidays: New Year's Day,
Martin Luther King's Birthday, President's Day, Good Friday, Memorial Day, In-
dependence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of
these holidays occurs on a weekend day, the Exchange may also be closed on the
business day occurring just before or just after the holiday.
Services
Independent auditors
The statutory-basis financial statements of LNY appearing in this SAI and Reg-
istration Statement have been audited by Ernst & Young LLP, independent audi-
tors, as set forth in their report 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 report
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 LNY or by third parties responsible
to LNY. We have entered into an agreement with the Delaware Management Compa-
ny, 2005 Market Street, Philadelphia, PA 19203, to provide accounting services
to the VAA. No separate charge against the assets of the VAA is made by LNY
for this service. Administrative services necessary for the operation of the
VAA and the contracts are currently provided by Lincoln Life. However, neither
the assets of Lincoln Life nor the assets of LNC support the obligations of
LNY under the contracts.
Principal underwriter
Lincoln Financial Advisors Corporation ("LFA"), an Indiana corporation regis-
tered with the Securities and Exchange Commission as a broker-dealer, is the
principal underwriter for the contracts, which are offered continuously. Dela-
ware Distributors, L.P. will perform certain marketing and other ancillary
functions as described in the Prospectus.
Sales charges and exchange privileges under the contracts are 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 LNY products; through independent in-
surance brokers; and through certain securities brokers/dealers selected by
LNY whose personnel are legally authorized to sell annuity products. There are
no special purchase plans for any class of prospective buyers.
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 paragraphs set forth below describe performance information for the VAA
and the subaccounts calculated in several different ways.
Money Market Fund Subaccount:
At times the VAA may advertise the Money Market subaccount's yield. The yield
refers to the income generated by an investment in the subaccount over a sev-
en-day period. This income is then annualized. The process of annualizing, re-
sults when the amount of income generated by the investment during that week
is assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The yield figure is based on historical earnings
and is not intended to indicate future performance.
The seven-day yield for the Lincoln National Money Market Fund subaccount 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 fac-
tor of
B-2
<PAGE>
365/7. This yield includes all deductions charged to the contractowner's ac-
count, 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.
Because the VAA had not yet begun operations as of December 31, 1999, standard
performance information is not yet available.
Average annual return for each period is determined by finding the average an-
nual compounded rate of return over each period that would equate the initial
amount invested to the ending redeemable value for that period, according to
the following formula:
P(1+T)n = ERV
Where:P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
N = number of years
ERV = ending redeemable value (as of the end of the period in question)
of a hypothetical $1,000 purchase payment made at the beginning of the 1-
year, 5-year, or 10-year period in question (or fractional period there-
of)
The formula assumes that: (1) all recurring fees have been charged to the
contractowner accounts; (2) all applicable non-recurring charges (including
any surrender charges) are deducted at the end of the period in question; and
(3) there will be a complete redemption upon the 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.
Non-standard investment results:
The VAA may report its results over various periods--daily, monthly, three-
month, six-month, year-to-date, yearly (fiscal year), three, five, ten years
or more and lifetime--and compare its results to indices and other variable
annuities in sales materials including advertisements, brochures and reports.
Performance information for the periods prior to the date that a fund became
available in the VAA will be calculated based on (1) the performance of the
fund adjusted for contract charges (ie: mortality and expense risk fees, any
applicable administrative charges, and the management and other expenses of
the fund) and (2) the assumption that the subaccounts were in existence for
the same periods as indicated for the fund. It may or may not reflect charges
for any riders that were in effect during the time periods shown. This perfor-
mance is referred to as non-standardized performance data. Such results may be
computed on a cumulative and/or annualized basis. We may also report perfor-
mance assuming you deposited $10,000 into a subaccount at inception of the un-
derlying fund or 10 years ago (whichever is less). This non-standard perfor-
mance may be shown as a graph illustrating how that deposit would have in-
creased or decreased in value over time based on the performance of the under-
lying fund adjusted for contract charges. This information represents past
performance and does not indicate or represent future performance. The invest-
ment return and value of a contract will fluctuate so that contractowner's in-
vestment may be worth more or less than the original investment.
Cumulative quotations are arrived at by calculating the change in accumulation
unit value between the first and last day of the base period being measured,
and expressing the difference as a percentage of the unit value at the begin-
ning 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.
B-3
<PAGE>
Non-Standard Performance Data (adjusted for contract expense charges):
Period Ending December 31, 1999
<TABLE>
<CAPTION>
As if
YTD With 1-year With 3-year With 5-year With 10-year With 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
MFS Utilities
Newport Tiger
Fund
Templeton
Growth
Templeton
International
</TABLE>
B-4
<PAGE>
Market Value Adjustment
The following example illustrates the
detailed calculations for a $50,000
deposit into the fixed account with a
guaranteed rate of 4.5% for a dura-
tion of five years. The intent of the
example is to show the effect of the
"MVA" and the 3% minimum guarantee
under various 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 effect of the MVA is reflected in
the index rate factor in column (2)
and the minimum 3% guarantee is shown
under 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.
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........ 0.25%
</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....................... $52,250 0.953765 $49,834 $51,500 $51,500 $3,000 $48,500
2....................... $54,601 0.978874 $53,448 $53,045 $53,448 $3,000 $50,448
3....................... $57,058 1.000000 $57,058 $54,636 $57,058 $2,500 $54,558
4....................... $59,626 1.007194 $60,055 $56,275 $60,055 $2,000 $58,055
5....................... $62,309 NA $62,309 $57,964 $62,309 $1,500 $60,809
</TABLE>
ANNUITY VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1............................................... $50,000 X 1.045 = $52,250
2............................................... $52,250 X 1.045 = $54,601
3............................................... $54,601 X 1.045 = $57,058
4............................................... $57,058 X 1.045 = $59,626
5............................................... $59,626 X 1.045 = $62,309
</TABLE>
B-5
<PAGE>
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% 6.25% 4 0.953765
2.......................................... 5.00% 5.50% 5.75% 3 0.978874
3.......................................... 5.00% 5.00% 5.00% 2 1.000000
4.......................................... 5.00% 4.00% 4.25% 1 1.007194
5.......................................... 5.00% N/A N/A N/A N/A
</TABLE>
MINIMUM VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1................................................ $50,000 X 1.03 = $51,500
2................................................ $51,500 X 1.03 = $53,045
3................................................ $53,045 X 1.03 = $54,636
4................................................ $54,636 X 1.03 = $56,275
5................................................ $56,275 X 1.03 = $57,964
</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, LNY 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 an Individual Annuity Mortality Table
on file with the New York Superintendent of Insurance, with an assumed invest-
ment return at the rate of 3%, 4% or 5% per annum. The first annuity payout is
determined by multiplying the benefit per $1,000 of value shown in the con-
tract tables by the number of thousands of dollars of value accumulated under
the contract. These annuity tables vary according to the form of annuity se-
lected and the age of the annuitant at the annuity commencement date. The as-
sumed interest rate stated above is the measuring point for subsequent annuity
payouts. If the actual net investment rate (annualized) exceeds the assumed
rate, the payout will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than the assumed 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 in-
crease more slowly.
LNY will use sex distinct annuity tables in the contracts, except for those
contracts associated with employer sponsored plans and where 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. The amount of the
second and subsequent periodic payouts is determined by multiplying the
contractowner's fixed number of annuity units in each subaccount by the appro-
priate 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 an arbi-
trary dollar amount. 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 immediately 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.
B-6
<PAGE>
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
LNY 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, LNY may refer to the following organizations
(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 LNY 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 and 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 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,
B-7
<PAGE>
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,
nonconvertible, domestic debt securities, as well as the domestic debt securi-
ties issued by the U.S. government or its agencies.
Lehman Brothers Government Intermediate Bond Index-- Composed of all bonds
covered by the Lehman Brothers Government Bond Index (all publicly issued,
nonconvertible, domestic debt of the U.S. government or any agency thereof,
quasi-federal corporations, or corporate debt guaranteed by the U.S. govern-
ment) with maturities between one and 9.99 years.
Merrill Lynch High Yield Master Index -- This is an index of high yield debt
securities. 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 capitaliza-
tion weighted index consisting of government bond markets of the following 13
countries: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ita-
ly, 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,
LNY intends to illustrate the advantages of the contracts in a number of ways:
Compound Interest Illustrations. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of 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 LNY, performance of the subaccounts and advertisement
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 balance needed to establish the DCA program is $2,000. DCA
transfers can take place over any period between six and 60 months. Once
elected, the program will remain in effect until the earlier of: (1) the annu-
ity commencement date; (2) the value of the amount being DCA'd is depleted; or
(3) you cancel the program by written request 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 remaining 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. If the DCA program is in ef-
fect, you may not participate in the Automatic Withdrawal Service, cross-rein-
vestment service, or portfolio rebalancing.
B-8
<PAGE>
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 Servicing Office. The minimum contract value
required 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 Servicing Office.
If telephone authorization has been elected, certain changes may be made by
telephone. Notwithstanding the requirements of the program, any withdrawal
must be permitted by Section 401(a)(9) of the code for qualified plans or per-
mitted 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. If the AWS program is in effect, you may not participate in the
DCA program, cross-reinvestment service, or portfolio rebalancing.
Cross-reinvestment service -- Under this option, account value in a designated
variable subaccount or the fixed side of the contract that exceeds a certain
baseline amount is automatically transferred to another specific variable
subaccount(s) or the fixed side of the contract at specific intervals. You may
elect to participate in cross-reinvestment at the time of application or at
any time before the annuity commencement date by sending a written request to
our servicing office or by telephone if we have your telephone authorization
on file. You designate the holding account, the receiving account(s), and the
baseline amount. Cross-reinvestment will continue until we receive authoriza-
tion to terminate the program.
The minimum holding account value required to establish cross-reinvestment is
$10,000 and the minimum amount transferred is $50.00. Currently, there is no
charge for this service. However, we reserve the right to impose one. A trans-
fer 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. This program is not available if you are utilizing an automatic deposit
feature. Also you may not use the DCA program, the AWS or portfolio
rebalancing, if you are using this cross-reinvestment service.
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 (e.g., 20% Money
Market, 50% Growth, 30% Utilities). This predetermined level will be the allo-
cation 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 LNY.
If the portfolio rebalancing is elected, all purchase payments allocated to
the variable accounts 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
LNY.
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. This program is not available if you are
utilizing the DCA program, AWS, or cross-reinvestment service.
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.
LNY's customers. Sales literature for the VAA and the series' funds may refer
to the number of employers and the number of individual annuity clients which
LNY serves. As of the date of this SAI, LNY was serving over 400 employer con-
tracts and more than 149,000 individuals.
LNY's assets, size. LNY may discuss its general financial condition (see, for
example, the reference to A.M. Best Company, above); it may refer to its as-
sets; it may also discuss its relative size and/or ranking among companies in
the industry or among any sub-classification of those companies, based upon
recognized evaluation criteria (see reference to A.M. Best Company above). For
example, at year-end 1999 LNY had statutory admitted assets of almost $2.3
billion.
Financial Statements
[TO BE FILED BY AMENDMENT.]
B-9
<PAGE>
LINCOLN NEW YORK SEPARATE ACCOUNT N FOR VARIABLE ANNUITIES
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 will be included
in Part A of this Registration Statement when available.
2. Part B The Financial Statements for the Variable Account will be
included in Part B of this Registration Statement when available.
3. Part B The following Statutory-Basis Financial Statements of Lincoln
Life & Annuity Company of New York are included in the SAI: (TO BE
FILED BY AMENDMENT)
Balance Sheets Statutory-Basis--December 31, 1999 and 1998
Statements of Operations Statutory-Basis--Years ended December 31, 1999,
1998 and 1997
Statements of Changes in Capital and Surplus Statutory-Basis--Years ended
December 31, 1999, 1998 and 1997.
Statements of Cash Flows Statutory-Basis--Years ended December 31, 1999, 1998,
and 1997.
Notes to Statutory-Basis Financial Statements--December 31, 1999
Report of Ernst & Young LLP, Independent Auditors
<PAGE>
Item 24. (Continued)
(b) List of Exhibits
(1)(a) Resolution of the Board of Directors and Memorandum authorizing
establishment of Account N is incorporated herein by reference to
Registration Statement on Form N-4 (File No. 333-93875) filed on
December 30, 1999.
(b) Amendment to that Certain Memorandum is incorporated herein by reference
to Registration Statement on Form N-4 (333-93875) filed December 30,
1999.
(2) None.
(3)(a) Amended and Restated Principal Underwriting Agreement--Lincoln Financial
Advisors/Lincoln Life & Annuity Company of New York. Incorporated herein
by reference to Registration Statement on Form N-4 (333-93875), filed
12-30-99.
(b) Form of Wholesaling Agreement between Lincoln Life & Annuity Company of
New York, Lincoln Financial Advisors, and Delaware Distributors, L.P. is
incorporated herein by reference to Registration Statement on Form N-4
(333-93875) filed on April 28, 2000.
(c) Standard Selling Group Agreement is incorporated herein by reference to
Registration Statement on Form N-4 (333-93875) filed on April 28, 2000.
(4) Form of Variable Annuity Contract.
(5) Form of Application.
(6) Articles of Incorporation and Bylaws of Lincoln Life & Annuity Company of
New York are incorporated herein by reference to Registration Statement
on Form N-4 (333-10863) filed on 8/27/96.
(7) Not applicable.
(8)(a) Form of Service Agreement between Lincoln Life & Annuity Company of New
York and Delaware Management Holdings, Inc. is incorporated herein by
reference to Registration Statement on Form N-4 (333-93875) filed on
April 28, 2000.
(b) Administrative Services Agreement between Lincoln Life & Annuity Company
of New York and Lincoln National Life Insurance Company dated 1-1-98
incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-4 (333-38007) filed on 10/11/99.
(c) Participation Agreement between Lincoln Life & Annuity Company of New
York and AIM Insurance Funds, Inc.
(d) Participation Agreement between Lincoln Life & Annuity Company of New
York and the Capital Research and Management Company. (TO BE FILED BY
AMENDMENT.)
(e) Participation Agreement between Lincoln Life & Annuity Company of New
York and the Delaware Funds.
(f) Participation Agreement between Lincoln Life & Annuity Company of New
York and Variable Insurance Products and Fidelity Insurance Funds and
Fidelity Distributors Corporation.
(g) Participation Agreement between Lincoln Life & Annuity Company of New
York and Variable Insurance Products Fund II and Fidelity Distributors
Corporation.
(h) Participation Agreement between Lincoln Life & Annuity Company of New
York and Variable Insurance Products Fund III and Fidelity Distributors
Corporation.
(i) Participation Agreement between Lincoln Life & Annuity Company of New
York and Franklin/Templeton Funds.
(j) Participation Agreement between Lincoln Life & Annuity Company of New
York and MFS Variable Insurance Funds.
(k) Participation Agreement between Lincoln Life & Annuity Company of New
York and Alliance Variable Products Series Fund. (TO BE FILED BY
AMENDMENT.)
(l) Participation Agreement between Lincoln Life & Annuity Company of New
York and BT Insurance Funds.
(m) Form of Participation Agreement between Lincoln Life & Annuity Company of
New York and the Liberty Variable Investment Trust Fund is incorporated
by reference to Registration Statement on Form N-4 (333-93875) filed
April 27, 2000.
(n) Participation Agreement between Lincoln Life & Annuity Company of New
York and the Lincoln National Bond Fund.
(o) Participation Agreement between Lincoln Life & Annuity Company of New
York and the Lincoln National Money Market Fund.
(9) Opinion and consent of Robert O. Sheppard, Counsel of Lincoln Life &
Annuity Company of New York 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 Registration Statement on Form N-4 (333-93875)
filed April 28, 2000.
Item 25.
The following list contains the officers and directors of Lincoln Life & Annuity
Company of New York who are engaged directly or indirectly in activities
relating to the Lincoln Life & Annuity Variable Annuity Account H as well as the
contracts. The list also shows Lincoln Life & Annuity Company of New York's
executive officers.
<TABLE>
<CAPTION>
Positions and Officers with Lincoln Life &
Name Annuity Company of New York
- ---- ------------------------------------------
<S> <C>
Joanne B. Collins*....................... President, Treasurer and Director
Troy D. Panning*......................... Second Vice President and Chief Financial
Officer
Roland C. Baker.......................... Director
1301 S. Meyers Road
Oakbrook Terrace, IL 60161
J. Patrick Barrett....................... Director
Chairman & CEO
Carpat Investments
4605 Watergap
Manlius, NY 13104
Thomas D. Bell, Jr. ..................... Director
President & CEO
Young & Rubicam Advertising
285 Madison Avenue
New York, NY 10017
Robert D. Bond** ........................ Director
</TABLE>
<PAGE>
DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name Positions and Offices with LNY
- ---- ------------------------------
Jon A. Boscia***................................. Director
Kathleen R. Gorman*.............................. Assistant Vice President
John H. Gotta*****............................... Director
Barbara S. Kowalczyk***.......................... Director
M. Leanne Lachman................................ Director
Managing Director
Boston Financial
437 Madison Avenue - 18th Floor
New York, NY 10022
Louis G. Marcoccia............................... Director
Senior Vice President
Syracuse University
Skytop Office Building
Skytop Road
Syracuse, NY 13244-5300
John M. Pietruski................................ Director
One Penn Plaza
Suite 3408
New York, NY 10119
Lawrence T. Rowland****.......................... Director
Robert O. Sheppard*.............................. Assistant Vice President
Richard C. Vaughan***............................ Director
C. Suzanne Womack***............................. Secretary
* Principal business address of each person is 120 Madison Street, 17th
Floor, Syracuse, New York 13202.
** Principal business address of each person is 1300 S. Clinton Street, Fort
Wayne, Indiana 46802.
*** Principal business address of each person is Centre Square, West Tower,
1500 Market St., Suite 3900, Philadelphia, PA 19102.
**** Principal business address of each person is 1700 Magnovox Way, One
Reinsurance Place, Fort Wayne, Indiana 46804.
*****Principal business address of each person is 350 Church Street,
Hartford, CT 06103.
<PAGE>
Item 26.
PERSONS CONTROLLED BY OR UNDER COMMON
CONTROL WITH THE DEPOSITOR OR REGISTRANT
See Exhibit 15(a): The Organizational Chart of The Lincoln National
Insurance Holding Company System is hereby incorporated herein by this
reference.
Item 27.
NUMBER OF CONTRACT OWNERS
Not applicable.
Item 28.
INDEMNIFICATION--UNDERTAKING
(a) Brief description of indemnification provisions.
In general, Article VII, Section 2, of the By-Laws of Lincoln Life &
Annuity Co. of NY (LNY) provides that LNY 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 LNY, 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 not opposed
to the best interests of, LNY. Certain additional conditions apply to
indemnification in criminal proceedings.
In particular, separate conditions govern indemnification of directors,
officers, and employees of LNY in connection with suits by, or in the
rights of LNY.
Please refer to Article VII of the By-Laws of LNY (Exhibit No. 6(a)
hereto) for the full text of the indemnification provisions.
Indemnification is permitted by, and is subject to the requirements of,
New York 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.
<PAGE>
Item 29. Principal Underwriter
(a) Lincoln Financial Advisors, Inc. is the Principal Underwriter for
Lincoln New York Separate Account N for Variable Annuities; Lincoln Life &
Annuity Variable Annuity Account L; Lincoln Life & Annuity Flexible Premium
Variable Life Account M; LLANY Separate Account R for Flexible Premium Variable
Life Insurance; and LLANY Separate Account S for Flexible Premium Variable Life
Insurance.
(b) Officers and Directors
J. Michael Hemp*
President and Director
Michael E. McMath*
Sr. Vice President and Director
Matthew Lynch*
Vice President, Chief Finance &
Admin. Officer and Director
Richard C. Boyles**
Second Vice President & Controller
Jeffrey C. Carleton*
Vice President
John M. Behrendt**
Vice President
C. Gary Shimmin
Vice President
180 N. Stetson Avenue, Ste. 4300
Chicago, IL 60601
Janet C. Chrzan***
Vice President & Treasurer
Susan J. Scanlon*
Second Vice President,
Compliance
Cynthia A. Rose****
Secretary
Gary D. Giller
Director
7720 Rivers Edge Drive, Ste. 100
Columbus, OH 43235
* Principal business address: 350 Church Street, Hartford, CT
06103-1106
** Principal business address: 200 East Berry Street, Fort Wayne,
IN 46802-2706
*** Principal business address: 1500 Market Street, Suite 3900,
Philadelphia, PA 19102-2112
**** Principal business address: 1300 South Clinton Street, Fort Wayne,
IN 46802
<PAGE>
(c) Name of Principal Underwriter: Lincoln Financial Advisors, Inc.; Net
Underwriting Discounts and Commissions: Not Applicable.
Item 30. Location of Accounts and Records
Exhibit 15(b) is hereby incorporated herein by reference.
Item 31. Management Services
Not Applicable.
Item 32
(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) Lincoln Life & Annuity Company of New York hereby represents that the fees
and charges deducted under the contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Lincoln Life & Annuity Company of New York.
(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.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Syracuse, and State of New York on this 26th day of May,
2000.
Lincoln New York Account N
for Variable Annuities
By: Lincoln Life & Annuity Company of New York
By: /s/ Joanne B. Collins
-------------------------------------------
Joanne B. Collins, President
Lincoln Life & Annuity Company of New York
(Depositor)
By: /s/ Joanne B. Collins
-------------------------------------------
Joanne B. Collins, President
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joanne B. Collins President, Treasurer and May 26, 2000
- --------------------------------------- Director (Principal
Joanne B. Collins Executive Officer)
/s/ Troy D. Panning Second Vice President and May 26, 2000
- --------------------------------------- Chief Financial Officer
Troy D. Panning (Principal Financial Officer
and Principal Accounting
Officer)
- --------------------------------------- Director May 26, 2000
Roland C. Baker
/s/ J. Patrick Barrett
- --------------------------------------- Director May 26, 2000
J. Patrick Barrett
/s/ Thomas D. Bell, Jr.
- --------------------------------------- Director May 26, 2000
Thomas D. Bell, Jr.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert D. Bond
- --------------------------------------- Director May 26, 2000
Robert D. Bond
/s/ Jon A. Boscia
- --------------------------------------- Director May 26, 2000
Jon A. Boscia
/s/ John H. Gotta
- --------------------------------------- Director May 26, 2000
John H. Gotta
/s/ Barbara S. Kowalczyk
- --------------------------------------- Director May 26, 2000
Barbara S. Kowalczyk
/s/ M. Leanne Lachman
- --------------------------------------- Director May 26, 2000
M. Leanne Lachman
/s/ Louis G. Marcoccia
- --------------------------------------- Director May 26, 2000
Louis G. Marcoccia
/s/ John M. Pietruski
- --------------------------------------- Director May 26, 2000
John M. Pietruski
/s/ Lawrence T. Rowland
- --------------------------------------- Director May 26, 2000
Lawrence T. Rowland
/s/ Richard C. Vaughan
- --------------------------------------- Director May 26, 2000
Richard C. Vaughan
</TABLE>
<PAGE>
Abraham Lincoln
XX-0123456
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(A Stock Company)
Home Office: 120 Madison Street, Suite 1700, Syracuse, New York 13202
Servicing Office: 1300 South Clinton Street, PO Box 7866 Fort Wayne, Indiana
46802
ANNUITY CONTRACT
Flexible Premium Deferred
Variable Annuity and/or Market Value Adjusted Annuity
With Benefit Payment Options
Nonparticipating
Lincoln Life & Annuity Company of New York (LNY) 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
LNY. 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 Servicing Office of LNY.
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 Servicing Office of LNY.
When the Contract is received at the Servicing Office, LNY will return the
Contract Value as of the date of cancellation where permitted by law. If this
Contract is issued as an IRA, then the entire amount of Purchase Payments made
shall be returned.
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 VARIABLE (THE AMOUNT MAY INCREASE OR
DECREASE) AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT (SEE PAGES 8 AND 18).
Signed for Lincoln Life & Annuity Company of New York at its Home Office in
Syracuse, New York.
/s/ Joanne B. Collins
Joanne B. Collins, President
Form 32096-NY 1
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Article Page
<S> <C> <C>
1 Definitions.................................................. 5
2 Purchase Payments............................................ 7
3 Variable Account............................................. 8
4 Fixed Account................................................ 9
5 Options......................................................11
6 Death Benefits...............................................14
7 Annuity Payment Option.......................................16
8 Beneficiary..................................................19
9 General Provisions...........................................20
10 Annuity Purchase Rates Under a Variable Payment Option.......22
11 Annuity Purchase Rates Under a Fixed Payment Option..........25
</TABLE>
Form 30296-NY 2
<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
GUARANTEED MINIMUM INTEREST RATE: 3.00%
[1-YEAR INITIAL GUARANTEED PERIOD INTEREST RATE: 4.00%]
[3-YEAR INITIAL GUARANTEED PERIOD INTEREST RATE: 5.00%]
[5-YEAR INITIAL GUARANTEED PERIOD INTEREST RATE: 6.00%]
[7-YEAR INITIAL GUARANTEED PERIOD INTEREST RATE: 7.00%]
[10-YEAR INITIAL GUARANTEED PERIOD INTEREST RATE: 8.00%]
DCA FIXED ACCOUNT
INITIAL GUARANTEED PERIOD/INTEREST RATE: [minimum 6 MONTHS/minimum 4.00%]
VARIABLE ACCOUNT
The Variable Account for this variable annuity Contract is the "Lincoln New York
Account N for Variable Annuities". There are currently [thirty-six] Sub-
accounts 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 Sub-accounts
are:
[AFIS GLOBAL SMALL CAPITALIZATION FUND (Class 2)]
[AFIS GROWTH FUND (Class 2)]
[AFIS GROWTH-INCOME FUND (Class 2)]
[AFIS INTERNATIONAL FUND (Class 2)]
[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 (Class B)]
[ALLIANCE GROWTH PORTFOLIO (Class B)]
Form 30296-NY 3
<PAGE>
[ALLIANCE PREMIER GROWTH PORTFOLIO (Class B)]
[ALLIANCE TECHNOLOGY PORTFOLIO (Class B)]
[DELAWARE GROUP PREMIUM EMERGING MARKETS SERIES (Service Class)]
[DELAWARE GROUP PREMIUM GROWTH & INCOME SERIES (Service Class)]
[DELAWARE GROUP PREMIUM HIGH YIELD SERIES (Service Class)]
[DELAWARE GROUP PREMIUM REIT SERIES (Service Class)]
[DELAWARE GROUP PREMIUM SELECT GROWTH SERIES (Service Class)]
[DELAWARE GROUP PREMIUM SMALL CAP VALUE SERIES (Service Class)]
[DELAWARE GROUP PREMIUM SOCIAL AWARENESS SERIES (Service Class)]
[DELAWARE GROUP PREMIUM TREND SERIES (Service Class)]
[DEUTSCHE ASSET MANAGEMENT VIT FUNDS: EQUITY 500 INDEX FUND]
[FIDELITY VIP EQUITY-INCOME PORTFOLIO (Service Class 2)]
[FIDELITY VIP GROWTH PORTFOLIO (Service Class 2)]
[FIDELITY VIP OVERSEAS PORTFOLIO (Service Class 2)]
[FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO (Service Class 2)]
[FRANKLIN MUTUAL SHARES SECURITIES FUND (Class 2)]
[FRANKLIN SMALL CAP SECURITIES FUND (Class 2)]
[LIBERTY VARIABLE TRUST NEWPORT TIGER FUND]
[LINCOLN NATIONAL BOND FUND]
[LINCOLN NATIONAL MONEY MARKET FUND]
[MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES (Service Class)]
[MFS VARIABLE INSURANCE TRUST RESEARCH SERIES (Service Class)]
[MFS VARIABLE INSURANCE TRUST TOTAL RETURN SERIES (Service Class)]
[MFS VARIABLE INSURANCE TRUST UTILITIES SERIES (Service Class)]
[TEMPLETON GROWTH SECURITIES FUND (Class 2]
[TEMPLETON INTERNATIONAL SECURITIES FUND (Class 2)]
[Other funds made available to LNY.]
See Section 3.01 for provisions governing any limitations, substitution or
elimination of Funds.
With a sub-account charge of [1.40%], the smallest rate of investment return
required to ensure that the dollar amount of variable annuity payments does not
decrease is:
. [4.40%] for variable annuity options based on an assumed rate of return
of [3%] per year; or
. [5.40%] for variable annuity options based on an assumed rate of return
of [4%] per year; or
. [6.40%] for variable annuity options based on an assumed rate of return
of [5%] per year.
Form 30296-NY 4
<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 LNY and the Owner, in which LNY 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).
Form 30296-NY 5
<PAGE>
1.12
CONTRACT VALUE - Prior to the Annuity Commencement Date, the sum of the values
of the Variable Account and of the Fixed Account, attributable to this Contract,
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.
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 Sub-accounts available under the
Contract. The periodic installments will be over any DCA period made available
by LNY 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 LNY.
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 LNY 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 LNY at the time of
selection.
1.22
HOME OFFICE - The principal office of LNY located at 120 Madison Street, Suite
1700, Syracuse, New York 13202.
1.23
LNY - Lincoln Life & Annuity Company of New York.
1.24
MATURITY DATE - The date specified on the Contract Data pages of this Contract.
Form 30296-NY 6
<PAGE>
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 exercises
rights of ownership under this Contract.
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
SERVICING OFFICE - The administrative offices of LNY for purposes of this
Contract, located at 1300 South Clinton Street, Fort Wayne, Indiana, 46802, or
an institution designated by LNY.
1.30
VALUATION DATE - Close of the market of each day that the New York Stock
Exchange is open for business.
1.31
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.
1.32
VARIABLE ACCOUNT - The segregated investment account into which LNY sets aside
and invests the assets allocated to the Variable Sub-account(s) made available
by LNY and selected by the Owner. The Variable Account for this Variable
Annuity Contract is shown on the Contract Data page(s).
1.33
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 LNY at its Servicing Office or to an agent
designated by LNY.
2.02 AMOUNT AND FREQUENCY
Purchase Payments are made in the amount and at the frequency shown on the
Contract Data Pages. The Owner may change the frequency or amount of Purchase
Payments subject to LNY's rules in effect at the time of the change. LNY
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.
Form 30296-NY 7
<PAGE>
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:
a. the Annuity Commencement Date;
b. termination of the Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date.
2.03 DOLLAR COST AVERAGING.
All or part of the Initial Premium Payment may be allocated to the Dollar Cost
Averaging Fixed Account or any other Sub-Account made available for the purpose
of Dollar Cost Averaging. Any amount so allocated will be transferred from the
Sub-Account used for Dollar Cost Averaging to the designated variable Sub-
Accounts in monthly installments over a period chosen by the Owner. Transfers
will occur on the same day each month until the end of the chosen period or, if
sooner, until the account value in the Sub-Account used for Dollar Cost
Averaging has been exhausted. Transfers from the Dollar Cost Averaging Fixed
Account are not subject to any Market Value Adjustment.
ARTICLE 3
VARIABLE ACCOUNT
3.01 THE VARIABLE ACCOUNT
Purchase Payments under the Contract may be allocated to the Variable Account of
the Contract. 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
LNY's business.
Subject to any required regulatory approvals, LNY 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 judgement of LNY, further investment in any Fund should become
inappropriate in view of the purposes of the Contract. LNY may add new Variable
Sub-accounts in which the assets of the Variable Account may be invested. LNY
will give the Owner written notice of the elimination and substitution of any
Fund within fifteen days after such substitution occurs.
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 LNY 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 to LNY in
writing.
Purchase Payments allocated to each Variable Sub-account will be invested at net
asset value in the shares of one of the Funds. LNY will use each Purchase
Payment to buy Accumulation Units in the Variable Sub-account(s) selected by the
Owner. The number of Accumulation Units bought shall 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 Servicing 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 Sub-accounts. The value of
the portion of this Contract allocated to a Variable Sub-account at any time
prior to the Annuity
Form 30296-NY 8
<PAGE>
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 LNY that LNY 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 levels
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 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 LNY 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. LNY
reserves the right to discontinue accepting new allocations or transfers to any
of the available Guaranteed Periods at any time. LNY 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 LNY 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 to LNY in
writing.
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.
Form 30296-NY 9
<PAGE>
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
LNY 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%. LNY 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;
LNY 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.
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 amounts allocated to the Fixed Account.
Multiple amounts within the same Fixed Sub-account may have different Guaranteed
Interest Rates, Expiration Dates, and Market Value Adjustments. The Guaranteed
Period begins when the amount is allocated to that Fixed Sub-account and ends on
the Expiration Date for the Guaranteed Period selected.
LNY will send written notice to the Owner at the last address known to LNY
regarding an upcoming expiration of a Purchase Payment's Guaranteed Period. LNY
will send this notice at least 15 but not more than 45 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 LNY within 60 days 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, if available,
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.
Form 30296-NY 10
<PAGE>
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 0.25%. 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).
As used herein, 'The yield rate for a Treasury security' means the applicable
yield rate based on the Treasury Constant Maturity Series published by the
Federal Reserve. If such yields are no longer published, the Company will
substitute an appropriate index of publicly traded obligations subject to
approval by the Superintendent of Insurance of the State of New York.
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.
4.07 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% on amounts in the Fixed Account. 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; and
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 LNY at its Servicing Office.
Form 30296-NY 11
<PAGE>
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
Servicing 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 received in the Servicing 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
Servicing 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. LNY reserves the right to restrict transfers 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. Transfers in excess of twelve (12) per
Contract Year must be authorized by LNY. Transfers made as a part of an
automatic transfer program (such as a DCA program) will not be counted
against these twelve (12) transfers.
c. 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.
d. 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.
e. The minimum transfer amount to a Variable Sub-account is $300.
f. 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
Form 30296-NY 12
<PAGE>
d. the Maturity Date;
The minimum withdrawal is $300. A withdrawal will be effective on the Valuation
Date on which LNY receives a written request for withdrawal at its Servicing
Office.
The request may specify from which Sub-account the withdrawal will be made. If
no Sub-account is specified, LNY will withdraw the amount requested on a pro-
rata basis from each Variable Sub-account and/or Fixed Sub-account. Any payment
from the Variable Account will be mailed from LNY's Servicing Office within
seven days after the date of withdrawal; however, LNY 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 at its Servicing 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 Servicing 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 Servicing 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 Servicing
Office.
The minimum withdrawal is $300. LNY reserves the right to surrender this
Contract if any withdrawal reduces the total Contract Value to less than $2,000,
and Purchase Payments have stopped for a period of three full years. By payment
of the Contract Value, LNY shall be relieved of any further obligation under
this Contract.
A partial withdrawal will result in a proportional reduction in any Death
Benefit payable under the Contract.
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 LNY receives a written request for surrender at its
Servicing 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 LNY's Servicing Office
within seven days after the date of surrender; however, LNY 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 Servicing 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.
Form 30296-NY 13
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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 LNY 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, LNY 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, LNY will pay a Death Benefit to the
Owner's estate.
If there are Joint Owners, upon the death of the first Joint Owner, LNY 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, LNY 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 LNY 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 LNY after LNY is in receipt of:
a. due proof, satisfactory to LNY, 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 LNY.
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 a Death Benefit called the 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 LNY for payment; or
Form 30296-NY 14
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b. the sum of all Purchase Payments, decreased proportionally by all
withdrawals, partial annuitizations, and premium tax incurred, if any;
or
c. the highest Contract Value on any Contract Date anniversary (determined
before the allocation of any Purchase Payments on that Contract Date
anniversary) 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 made on or subsequent to that Contract
Date anniversary on which the highest Contract Value is obtained, and
decreased proportionally for partial withdrawals, partial
annuitizations, and premium tax incurred, if any, on or subsequent to
that Contract Date anniversary on which the highest Contract Value is
obtained.
Upon the death of the 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 LNY 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
LNY for payment will be credited into the Contract. This benefit will only
apply one time for each Contract.
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 LNY approves the death claim.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by LNY 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 Owner's 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.
Form 30296-NY 15
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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 Pages. 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, LNY 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 Benefit to a
Beneficiary. Such selection of a distribution method must be made in writing to
the Servicing Office and approved by LNY. The Owner may change or revoke, in
writing to the Servicing 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 the payment of the Death Benefit to the 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 LNY.
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 LNY, after
LNY is in receipt of:
(a) due proof of death acceptable to LNY;
(b) written authorization for payment; and
Form 30296-NY 16
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(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 LNY after LNY is in
receipt of:
(a) due proof of death acceptable to LNY;
(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 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 LNY.
At the time an Annuity Payment 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.
At the time Income Payments commence, they will not be less than those that
would be provided by a specific amount for any single premium immediate annuity
contract offered by LNY at the time to the same class of annuitants. The
specific amount is the greater of the surrender value or 95% of the accumulation
value.
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
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 an Individual Mortality Table on
file with the New York Superintendent of Insurance, with an assumed interest
rate of 3.0%, 4.0%, and 5.0% 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 an Individual
Annuity Mortality Table on file with the New York Superintendent of Insurance,
with an interest rate of 2.75% per year.
Form 30296-NY 17
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Minimum payment amounts for ages not shown in Articles 10 and 11 can be obtained
from LNY's Servicing Office. The minimum payment amounts shown for Joint and
Survivor Annuities under both Article 10 and Article 11 are for joint ages; that
is, for a male and a female both of the same age. Minimum payment amounts for
other age and sex combinations on Joint and Survivor Annuities are not
illustrated in Articles 10 and 11, but are available from LNY's Servicing
Office.
For a 100% fixed annuity benefit payment, the Annuity Payment Date must be at
least 30 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 for 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 Sub-account. In absence of transfers between
Variable Sub-accounts, the number of Annuity Units attributable to 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, and
0.999866337 for a 5% 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 LNY of the value of an Accumulation Unit and of any
Annuity Unit will be conclusive upon the Owner and any Beneficiary.
LNY 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 LNY at its Servicing Office. The valuation
of Annuity Units is described above. A transfer from a Variable Sub-account to a
fixed annuity benefit payment will result in the redemption of Annuity Units in
that 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 LNY will accept, such as a
certified copy of a birth certificate.
7.07 MINIMUM ANNUITY BENEFIT PAYMENT REQUIREMENTS
Form 30296-NY 18
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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
LNY 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.
If the surviving spouse of the deceased continues the Contract as the sole
Owner, then the designated Beneficiary(s) 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(s). 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 LNY, at
its Servicing Office. The change will become effective upon receipt of the
written request by LNY at its Servicing Office.
LNY 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 LNY Servicing Office in a form acceptable to LNY.
Form 30296-NY 19
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ARTICLE 9
GENERAL PROVISIONS
9.01 THE CONTRACT
The Contract, any riders attached, together with the application therefore if a
copy of such application is attached to the Contract when issued, constitute the
entire Contract. Only the President, a Vice President, the Secretary or an
Assistant Secretary of LNY has the power, on behalf of LNY, to change, modify,
or waive any provisions of this Contract.
LNY reserves the right to unilaterally change the Contract for the purpose of
keeping the Contract in compliance with federal or state law, subject to the
prior approval of the New York Superintendent of Insurance.
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. The existence of a Joint Owner will not operate to continue the
Contract upon the death of the first Owner, unless the Joint Owner is the spouse
of the deceased Owner (see Section 6.01 - Entitlement).
Any transfer of ownership, or a revocation of transfer, must be made in writing
to LNY at its Servicing Office. A transfer or revocation will not take effect
until received in writing at LNY's Servicing Office. Any payment made or any
action taken or allowed by LNY before the transfer is received will be without
prejudice to LNY.
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 LNY in writing of the change. The new
Annuitant must be under the age of 90 as of the effective date of the change. A
Death Benefit may not be payable upon the death of the new Annuitant (see
Section 6.01).
A Contingent Annuitant may be named, or changed, by notifying LNY 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 LNY.
9.06 MISSTATEMENT OF AGE AND/OR SEX
Form 30296-NY 20
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If the age and/or sex of an Annuitant is misstated, the amount payable under the
contract will be adjusted to be the amount of Income which the actual premium
paid would have purchased for the correct age and/or sex according to the
Company's rates in effect on the Date of Issue. Any overpayment by the Company,
with interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any underpayment
by the Company will be paid in a lump sum, with interest at the rate of 6% per
year, compounded annually.
9.07 NONPARTICIPATING
The Contract is nonparticipating and will not share in the surplus earnings of
LNY.
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 LNY. Votes
attributable to the Contract will be cast in conformity with applicable law.
9.09 OWNERSHIP OF THE ASSETS
LNY 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, LNY
will mail a report to the Owner. The report will be mailed to the last address
known to LNY. 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 report will also contain such information as may be required by
law or regulation.
The information in the report will be as of a date not more than two months
prior to the date of mailing the report. LNY 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.
9.11 PREMIUM TAX
State and local government premium tax, if applicable, will be deducted from
Purchase Payments or Contract Value when incurred by LNY or at another time of
LNY'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 90 when this Contract is
issued.
9.13 LOANS
Loans are not permitted under this Contract.
9.14 MINIMUM BENEFITS PAYABLE
Any benefits paid under this Contract will not be less than those required by
the New York Insurance Law.
---0---
Form 30296-NY 21
<PAGE>
ARTICLE 10
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
10.01 A VARIABLE PAYMENT OPTION WITH A 3.0% ASSUMED INTEREST RATE
Form 30296-NY 22
<PAGE>
10.02 A VARIABLE PAYMENT OPTION WITH A 4.0% ASSUMED INTEREST RATE
Form 30296-NY 23
<PAGE>
10.03 A VARIABLE PAYMENT OPTION WITH A 5.0% ASSUMED INTEREST RATE
Form 30296-NY 24
<PAGE>
ARTICLE 11
ANNUITY PURCHASE RATES UNDER A FIXED PAYMENT OPTION
Form 30296-NY 25
<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 Life & Annuity Company of New York
representative or the Servicing Office of LNY.
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
Servicing Office:
1300 South Clinton Street
P.O. Box 7866
Fort Wayne, Indiana 46802
888-868-2583
Home Office:
120 Madison Street, Suite 1700
Syracuse, New York 13202
Form 30296-NY 26
<PAGE>
[LOGO OF LINCOLN CHOICEPLUS ACCESS(SM)] Lincoln Life & Annuity
Company of New York
Home office Syracuse, New York
Applicants signing in New York must use this form.
ChoicePlus Access
Variable Annuity Application
================================================================================
Instructions: Please type or print. ANY ALTERATIONS TO THIS APPLICATION MUST BE
INITIALED BY THE CONTRACT OWNER.
- --------------------------------------------------------------------------------
1a Contract Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Full legal name or trust name*
- --------------------------------------------------------------------------------
Street address
- --------------------------------------------------------------------------------
City State ZIP
- --------------------------------------------------------------------------------
Trustee name*
Social Security number/TIN [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
Month Day Year [_] Yes [_] No
*This information is required for trusts.
Note: Maximum age of Contract Owner is 89.
- --------------------------------------------------------------------------------
1b Joint Contract Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Full legal name
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
[_] Spouse [_] Non-Spouse
Note: Maximum age of Joint Contract Owner is 89.
- --------------------------------------------------------------------------------
2a Annuitant (If no Annuitant is specified, the Contract Owner, or Joint Owner
if younger, will be the Annuitant.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Full legal name
- --------------------------------------------------------------------------------
Street address
- --------------------------------------------------------------------------------
City State ZIP
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
Note: Maximum age of Contract Owner is 89.
- --------------------------------------------------------------------------------
2b Contingent Annuitant
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Full legal name
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Note: Maximum age of Annuitant is 89.
- --------------------------------------------------------------------------------
3 Beneficiary(ies) Of Contract Owner (List additional beneficiaries on
separate sheet. If listing children, use full legal names.)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
%
- ---------------------------------------------------------- ----------------------------- ------- ----
Full legal name or trust name* [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
%
- ---------------------------------------------------------- ----------------------------- ------- ----
Full legal name or trust name* [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
%
- ---------------------------------------------------------- ----------------------------- ------- ----
Full legal name or trust name* [_] Primary [_] Contingent Relationship to Contract Owner SSN/TIN
- ----------------------------------------------------------
Trustee name*
</TABLE>
Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
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-NY).
- --------------------------------------------------------------------------------
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
Form 29365-AccessNY4/00 Page 1 CP-APP
<PAGE>
- --------------------------------------------------------------------------------
5a Allocation (This section must be completed.)
- --------------------------------------------------------------------------------
Initial minimum: $25,000
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 Emerging Markets Series
- ------------
% Delaware Growth & Income Series
- ------------
% Delaware High Yield 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 Growth Portfolio
- ------------
% Alliance Growth & Income Portfolio
- ------------
% Alliance Premier Growth Portfolio
- ------------
% Alliance Technology Portfolio
- ------------
% American Funds Global Small Cap Fund
- ------------
% American Funds Growth Fund
- ------------
% American Funds Growth-Income Fund
- ------------
% American Funds International Fund
- ------------
% 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 Templeton Growth Securities Fund
- ------------
% Franklin Templeton International Securities Fund
- ------------
% Franklin Templeton Mutual Shares Securities Fund
- ------------
% Franklin Templeton Small Cap Securities Fund
- ------------
% Liberty Newport Tiger Fund
- ------------
% 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):
[_] DCA Fixed Account
[_] Delaware High Yield Series* *The DCA holding account
[_] Lincoln National Money Market Fund* and the DCA fund elected
[_] Lincoln National Bond Fund* cannot be the same.
INTO THE FUND(S) BELOW
Use whole percentages
% Delaware Emerging Markets Series
- ------------
% Delaware Growth & Income Series
- ------------
% Delaware High Yield 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 Growth Portfolio
- ------------
% Alliance Growth & Income Portfolio
- ------------
% Alliance Premier Growth Portfolio
- ------------
% Alliance Technology Portfolio
- ------------
% American Funds Global Small Cap Fund
- ------------
% American Funds Growth Fund
- ------------
% American Funds Growth-Income Fund
- ------------
% American Funds International Fund
- ------------
% 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 Templeton Growth Securities Fund
- ------------
% Franklin Templeton International Securities Fund
- ------------
% Franklin Templeton Mutual Shares Securities Fund
- ------------
% Franklin Templeton Small Cap Securities Fund
- ------------
% Liberty Newport Tiger Fund
- ------------
% 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-NY) or the Portfolio Rebalancing form (28887CP-NY).
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
[_] Please provide me with automatic withdrawals totaling ________ % of total
contract value or $ ___________________ payable as follows:
($50 minimum)
[_] 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-NY) 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 (1-28) Year
$
- --------------------------------------- ----------------------------------
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 & Annuity Company of New York, Servicing Office - 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 & Annuity Company of New York 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.
Page 3
<PAGE>
- --------------------------------------------------------------------------------
9 Replacement Will the proposed contract replace any existing annuity of the
insurance contract?
- --------------------------------------------------------------------------------
ELECT ONE: [_] No [_] Yes If yes, complete the 1035 Exchange or
Qualified Retirement Account Transfer form.
(Attach a state replacement form.)
- --------------------------------------------------------------------------------
Company name
- --------------------------------------------------------------------------------
Plan name Year issued
- --------------------------------------------------------------------------------
10 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) Access
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.
- --------------------------------------------------------------------------------
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.)
================================================================================
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.
- --------------------------------------------------------------------------------
11 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.)
$
- --------------------------------------------------------------------------------
Company name Year issued Amount
- --------------------------------------------------------------------------------
12 Additional Remarks
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13 Dealer Information
- --------------------------------------------------------------------------------
Option: [_] 1 [_] 2 Note: Licensing appointment with Lincoln Life &
Annuity Company of New York is required for this
application to be processed. If more than one
representative, please indicate names and percentages in
Section 12.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
14 Representative's Signature
- --------------------------------------------------------------------------------
The representative hereby certifies that he/she witnessed the signature(s) in
section 10 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 &
Annuity Company of New York -- to your investment dealer's home office or to:
[LOGO OF LINCOLN CHOICEPLUS ACCESS(R)]
<TABLE>
<S> <C>
By Express Mail:
Lincoln Life & Annuity Company of New York Lincoln Life & Annuity Company of New York
Servicing Office - P.O. Box 7866 Attention: ChoicePlus Operations
Fort Wayne, IN 46801-7866 1300 South Clinton Street
Fort Wayne, IN 46802
</TABLE>
If you have any questions regarding this application, please call Lincoln Life &
Annuity Company of New York at 888 868-2583.
Page 5
<PAGE>
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
LINCOLN FINANCIAL ADVISORS CORPORATION
<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......................................................................3
2.1 Timely Pricing and Orders................................................................3
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.............................................................................5
4.1 Tax Laws.................................................................................5
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.............................................................................19
12.1 Of AVIF and AIM by LIFE COMPANY ........................................................19
12.2 Of LIFE COMPANY by AVIF and AIM ........................................................21
12.3 Effect of Notice .......................................................................23
12.4 Successors .............................................................................23
Section 13. Applicable Law .............................................................................23
Section 14. Execution in Counterparts ..................................................................24
Section 15. Severability............................................................................... 24
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"), Lincoln Life & Annuity Company of New York, a New York 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 Lincoln Financial Advisors Corporation ("UNDERWRITER"),
an affiliate of LIFE COMPANY 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");
WHEREAS, UNDERWRITER 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.
2
<PAGE>
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its desipated 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. 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
3
<PAGE>
Funds next computed after receipt by AVIF or its designated agent of the
orders. For purposes of this Section 2.3(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.
(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.
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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.
(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;
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(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 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
facilitate review by AVIF or its advisors of any
written submissions provided to it pursu-ant 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 AVIFs refusal to
accept the proposed settlement or
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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) LIFE 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.
(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 (1) it is an
insurance company duly organized, validly existing, under the laws of the
State of New York and has full corporate power, authority and legal right to
execute, deliver and per-form 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 New York 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
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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 New York 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 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) AVIF's 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) AVIIF 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-I 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-(l) 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, (1i) any request by the SEC
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<PAGE>
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 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
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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 AW.
(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 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,
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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,
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
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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 AVIF. 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.
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.
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Consistent with the SEC's 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 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.
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(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.
(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 AVIF's 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 COMPANY, 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 (1) 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 (H) 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 817(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. l (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.
LINCOLN LIFE & ANNUITY COMPANY of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attn: Robert 0. Sheppard, Esq.
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LINCOLN FINANCIAL ADVISORS CORPORATION
1300 S. Clinton Street
Fort Wayne, IN 46802
Facsimile: (219) 455-1773
Attn: Kelly D. Clevenger
Vice President
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.
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SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and
12.1(c), below, LIFE COMPANY and UNDERWRITER agree 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 and/or UNDERWRITER 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:
(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 and/or UNDERWRITER 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, UNDERWRITER, or
their affiliates and on which such persons
have reasonably relied) or the negligent, illegal
or fraudulent conduct of LIFE COMPANY,
UNDERWRITER, or their 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 AVIFs 1933 Act registration statement,
AVIF Prospectus, sales literature or advertising of
AVIF, or any
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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, UNDERWRITER, or their
affiliates for use in AVIFs 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
and/or LJNDERWRITER 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 LIFE COMPANY and/or UNDERWRITER in
this Agreement or arise out of or result from any
other material breach of this Agreement by LIFE
COMPANY and/or UNDERWRITER; 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) Neither LIFE COMPANY nor UNDERWRITER shall 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) Neither LIFE COMPANY nor UNDERWRITER shall 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
and/or LTNDERWRITER of any such action shall not relieve LIFE COMPANY and/or
UNDERWRITER 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 and/or UNDERWRITER 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 and/or
UNDERWRITER to such Indemnified Party of LIFE COMPANY's and/or UNDERWRITER's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with LIFE COMPANY and/or UNDERWRITER and shall bear the fees and
expenses of any additional counsel retained by it, and neither LIFE COMPANY
nor UNDERWRITER will be liable to such Indemnified Party under this Agreement
for any legal or other
20
<PAGE>
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 AND UNDERWRITER 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, UNDERWRITER, their respective affiliates, and each person, if any,
who controls LIFE COMPANY, UNDERWRITER, or their respective 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:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in AVIFs 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,
UNDERWRITER, or their respective 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 their 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
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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, UNDERWRITER, or their
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.
(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 (1) under this Agreement, or
(1i) to LIFE COMPANY, UNDERWRITER, 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 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 AVIIF or AIM
of any such action shall not relieve AVIF or AIM from any liability
22
<PAGE>
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; UNDERWRITER, 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 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.
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SECTION 14. EXECUTION IN COUP
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.
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 LIFE COMPANY's performance of its
duties under this Agreement are the valuable property of the LIFE 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 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 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
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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 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.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("ALM" 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 ADA 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,
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<PAGE>
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.
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:
Name: Name:
Title: Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: By:
Name: Name:
Title: Assistant Secretary President
LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK, on behalf of itself and
its separate accounts
Attest: By:
Name: Name:
Title: Assistant Secretary President
LINCOLN FINANCIAL ADVISORS
CORPORATION as principal
underwriter for the separate
accounts of Lincoln Life & Annuity
Company of New York
Attest: By:
Name: Name:
Title: Assistant Secretary 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 & Annuity Flexible Premium Variable Life Account M
LLANY Separate Account R for Flexible Premium Variable Life Insurance
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
Lincoln Life & Annuity Company of New York:
Flexible Premium Variable Life Insurance Policy
LN615 NY LNY
Lincoln Life & Annuity Company of New York
Flexible Premium Variable Life Insurance Policy On the Lives of Two
Insureds
LN650 NY
28
<PAGE>
SCHEDULE B
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Fund
AIM and Design
AIM LOGO
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 to existing Participants'
(but not for EXISTING,
PARTICIPANTS)
SAIS
Typesetting Account SAIs Fund SAIs
Printing Account SAIs Fund SAIs
SUPPLEMENTS (TO
PROSPECTUSES OR SAlS
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 2417-2 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 AINVAVIF 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/AVIEF
<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, SAls,
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. I
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated October 15, 1998, by
and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware Corporation, The Lincoln Life & Annuity Company
of New York, a New York life insurance company and Lincoln Financial Advisors
Corporation, 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
THE POLICIES UTILIZING SOME OR BY THE SEPARATE ACCOUNTS
ALL OF THE FUNDS
<S> <C> <C>
AIM V.I. Capital Appreciation Fund Lincoln Life & Annuity Flexible - The Lincoln Life & Annuity Company of New
AIM V.I. Diversified Income Fund Premium Variable Life Account M York: Flexible Premium Variable Life
AIM V.I. Growth Fund Insurance Policy LN615NYLNY
AIM V.I. International Equity Fund
AIM V.I. Value Fund LLANY Separate Account R for - The Lincoln Life & Annuity Company of New
Flexible Premium Variable Life York: Flexible Premium Variable Life
Insurance Insurance Policy On the Lives of Two
Insureds LN650NY
- Lincoln Life & Annuity Company of New York:
Lincoln New York Account N for Delaware Lincoln New York Choice Plus
Variable Annuities Variable Annuity AN426NY
</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: Name:
Title: Assistant Secretary Title: President
s
(SEAL)
1 of 2
<PAGE>
Attest: (SEAL)
Name:
Title:
AIM DISTRIBUTORS, INC.
By:
Name:
Title:
(SEAL)
THE LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK
Attest:
Name:
Title:
By:
Name:
Title:
(SEAL)
LINCOLN FINANCIAL ADVISORS CORPORATION
Attest:
Name: By:
Title: Name:
Title:
2 of 2
<PAGE>
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated October 15, 1998, by
and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware Corporation, The Lincoln Life & Annuity Company
of New York, a New York life insurance company and Lincoln Financial Advisors
Corporation, 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 & Annuity - The Lincoln Life & Annuity Company of New York:
AIM V.I. Diversified Income Fund Flexible Premium Variable Flexible Premium Variable Life Insurance Policy
AIM V.I. Growth Fund Life Account M LN615NYLNY; LN660NY
AIM V.I. International Equity Fund
AIM V.I. Value Fund
- ------------------------------------------- ----------------------------------- ----------------------------------------------------
LLANY Separate Account R - The Lincoln Life & Annuity Company of New York:
for Flexible Premium Flexible Premium Variable Life Insurance Policy
Variable Life Insurance On the Lives of Two Insureds LN650NY; LN655
- ------------------------------------------- ----------------------------------- ----------------------------------------------------
Lincoln New York Account N - Lincoln Life & Annuity Company of New York:
for Variable Annuities Delaware Lincoln New York Choice Plus Variable
Annuity AN426NY
- ------------------------------------------- ----------------------------------- ----------------------------------------------------
</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: ___________________
<TABLE>
<S><C>
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 LIFE & ANNUITY COMPANY OF NEW YORK
Attest: By:
-------------------------------- ------------------------------------
Name: Name:
-------------------------------- ------------------------------------
Title: Title:
-------------------------------- ------------------------------------
(SEAL)
LINCOLN FINANCIAL ADVISORS CORPORATION
AAttest: By:
-------------------------------- ------------------------------------
Name: Name:
-------------------------------- ------------------------------------
Title: Title:
-------------------------------- ------------------------------------
(SEAL)
</TABLE>
2 of 2
<PAGE>
PARTICIPATION AGREEMENT
AMONG
DELAWARE GROUP PREMIUM FUND, INC.
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
DELAWARE DISTRIBUTORS, LP
THIS AGREEMENT, made and entered into this 15th day of October,
1999, by and between DELAWARE GROUP PREMIUM FUND, INC., a corporation
organized under the laws of Maryland (the "Fund"), and LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK, a New York insurance corporation (the "Company"), on its
own behalf and on behalf of each separate account of the Company named in
Schedule 1 to this Agreement as in effect at the time this Agreement is
executed and such other separate accounts that may be added to Schedule 1
from time to time in accordance with the provisions of Article XI of this
Agreement (each such account referred to as the "Account"), 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 Series available to these Variable Insurance Products
are listed on Schedule 4, as may be amended; 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 under the Investment Company Act of
1940, as amended (the "1940 Act"), and the Fund shares under the Securities
Act of 1933, as amended (the "1933 Act"); and
<PAGE>
WHEREAS, the Company has filed a registration statement with the SEC
to register under the 1933 Act, unless exempt, certain variable annuity
contracts described in Schedule 2 to this Agreement as in effect at the time
this Agreement is executed and such other variable annuity contracts and
variable life insurance policies which may be added to Schedule 2 from time
to time in accordance with Article XI of this Agreement (such policies and
contracts shall be referred to herein collectively as the "Contracts," each
such registration statement for a class or classes of contracts listed on
Schedule 2 being referred to as the "Contracts Registration Statement" and
the prospectus for each such class or classes being referred to herein as the
"Contracts Prospectus," and the owners of the such contracts, as
distinguished from all Product Owners, being referred to as
"Contractowners"); and
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, unless exempt, 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 (the "Investment Manager") is
registered as an investment adviser under the INVESTMENT ADVISERS ACT OF 1940
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 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.
2
<PAGE>
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., New York time, on each such Business Day.
Notwithstanding any other provision in this Agreement to the contrary, the
Board of Directors of the Fund (the "Fund Board") may suspend or terminate
the offering of Fund shares of any Series, if such action is required by law
or by regulatory 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). Such suspension or termination of the offering of any Series
of Fund shares does not by itself constitute the termination of this
Agreement.
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 the close of trading on the New York
Stock Exchange) 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., New York 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.
(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., New York time 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.
3
<PAGE>
(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.
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., New York 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
the Investment Manager nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company to the
Fund, the Distributor or the Investment Manager.
1.8
(a) The Company may withdraw the Account's investment in the
Fund or a Series only: (i) as necessary to facilitate Contract
owner requests; (ii) upon a determination by a majority of the Fund
Board, or a majority of disinterested Fund Board members, that an
irreconcilable material conflict exists among the interests of (x)
any Product Owners or (y) the interests of the Participating
Insurance Companies investing in the Fund; (iii) upon requisite
vote of the Contractowners having an interest in the affected
Series to substitute the shares of another investment company for
Series shares in accordance with the terms of the Contracts; (iv)
as required by state and/or federal laws or regulations or judicial
or other legal precedent of general application; or (v) at the
Company's sole discretion, pursuant to an order of the SEC under
Section 26(b) of the 1940 Act.
4
<PAGE>
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that the Fund
shares may be sold to other insurance companies (subject to Section
1.9 hereof) and the cash value of the Contracts may be invested in
other investment companies.
(c) The Company shall not, without prior notice to the
Distributor (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company
under the 1940 Act.
1.9. The Fund and the Distributor agree that Fund shares will be
sold only to Participating Insurance Companies and their separate accounts.
The Fund and the Distributor will not sell Fund shares to any insurance
company or separate account unless an agreement complying with Article VII of
this Agreement is in effect to govern such sales. No Fund shares of any
Series will be sold to the general public.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the issuance
thereof, unless exempt, (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 in good standing
under applicable law and that it has legally and validly authorized each
Account as a separate account under Section 4240 of the New York Insurance
Law (NYIL), 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, unless exempt, to serve as a separate account for
its Contracts, and that it will maintain such registrations for so long as
the law requires.
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.
5
<PAGE>
2.5. The Company represents that the Contracts are currently and at
the time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code.
The Company shall make every effort to maintain such treatment and shall
notify the Fund and the Distributor immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that
they might not be so treated in the future.
2.6. The Fund represents that the Fund's investment policies, fees
and expenses, and operations are and shall at all times remain in material
compliance with the laws of the state of Maryland, to the extent required to
perform this Agreement; and with state-mandated investment restrictions (if
any) set forth on Schedule 3, as amended from time to time by the Company in
accordance with Section 6.6. The Fund, however, makes no representation as to
whether any aspect of its operations (including, but not limited to, fees and
expenses and investment policies) otherwise complies with the insurance laws
or regulations of any state. The Company alone shall be responsible for
informing the Fund of any investment restrictions imposed by state insurance
law and applicable to the Fund.
2.7. The Distributor represents and warrants that it is duly
registered as a broker-dealer under the 1934 Act, a member in good standing
of the NASD, and duly registered as a broker-dealer under applicable state
securities laws; its operations are in compliance with applicable law, and it
will distribute the Fund shares according to applicable law.
2.8. The Distributor, on behalf of the Investment Manager,
represents and warrants that the Investment Manager is registered as an
investment adviser under the Investment Advisers Act of 1940 and is in
compliance with applicable federal and state securities laws.
2.9. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Distributor shall provide the Company with as many copies
of the current Fund Prospectus as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund at its expense shall
provide to the Company a camera-ready copy of the current Fund Prospectus
suitable for printing and other assistance as is reasonably necessary in
order for the Company to have a new Contracts Prospectus printed together
with the Fund Prospectus in one document. See Article V for a detailed
explanation of the responsibility for the cost of printing and distributing
Fund prospectuses.
3.2. The Fund Prospectus shall state that the Statement of
Additional Information for the Fund is available from the Distributor (or, in
the Fund's discretion, the Fund Prospectus shall state that such Statement is
available from the Fund), and the Distributor (or the Fund) shall provide
such Statement free of charge to the Company and to any outstanding or
prospective Contractowner who requests such Statement.
6
<PAGE>
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
Contractowners.
(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 Contractowners, 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.
7
<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, 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.
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 state insurance laws, 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 Contractowners;
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
Contractowners in accordance with instructions or proxies received
in timely fashion from such Contractowners;
8
<PAGE>
(b) vote Fund shares of each Series attributable to
Contractowners 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
Contractowners 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 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 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
required by applicable securities laws of the various states.
9
<PAGE>
6.3. The Fund shall amend the Fund Registration Statement under the
1933 Act and the 1940 Act from time to time as required in order to effect
for so long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by
applicable securities laws of the various states.
6.4. The Company shall be responsible for assuring that any
prospectus offering a Contract that is a life insurance contract where it is
reasonably possible that such Contract would be deemed a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will
describe the circumstances under which a Contract could be treated as a
modified endowment contract (or policy).
6.5. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of
Directors, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
6.6.
(a) The Company shall amend Schedule 3 when appropriate in
order to inform the Fund of any applicable state-mandated
investment restrictions with which the Fund must comply.
(b) Should the Fund or the Distributor become aware of any
restrictions which may be appropriate for inclusion in Schedule 3,
the Company shall be informed immediately of the substance of those
restrictions.
ARTICLE VLI. 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(c) of the Act and, in particular, has reviewed the
conditions to the relief set forth in the related Notice. As set forth
therein, the Company agrees to report to the Board of Directors of the Fund
(the "Board") any potential or existing conflicts between the interests of
Product Owners of all separate accounts investing in the Fund, and to assist
the Board in carrying out its responsibilities under the conditions of the
Mixed and Shared Funding Order by providing all information reasonably
necessary for the Board to consider any issues raised, including information
as to a decision to disregard voting instructions of variable Contractowners.
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.
10
<PAGE>
(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: (i) 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 (ii) establishing a new registered
mutual fund or management separate account, or taking such other
action as is necessary to remedy or eliminate the irreconcilable
material conflict.
(b) If the Company disagrees with the Board's determination,
the Company shall file a written protest with the Board, reserving
its right to dispute the determination as between just the Company
and the Fund. After reserving that right the Company, although
disagreeing with the Board that it (the Company) was responsible
for the conflict, shall take the necessary steps, under protest, to
remedy the conflict, substantially in accordance with paragraph (a)
just above, for the protection of Contractowners.
(c) As between the Company and the Fund, if within 45 days
after the Board's determination the Company elects to press the
dispute, it shall so notify the Board in writing. The parties shall
then attempt to resolve the matter amicably through negotiation by
individuals from each party who are authorized to settle the
controversy.
If the matter has not been amicably resolved within 60 days from the date of
the Company's notice of its intent to press the dispute, then before either
party shall undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance with the CPR
Rules for Non-Administered Arbitration of Business Disputes, by a sole
arbitrator; PROVIDED, HOWEVER, that if one party has requested the other
party to seek an amicable resolution and the other party has failed to
participate, the requesting party may initiate arbitration before expiration
of the 60-day period set out just above.
If within 45 days of the commencement of the process to select an arbitrator
the parties cannot agree upon the arbitrator, then he or she will be selected
from the CPR Panels of Neutrals. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of arbitration
shall be Syracuse, New York. The Arbitrator is not empowered to award damages
in excess of compensatory damages.
11
<PAGE>
(d) If the Board shall determine that the Fund or another
insurer was responsible for the conflict, then the Board shall
notify the Company immediately of that determination. The Fund
shall assure the Company that it (the Fund) or that other insurer,
as applicable, shall, at its sole cost and expense, take whatever
steps are necessary to eliminate the conflict.
7.3. If a material irreconcilable conflict arises because of the
Company's decision to disregard Contractowner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company shall withdraw (without charge or penalty) 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 Contractowners.
7.5. For purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable conflict, but in no event will the
Fund be required to establish a new funding medium for any variable contract,
nor will the Company be required to establish a new funding medium for any
Contract if an offer to do so has been declined by a vote of a majority of
affected Contractowners.
12
<PAGE>
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Fund, the Distributor and each person who
controls or is associated with the Fund (other than another Participating
Insurance Company) or the Distributor within the meaning of such terms under
the federal securities laws and any officer, trustee, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or such alleged statement or alleged omission
was made in reliance upon and in conformity with information
furnished in writing to the Company by the Fund or the Distributor
(or a person authorized in writing to do so on behalf of the Fund
or the Distributor) for use in the Contracts Registration
Statement, Contracts Prospectus or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(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
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<PAGE>
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Fund shares on a timely basis
in accordance with the procedures set forth in Article 1; or
(f) arise as a result of the Company's providing the Fund with
inaccurate information, which causes the Fund to calculate its Net
Asset Values incorrectly.
This indemnification will be in addition to any liability which the Company
may otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.2. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees to
indemnify and hold harmless the Company and each person who controls or is
associated with the Company within the meaning of such terms under the
federal securities laws and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Fund
Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature or other promotional
material of the Fund, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not 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
14
<PAGE>
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contract's
Registration Statement, Contracts Prospectus or sales literature or
other promotional material for the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing
by the Distributor or the Fund to the Company (or a person
authorized in writing to do so on behalf of the Fund or the
Distributor); or
(d) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including, but not by way of limitation, a failure,
whether unintentional or in good faith or otherwise: (i) to comply
with the diversification requirements of Article VI of this
Agreement; and (ii) to provide the Company with accurate
information sufficient for it to calculate its accumulation and/or
annuity unit values in timely fashion as required by law and by the
Contracts Prospectuses); or
(e) arise out of any material breach by the Distributor or the
Fund of this Agreement.
This indemnification will be in addition to any liability which the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is due
to the wilful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the party seeking indemnification.
15
<PAGE>
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 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, 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
16
<PAGE>
(b) at the option of the Company if shares of any Series are
not available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of the election to
terminate for such cause shall be furnished by the Company.
Termination shall be effective ten days after the giving of notice
by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the operation of the Account, the administration of the
Contracts or the purchase of Fund shares, or an expected or
anticipated ruling, judgment or outcome which would, in the Fund's
reasonable judgment, materially impair the Company's ability to
perform the Company's obligations and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the Distributor, the Investment
Manager or any Sub-Investment Manager, by the NASD, the SEC, or any
state securities or insurance commission or any other regulatory
body regarding the duties of the Fund or the Distributor under this
Agreement, or an expected or anticipated ruling, judgment or
outcome which would, in the Company's reasonable judgment,
materially impair the Fund's or the Distributor's ability to
perform Fund's or Distributor's obligations and duties hereunder; or
(e) at the option of the Company upon institution of formal
proceedings against the Investment Manager or Sub-investment
Manager by the NASD, the SEC, or any state securities or insurance
commission or any other regulatory body which would, in the good
faith opinion of the Company, result in material harm to the
Accounts, the Company, or Contractowners.
(f) upon requisite vote of the Contractowners 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
17
<PAGE>
(j) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Section 817(h) of the
Code and any regulations thereunder; or
(k) at the option of the Fund if the Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if the Fund reasonably believes that
the Contracts may fail to so qualify; or
(l) at the option of either the Fund or the Distributor if the
Fund or the Distributor, respectively, shall determine, in their
sole judgment exercised in good faith, that either (1) the Company
shall have suffered a material adverse change in its business or
financial condition; or (2) the Company shall have been the subject
of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of either the Fund
or the Distributor; or
(m) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that
either: (1) the Fund and the Distributor, or either of them, shall
have suffered a material adverse change in their respective
businesses or financial condition; or (2) the Fund or the
Distributor, or both of them, shall have been the subject of
material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company; or
(n) upon the assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Accounts to
another insurance company pursuant to an assumption reinsurance
agreement) unless the non-assigning party consents thereto or
unless this Agreement is assigned to an affiliate of the
Distributor.
10.2. NOTICE REQUIREMENT. Except as otherwise provided in Section
10.1, no termination of this Agreement shall be effective unless and until
the party terminating this Agreement gives prior written notice to all other
parties to this Agreement of its intent to terminate, and that 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.
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<PAGE>
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, the Fund and the Distributor
will, at the option of the Company, continue to make available
additional Fund shares for so long after the termination of this
Agreement as the Company desires, pursuant to the terms and
conditions of this Agreement as provided in paragraph (b) below,
for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as ("Existing Contracts").
Specifically, without limitation, if the Company so elects to make
additional Fund shares available, the owners of the Existing
Contracts or the Company, whichever shall have legal authority to
do so, shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts.
(b) In the event of a termination of this Agreement pursuant
to Section 10.1 of this Agreement, the Fund and the Distributor
shall promptly notify the Company whether the Distributor and the
Fund will continue to make Fund shares available after such
termination. If Fund shares continue to be made available after
such termination, the provisions of this Agreement shall remain in
effect except for Section 10.1(a) and thereafter either the Fund or
the Company may terminate the Agreement, as so continued pursuant
to this Section 10.3, upon prior written notice to the other party,
such notice to be for a period that is reasonable under the
circumstances but, if given by the Fund, need not be for more than
six months.
(c) The parties agree that this Section 10.3 shall not apply
to any termination made pursuant to Article VII or any conditions
or undertakings incorporated by reference in Article VII, and the
effect of such Article VII termination shall be governed by the
provisions set forth or incorporated by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts and to add new classes of variable annuity contracts and variable
life insurance policies to be issued by the Company through a Separate
Account investing in the Fund. The provisions of this Agreement shall be
equally applicable to each such class of contracts or policies, unless the
context otherwise requires. The schedule of available series in the Fund may
also be amended from time to time.
19
<PAGE>
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party(ies) at the address of such party(ies) set
forth below or at such other address as such party(ies) may from time to time
specify in writing to the other party.
If to the Fund:
Delaware Group Premium Fund, Inc.
1818 Market Street
Philadelphia, PA 19103
Attn: Christopher Price
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, New York 13202-2802
Attn: Troy Panning
If to the Distributor:
Delaware Distributors, Inc.
1818 Market Street
Philadelphia, PA 19103
Attn: Bruce D. Barton
ARTICLE XIII. MISCELLANEOUS
13.1. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.4. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
20
<PAGE>
13.5. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as
applicable, by such party, and when so executed and delivered this Agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
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: David K. Downes
Title: President and Chief Executive Officer
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Company)
Date: ________________ By: ______________________________________
Name: ____________________________________
Title: ___________________________________
DELAWARE DISTRIBUTORS, LP (Distributor)
by DELAWARE DISTRIBUTORS, INC. (General Parties)
Date: ________________ By: ______________________________________
Name: Bruce D. Barton
Title: President
21
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SCHEDULE 1
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of October 11, 1999
<TABLE>
<CAPTION>
Separate Account Date Created
- ---------------- ------------
<S> <C>
Lincoln Life & Annuity Separate Account M November 24, 1997
Lincoln Life & Annuity Separate Account N March 11, 1999
Lincoln Life & Annuity Separate Account R January 29, 1998
Lincoln Life & Annuity Separate Account S March 2, 1999
</TABLE>
22
<PAGE>
SCHEDULE 2
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - VUL
CHOICE PLUS VARIABLE ANNUITY
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - SVUL
CVUL
23
<PAGE>
SCHEDULE 3
State-mandated Investment Restrictions
Applicable to the Fund
As of October 11, 1999
None.
24
<PAGE>
SCHEDULE 4
Series in the Fund Available
to the Contracts and Policies
Listed on Schedule 2
As of October 15, 1999
Trend Series
Emerging Markets Series
Small Cap Value Series
Delchester Series
REIT Series
Devon Series
25
<PAGE>
SCHEDULE 1
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of May 1, 2000
<TABLE>
<CAPTION>
Separate Account Date Created
- ---------------- ------------
<S> <C>
Lincoln Life & Annuity Variable Annuity Separate Account L July 24, 1996
Lincoln Life & Annuity Flexible Premium Variable Life Account M November 24, 1997
Lincoln New York Separate Account N for Variable Annuities March 11, 1999
LLANY Separate Account R for Flexible Premium Variable Life Insurance January 29, 1998
LLANY Separate Account S for Flexible Premium Variable Life Insurance March 2, 1999
</TABLE>
<PAGE>
SCHEDULE 2
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
LINCOLN VUL
DELWARE-LINCOLN CHOICE PLUS VARIABLE ANNUITY
LINCOLN SVUL
LINCOLN CVUL
GROUP VARIABLE ANNUITY (GVA) I, II, III
<PAGE>
AMENDMENT TO
SCHEDULE 4
Series in the Fund Available
to the Contracts and Policies
Listed on Schedule 2
As of May 1, 2000
Trend Series
Emerging Markets Series
Small Cap Value Series
High Yield Series
REIT Series
Devon Series
Growth & Income
Select Growth
Social Awareness
International Equity
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to Schedules 1, 2 and 4 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: _____________________________________________
David K. Downes
President and Chief Executive Officer
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Company)
Date: ________________ By: _____________________________________________
Troy D. Panning
CFO/2nd Vice President
DELAWARE DISTRIBUTORS, LP (Distributor)
by DELAWARE DISTRIBUTORS, INC. (General Parties)
Date: ________________ By: _____________________________________________
Bruce D. Barton
President
<PAGE>
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the Sit day of September,
1996, by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, (hereinafter the
"Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts (hereinafter
the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund filed with the Securities and Exchange Commission
(the "SEC") a registration statement on Form N- I A and the SEC has declared
effective said registration statement; and
WHEREAS, the Fund has obtained an order from the SEC, dated October
15, 1985 (File No. 812-6102), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the " 1940
1
<PAGE>
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the " 1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Under-writer agree as follows:
ARTICLE 1. SALE OF FUND SHARES
I A - The Underwriter agrees to sell to the Company those shares of
the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1. 1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the
2
<PAGE>
Fund receives notice of such order by 9:30 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing -provisions
substantially the same as Articles 1, 111, V, VII and Section 2.5 of Article H
of this Agreement is in effect to govern. such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the , provisions of such prospectus. The Company agrees that all
net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, (as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto), (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the ' parties hereto, or in
the Company's general account, provided that such amounts may also be invested
in investment companies other than the Fund. The Company shall notify the Fund
as to which other investment companies are available as investment options under
the Contract not later than the time such investment companies are made
available to owners of the
3
<PAGE>
Contracts. The investment companies available to Contract owners as of the date
of this Agreement are as shown on Schedule C.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1. 1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2. 10 and 2. 11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
2. 1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
state laws and that the Company will require of every person distributing the
Contracts that the Contracts be offered and sold in compliance in all material
respects with all applicable Federal and state laws. The Company further
represents and warrants that it is an insurance company duly organized and
validly existing under applicable law and that it has legally and validly
established each Account, prior to any issuance or sale thereof, as a segregated
asset account under Section 4240 of the New York Insurance Laws and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities
4
<PAGE>
laws and that the Fund is and shall remain registered under the 1940 Act. The
Fund shall amend the Registration Statement for its shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and
to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as life insurance policies or annuity insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it win notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b- I under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b- I Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b- 1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b- I to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
5
<PAGE>
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2. 10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other individual
entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage as required currently by Rule 17g-(I) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Fund and the Underwriter agree to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agree to notify the Company immediately in the event that
such coverage no longer applies.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS-, VOTING
3. 1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film in lieu of receiving
printed copies of the Fund's prospectus, the Fund
6
<PAGE>
will reimburse the Company in an amount equal to the product of A and B where A
is the number of such prospectuses distributed to owners of the Contracts, and
B is the Fund's per unit cost of typesetting and printing the Fund's
prospectus. The same procedures shall be followed with respect to the Fund's
Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which are
covered in Section 3. 1) to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating Insurance
Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
7
<PAGE>
ARTICLE IV. Sales MATERIAL AND INFORMATION
4. 1. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects to
such use within ten Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares, within 30
days of the filing of such document with the Securities and Exchange Commission
or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to
8
<PAGE>
the Contracts or each Account and their investment in the Fund, within 30 days
of the filing of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5. 1. The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b- I to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
9
<PAGE>
6. 1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section 8
17(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7. 1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, ~ including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such
10
<PAGE>
segregation, or offering to the affected contract owners the option of making
such a change; and (2), establishing a new registered management investment
company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as detennined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7. 1,
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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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<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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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, ARC RELATED TO THE OPERATIONS OF THE FUND AND:
15
<PAGE>
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal of other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9. 1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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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
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<PAGE>
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter
has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity;
or
(h) the requisite vote of the Contract owners having an interest in a
Portfolio (unless otherwise required by applicable law) and
written approval of the Company, to substitute the shares of
another investment company for the corresponding shares of a
Portfolio in accordance with the terms of the Contracts; or
(i) at the option of the Fund, upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding
the Company's duties under this Agreement or related to the sale
of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Fund shares,
or an expected or anticipated ruling, judgment or outcome which
would, in the Fund's reasonable judgment, materially impair the
Company's ability to perform the Company's obligations and duties
hereunder; or
at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's
investment adviser or any sub-adviser, by the NASD, the SEC, or
any state securities or insurance commission or any other
regulatory body regarding the duties of the Fund or the
Underwriter under this Agreement, or an expected or anticipated
ruling, judgment or outcome which would, in the Company's
reasonable judgment, materially impair the Fund's or the
Underwriter's ability to perform the Fund's or the Underwriter's
obligations and duties hereunder; or
(k) at the option of the Company, upon institution of formal
proceedings against the Fund's investment adviser of any
sub-adviser by the NASD, the SEC, or any state securities or
insurance commission or any other regulatory body which would, in
the good faith opinion of the Company, result in material harm to
the Accounts, the Company or Contract owners.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall
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<PAGE>
not apply to any terminations under Article VII and the effect of such Article
VII terminations shall be governed by Article VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any other provision of this Agreement, each
party's obligation under Article VII to indemnify the other parties shall
survive termination of this Agreement, to the extent that the events giving rise
to the obligation to indemnify the other party occurred prior to the date of
termination
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street
17th Floor
Syracuse, New York 13202
Attention: Phil Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
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ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any non-privileged
information or reports in connection with services provided under this Agreement
which such Commissioner may request in order to ascertain whether the insurance
operations of the Company are being conducted in a manner consistent with the
New York Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND
By:
J. Gary Burkehead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Neal Litvack
President
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
Lincoln Life & Annuity Variable GAC96-1 11
Annuity Account L GAC91-101
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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.)
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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.
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10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible) of
the procedure are "hand verified," i.e., examined as to why they did not
complete the system. Any questions on those Cards are usually remedied
individually
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number OF SHARES.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may reasonably request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All arrangements, approvals and "signing-off 'may be done orally, but must
always be followed up in writing.
25
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
Calvert Responsibly Invested Balanced Portfolio
26
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- -----------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111 Growth - Initial
Annuity Account L GAC91-101 Equity-Income - Initial
Lincoln Life & Annuity Flexible LN615NY - LNY Equity-Income - Initial
Premium Variable Life Account M
Lincoln New York Account N AN426NY Equity-Income - Initial
for Variable Annuities Growth - Initial
Overseas - Initial
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Calvert Responsibly Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Liberty Variable Investment Trust
Lincoln National
MFS Variable Insurance Trust
T. Rowe Price International Series, Inc.
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
Date LINCOLN LIFE & ANNUITY
-------------------------- COMPANY OF NEW YORK
By:
--------------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- -----------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111; GAC91-101 Growth - Initial
Annuity Separate Account L (GVA I, II, III) Equity-Income - Initial
Lincoln Life & Annuity Flexible LN615NY - LNY Equity-Income - Initial
Premium Variable Life Account M (VUL I)
LN660NY Growth - Service
(VUL) High Income - Service
Lincoln New York Separate AN426NY Equity-Income - Initial
Account N for Variable Annuities (ChoicePlus) Growth - Initial
Overseas - Initial
LLANY Separate Account R for LN650 Growth - Service
Flexible Premium Variable (SVUL) High Income - Service
Life Insurance
LN655 Growth - Service
(SVUL II) High Income - Service
LLANY Separate Account S for LN920NY Growth - Service
Flexible Premium Variable (CVUL) High Income - Service
Life Insurance Overseas - Service
LN925 Growth - Service
(CVUL Series III) High Income - Service
Overseas - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Century Variable Products Group, Inc.
American Variable Insurance Series (AVIS)
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibly Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Funds
MFS Variable Insurance Trust
Neuberger&Berman Advisers Management Trust
OCC Accumulation Trust
Oppenheimer Funds
T. Rowe Price International Series, Inc.
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
Date LINCOLN LIFE & ANNUITY
-------------------------- COMPANY OF NEW YORK
By:
--------------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
--------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
Among
VARIABLE INSURANCE PRODUCTS FUND II,
------------------------------------
FIDELITY DISTRIBUTORS CORPORATION
---------------------------------
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
------------------------------------------
THIS AGREEMENT, made and entered into as of the 1st day of
September, 1996, by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
(hereinafter the "Company"), a New York corporation, on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account hereinafter
referred to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND 11, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular
managed portfolio of securities and other assets, any one of more of which may
be made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter referred
to as a "Portfolio"); and
WHEREAS, the Fund filed with the Securities and Exchange
Commission (the "SEC") a registration statement on Form N- I A and the SEC has
declared effective said registration statement; and
WHEREAS, the Fund has obtained an order from the SEC, dated
September 17, 1986 (File No. 812-6422), granting Participating Insurance
Companies and variable annuity and variable life insurance separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (hereinafter the "1940
1
<PAGE>
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the " 1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser UNDER THE FEDERAL INVESTMENT
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors
of the Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the SEC under the Securities Exchange Act of 1934, as amended, (hereinafter the
" 1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Under-writer is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE 1. SALE OF FUND SHARES
-------------------
I.I. The Underwriter agrees to sell to the Company those
shares of the Fund which each Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Fund. For purposes of this Section
1. 1, the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by the
Fund; provided that the
2
<PAGE>
Fund receives notice of such order by 9:30 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and' Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund shall
use reasonable efforts to calculate such net asset value on each day which the
New York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles 1, 111, V, VII and Section 2.5 of
Article 11 of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, (as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto), (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in
the Company's general account, provided that such amounts may also be invested
in investment companies other than the Fund. The Company shall notify the Fund
as to which other investment companies are available as investment options
under the Contract not later than the time such investment companies are made
available to owners of the
3
<PAGE>
Contracts. The investment companies available to Contract owners as of the
date of this Agreement are as shown on Schedule C.
1.7. The Company shall pay for Fund shares on the next
Business Day after an order to purchase Fund shares is made in accordance
with the provisions of Section 1. 1 hereof. Payment shall be in federal funds
transmitted by wire. For purpose of Section 2. 10 and 2. 11, upon receipt by
the Fund of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to the Company or any
Account. Shares ordered from the Fund will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for
each Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act; that the Contracts will be
issued and sold in compliance in all material respects with all applicable
Federal and state laws and that the Company will require of every person
distributing the Contracts that the Contracts be offered and sold in
compliance in all material respects with all applicable Federal and state
laws. The Company further represents and warrants that it is an insurance
company duly organized and validly existing under applicable law and that it
has legally and validly established each Account, prior to any issuance or
sale thereof, as a segregated asset account under Section 4240 of the New
York Insurance Laws and has registered or, prior to any issuance or sale of
the Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
New York and all applicable federal and state securities
4
<PAGE>
laws and that the Fund is and shall remain registered under the 1940 Act. The
Fund shall amend the Registration Statement for its shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and
to the extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended, (the "Code") and that it will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Company represents that the Contracts are currently
treated as life insurance policies or annuity insurance contracts, under
applicable provisions of the Code and that it will make every effort to
maintain such treatment and that it will notify the Fund and the Underwriter
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the
future.
2.5. The Fund currently does not intend to make any payments
to finance distribution expenses pursuant to Rule 12b- I under the 1940 Act
or otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b- I Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b- 1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b- I to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses
and investment policies) complies with the insurance laws or regulations of
the various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance
with the laws of the State of New York and the Fund and the Underwriter
represent that their respective operations are and shall at all times remain
in material compliance with the laws of the State of New York to the extent
required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a
member in good standing of the NASD and is registered as a broker-dealer with
the SEC. The Underwriter further represents that it will sell and distribute
the Fund shares in accordance with the laws of the State of New York and all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act.
5
<PAGE>
2.9. The Underwriter represents and warrants that the
Adviser is and shall remain duly registered in all material respects under
all applicable federal and state securities laws and that the Adviser shall
perform its obligations for the Fund in compliance in all material respects
with the laws of the State of New York and any applicable state and federal
securities laws.
2.10. The Fund and Underwriter represent and warrant that
all of their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(I) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
Bond shall include coverage for larceny and embezzlement and shall be issued
by a reputable bonding company. The Fund and the Underwriter agree to make
all reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agree to notify the Company immediately
in the event that such coverage no longer applies.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, and that said bond is issued by a reputable bonding company, includes
coverage for larceny and embezzlement, and is in an amount not less than $5
million. The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund and the Underwriter in the event that such coverage
no longer applies.
ARTICLE Ill. PROSPECTUSES AND PROXY STATEMENTS: VOTING
-----------------------------------------
3. 1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund shall provide camera-ready film containing
the Fund's prospectus and Statement of Additional Information, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or Statement of Additional
information for the Fund is amended during the year) to have the prospectus
for the Contracts and the Fund's prospectus printed together in one document,
and to have the Statement of Additional Information for the Fund and the
Statement of Additional Information for the Contracts printed together in one
document. Alternatively, the Company may print the Fund's prospectus and/or
its Statement of Additional Information in combination with other fund
companies' prospectuses and statements of additional information. Except as
provided in the following three sentences, all expenses of printing and
distributing Fund prospectuses and Statements of Additional Information shall
be the expense of the Company. For prospectuses and Statements of Additional
Information provided by the Company to its existing owners of Contracts in
order to update disclosure as required by the 1933 Act and/or the 1940 Act,
the cost of printing shall be borne by the Fund. If the Company chooses to
receive camera-ready film in lieu of receiving printed copies of the Fund's
prospectus, the Fund
6
<PAGE>
will reimburse the Company in an amount equal to the product of A and B where
A is the number of such prospectuses distributed to owners of the Contracts,
and B is the Fund's per unit cost of typesetting and printing the Fund's
prospectus. The same procedures shall be followed with respect to the Fund's
Statement of Additional Information.
The Company agrees to provide the Fund or its designee with
such information as may be reasonably requested by the Fund to assure that
the Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed to
existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3. 1) to shareholders in such
quantity as the Company shall reasonably require for distributing to Contract
owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii)vote Fund shares for which no instructions have been
received in a particular separate account in the
same proportion as Fund shares of such portfolio
for which instructions have been received in that
separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto and incorporated herein by this reference,
which standards will also be provided to the other Participating Insurance
Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
7
<PAGE>
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4. 1. The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee, each piece of sales literature or
other promotional material in which the Fund or its investment adviser or the
Underwriter is named, at least ten Business Days prior to its use. No such
material shall be used if the Fund or its designee reasonably objects to such
use within ten Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the permission of the
Fund or the Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within ten Business Days after receipt of such material
4.4. The Fund and the Underwriter shall not give any
information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement and prospectus
may be amended or supplemented from time to time, or in published reports for
each Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission
of the Company.
4.5. The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, within 30 days of the filing of such document with the Securities
and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above, that
relate to
8
<PAGE>
the Contracts or each Account and their investment in the Fund, within 30 days
of the filing of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
any of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (I.E., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act
or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or
any Portfolio adopts and implements a plan pursuant to Rule 12b- 1 to finance
distribution expenses, then the Underwriter may make payments to the Company
or to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or
other resources available to the Underwriter. No such payments shall be made
directly by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under
this Agreement shall be paid by the Fund. The Fund shall see to it that all
its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by
any federal or state law, and all taxes on the issuance or transfer of the
Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials and reports to owners of Contracts issued
by the Company.
ARTICLE VI. DIVERSIFICATION
---------------
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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 it-reconcilable
material conflict, but in no event will the Fund be required to establish a
new funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw
the Account's investment in the Fund and terminate this Agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall
be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
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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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<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 FUN
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to the
operations of the Fund and:
15
<PAGE>
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the diversification
requirements specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c)hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter or each
Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Fund to such party of the
Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement,
the issuance or sale of the Contracts, with respect to the operation of
either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9. 1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as
the Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by six months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts;
or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written notice
to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
17
<PAGE>
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter
has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity;
or
(h) the requisite vote of the Contract owners having an interest in
a Portfolio (unless otherwise required by applicable law) and
written approval of the Company, to substitute the shares of
another investment company for the corresponding shares of a
Portfolio in accordance with the terms of the Contracts; or
(i) at the option of the Fund, upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance
commission of any state or any other regulatory body regarding
the Company's duties under this Agreement or related to the sale
of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Fund shares,
or an expected or anticipated ruling, judgment or outcome which
would, in the Fund's reasonable judgment, materially impair the
Company's ability to perform the Company's obligations and
duties hereunder; or at the option of the Company, upon
institution of formal proceedings against the Fund, the
Underwriter, the Fund's investment adviser or any sub-adviser,
by the NASD, the SEC, or any state securities or insurance
commission or any other regulatory body regarding the duties of
the Fund or the Underwriter under this Agreement, or an expected
or anticipated ruling, judgment or outcome which would, in the
Company's reasonable judgment, materially impair the Fund's or
the Underwriter's ability to perform the Fund's or the
Underwriter's obligations and duties hereunder; or
(k) at the option of the Company, upon institution of formal
proceedings against the Fund's investment adviser of any
sub-adviser by the NASD, the SEC, or any state securities or
insurance commission or any other regulatory body which would,
in the good faith opinion of the Company, result in material
harm to the Accounts, the Company or Contract owners.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.2 shall
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<PAGE>
not apply to any terminations under Article VII and the effect of such
Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to Section 26(b) of
the 1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall
be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of
the Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to- do so.
10.4 Notwithstanding any other provision of this Agreement, each
party's obligation under Article VII to indemnify the other parties shall
survive termination of this Agreement, to the extent that the events giving
rise to the obligation to indemnify the other party occurred prior to the
date of termination.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street
17th Floor
Syracuse, New York 13202
Attention: Phil Holstein
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
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<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the New York Insurance Commissioner
with any non-privileged information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the insurance operations of the Company are being conducted
in a manner consistent with the New York Insurance Regulations and any other
applicable law or regulations.
12.7 The fights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12-8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or
company under common control with the Underwriter, if such assignee is duly
licensed and registered to perform the obligations of the Underwriter under
this Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
Name:
Title:
VARIABLE INSURANCE PRODUCTS FUND II
By:
J. Gary Burkhead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By:
Neal Litvack
President
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SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
Lincoln Life & Annuity Variable GAC96-111
Annuity Account L GAC91-101
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SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Fund by the Underwriter, the Fund and
the Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include
the department or third party assigned by the Insurance Company to perform
the steps delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done in writing approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2, The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual. Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards. The
Legal Department of the Underwriter or its affiliate ("Fidelity Legal")
must approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found on the
Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
23
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but NOT including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
24
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually remedied
individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may reasonably request an earlier deadline if required
to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All arrangements, approvals and "signing-off" may be done orally, but
must always be followed up in writing.
25
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Twentieth Century's TCI Portfolios, Inc.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
Calvert Responsibly Invested Balanced Portfolio
26
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded by Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111 Asset Manager - Initial
Annuity Account L GAC91-101
Lincoln Life & Annuity Flexible LN650NY Contrafund - Service
Premium Variable Account R
Lincoln Life & Annuity Flexible LN615NY - LNY Asset Manager - Initial
Premium Variable Life Account M Investment Grade Bond -
Initial
Contrafund - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibiltiy Invested Balanced Portfolio
Delaware Group Premium Fund, Inc.
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Lincoln National (LN)
MFS-Registered Trademark- Variable Insurance Trust
Neuberger Berman Advisers Management Trust
Templeton Variable Products Series Fund
Twentieth Century's TCI Portfolios, Inc.
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to Schedules A and C to be executed in its name and on its behalf by its duly
authorized representative and its seal to be hereunder affixed hereto as of
the date specified below.
Date______________________________ LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: _________________________________
Name: Troy D. Panning
Title: CFO/2nd Vice President
Date______________________________ VARIABLE INSURANCE PRODUCTS FUNDS II
By: _________________________________
Name: _______________________________
Title: ______________________________
Date _____________________________ FIDELITY DISTRIBUTORS CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Variable GAC96-111; GAC91-101 Asset Manager - Initial
Annuity Separate Account L (GVA I, II, III) Contrafund - Initial
Lincoln Life & Annuity Flexible LN615NY Asset Manager - Initial
Premium Variable Life Account M (VUL I) Investment Grade Bond -
Initial
LN660NY Contrafund - Service
(VUL)
LLANY Separate Account R LN650NY Contrafund - Service
for Flexible Premium Variable (SVUL)
Life Insurance
LN655 Contrafund - Service
(SVUL II)
LLANY Separate Account S LN920NY Asset Manager - Service
for Flexible Premium Variable (CVUL) Contrafund - Service
Life Insurance
LN925 Asset Manager - Service
(CVUL Series III) Contrafund - Service
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
American Century Variable Products Group, Inc.
American Variable Insurance Series (AVIS)
Baron Capital Funds Trust
BT Insurance Funds Trust
Calvert Responsibiltiy Invested Balanced Portfolio
Delaware Group Premium Fund
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
Janus Aspen Series
Lincoln National Funds
MFS-Registered Trademark- Variable Insurance Trust
OCC Accumulation Trust
Oppenheimer Funds
Neuberger Berman Advisers Management Trust
Templeton Variable Products Series Fund
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedules A and C to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder affixed hereto
as of the date specified below.
Date____________________ LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: _______________________________
Name: Troy D. Panning
Title: CFO/2nd Vice President
Date____________________ VARIABLE INSURANCE PRODUCTS FUNDS II
By: _______________________________
Name: _______________________________
Title: _______________________________
Date____________________ FIDELITY DISTRIBUTORS CORPORATION
By: _______________________________
Name: _______________________________
Title: _______________________________
<PAGE>
FIDELITY FUND PARTICIPATION AGREEMENT
VIP III COMPLETE AGREEMENT
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III, FIDELITY DISTRIBUTORS CORPORATION
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 15th day of
October,1999 by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
(hereinafter the "Company"), a New York corporation, on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A
hereto as may be amended from time to time (each such account hereinafter
referred to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND III, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
(hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15)
<PAGE>
and 6e-3(T) (b) (15)thereunder, to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life
insurance companies hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act, unless exempt;
and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity and variable
life contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act, unless exempt; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life insurance and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute
1
<PAGE>
receipt by the Fund; provided that the Fund receives notice of such order by
9:00 a.m. Boston time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the variable life insurance or variable annuity
contracts with the form number(s) which are listed on Schedule A attached hereto
and incorporated herein by this reference, as such Schedule A may be amended
from time to time hereafter by mutual written agreement of all the parties
hereto, (the "Contracts") shall be invested in the Fund, in such other Funds
advised by the Adviser as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may also
be invested in one or more investment companies other than the Fund.
2
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company or its designee on a daily basis as soon as
reasonably practical after the net asset value per share is calculated (normally
by 6:30 p.m. Boston time) and shall use its best efforts to make such net asset
value per share available by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act unless an exemption from registration is
available and an opinion of counsel to that effect shall have been furnished to
the Fund; that the Contracts will be issued and sold in compliance in all
material respects with all applicable Federal and State laws. The Company
further represents and warrants that it is an insurance company duly organized
and validly existing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 4240 of the New York Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act, unless exempt, to serve as a segregated investment account for the
Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the
3
<PAGE>
1940 Act from time to timeas required in order to effect the continuous
offering of its shares. The Fund shall register and qualify the shares for
sale in accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
life insurance policies or annuity insurance contracts under applicable
provisions of the Code; that it will make every effort to maintain such
treatment; and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. (a) With respect to Initial Class shares, the Fund currently does
not intend to make any payments to finance distribution expenses pursuant to
Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments
in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan
under which it makes no payments for distribution expenses. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b- 1, the Fund
undertakes to have a board of trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(b) With respect to Service Class shares, the Fund has adopted a Rule
12b-1 Plan under which it makes payments to finance distribution expenses. The
Fund represents and warrants that it has a board of trustees, a majority of whom
are not interested persons of the Fund, which has formulated and approved the
Fund's Rule 12b-1 Plan to finance distribution expenses of the Fund and that any
changes to the Fund's Rule 12b-1 Plan will be approved by a similarly
constituted board of trustees.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further
4
<PAGE>
represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
5
<PAGE>
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under the Investment
Advisers Act of 1940 and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of New
York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(l) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company. The Fund and the Underwriter agree to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agree to notify the Company immediately in
the event that such coverage no longer applies.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus (which shall mean, for purposes of this Article III if the Company so
requests, a separate prospectus for each Fund portfolio used in a particular
Account), and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with
6
<PAGE>
other fund companies' prospectuses and statements of additional information.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure annually as required by the 1933 Act
and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the
Company chooses to receive camera-ready film in lieu of receiving printed
copies of the Fund's prospectus, the Fund will reimburse the Company in an
amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of
Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate
account, so long as and to the extent that the
Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company
reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the
extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each
of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent
with the
7
<PAGE>
standards set forth on Schedule B attached
hereto and incorporated herein by this reference,
which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects to
such use within ten Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in an offering statement for unregistered contracts, or in published
reports for each Account which are in the public domain or approved by the
Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except
8
<PAGE>
with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, within 30 days of
the filing of such document with the Securities and Exchange Commission or other
regulator5, authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, and to their investments in the Fund within 30 days of the filing
of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials, and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent
9
<PAGE>
deemed advisable by the Fund, in accordance with applicable state laws prior
to their sale. The Fund shall bear the expenses for the cost of registration
and qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, setting
the prospectus in type, setting in type and printing the proxy materials and
reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or
transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance within the grace period afforded by Regulation
1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested
10
<PAGE>
trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (I.E., variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contract owners the option of making such a change; and
(2), establishing a new registered management investment company or managed
separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict: provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
11
<PAGE>
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8. l.(a) The Company agrees to indemnify and hold harmless tile Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including reasonable legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of
any material fact contained in the Registration
Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for
the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein
a material fact required to be stated therein or
necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to the Company by or on
behalf of the Fund for use in the
12
<PAGE>
Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or
any amendment or supplement to any of the foregoing)
or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(ii) arise out of or as a result of untrue statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its
control) or willful misfeasance, bad faith or gross
negligence of the Company or persons under its
control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading if such a statement or
omission was made in reliance upon information
furnished to the Fund by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials
under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company, as limited by and in accordance with the
provisions of Sections 8.1 (b) and 8.1 (c) hereof.
8.1.(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to the Fund, whichever is applicable.
8.1.(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company
of any such claim
13
<PAGE>
shall not relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company
to such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8. l.(d) The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2.(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf
of the Company for use in the Registration Statement
or prospectus for the Fund or in sales literature (or
any amendment or supplement to any of the foregoing)
or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(ii) arise out of or as a result of untrue statements or
representations
14
<PAGE>
(other than statements or representations contained
in the Registration Statement, prospectus or sales
literature for the Contracts not supplied by the
Underwriter or persons under its control) or willful
misfeasance, bad faith, or gross negligence of the
Fund, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2.(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2.(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified
15
<PAGE>
Parties, the Underwriter will be entitled to participate, at its own expense,
in the defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Underwriter to such party of the Underwriter's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2.(d) The Company agrees promptly to notify the Underwriter of tile
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3.(a) The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions
of Sections 8.3(b) and 8.3(c) hereof.
8.3.(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
16
<PAGE>
8.3.(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3.(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by ninety (90) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to
<PAGE>
17
meet the requirements of the Contracts: or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity: or
(h) termination by the Company by written notice to the Fund and
the Underwriter upon the requisite vote of the Contract owners
having an interest in a Portfolio (unless otherwise required
by applicable law) and written approval of the Company, to
substitute shares of another investment company for the
corresponding shares of a Portfolio in accordance with the
terms of the Contracts; or
(i) termination by written notice to the Company at the option of
the Fund, upon institution of formal proceedings against the
Company and by the NASD, the SEC, the insurance commission of
any state or any other regulatory body regarding the Company's
duties under this Agreement or
18
<PAGE>
related to the sale of the Contracts, the operation of the
Account, the administration of the Contracts or the purchase
of Fund shares, or an expected or anticipated ruling,
judgment or outcome which would, in the Fund' s reasonable
judgment, materially impair the Company's ability to perform
the Company's obligations and duties hereunder; or
(j) termination by written notice to the Fund and the Underwriter,
at the option of the Company, upon institution of formal
proceedings against the Fund, the Underwriter, the Fund's
investment adviser or any sub-adviser, by the NASD, the SEC,
or any state securities or insurance commission or any other
regulatory body regarding the duties of the Fund or the
Underwriter under this Agreement, or an expected or
anticipated ruling, judgment or outcome which would, in the
Company's reasonable judgment, materially impair the Fund's or
the Underwriter's ability to perform the Fund's or
Underwriter's obligations and duties hereunder; or
(k) termination by written notice to the Fund and the Underwriter,
at the option of the Company, upon institution of formal
proceedings against the Fund's investment adviser of any
sub-adviser by the NASD, the SEC, or any state securities or
insurance commission or any regulatory body which would, in
the good faith opinion of the Company, result in material harm
to the Accounts, the Company or Contract Owners.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except
(i) as necessary to implement Contract Owner initiated
or approved transactions, or
(ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of
general application (hereinafter referred to as a
"Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to
Section 26(b) of
19
<PAGE>
the 1940 Act. Upon request, the Company will
promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund
and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases
where permitted under the terms of the Contracts, the
Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise
available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its
intention to do so.
10.4. Notwithstanding any other provision of this Agreement, one
party's obligation under Article VIII to indemnify the other party shall survive
termination of this Agreement, to the extent that the events giving rise to the
obligation to indemnify the other party occurred prior to the date of
termination.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attention: Troy Panning
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
20
<PAGE>
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish any insurance commissioner with any information or reports in
connection with services provided under this Agreement which such Commissioner
may request in order to ascertain whether the insurance operations of the
Company are being conducted in a manner consistent with the insurance
regulations and any other applicable law or regulations of that state.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement. The Company
shall promptly notify the Fund and the Underwriter of any change in control of
the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
21
<PAGE>
(a) the Company's annual statement (prepared under
statutory ) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90
days alter the end of each fiscal year;
(b) the Company's quarterly statements (statutory)
(and GAAP, if any). as soon as practical and in any
event within 45 days after the end of each quarterly
period:
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the
delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the SEC
or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of the
books of the Company, as soon as practical after the
receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
VARIABLE INSURANCE PRODUCTS FUND III
By:
-------------------------------------------
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTION
By:
--------------------------------------------
Kevin J. Kelly
Vice President
22
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
AS OF OCTOBER 15, 1999
<TABLE>
<S> <C> <C>
Separate Account and Date ESTABLISHED BY Form Numbers of Contracts FUNDED BY
BOARD OF DIRECTORS SEPARATE ACCOUNT FIDELITY FUND (CLASS)
Lincoln Life & Annuity Separate LN650NY Growth Opportunities -
Account R (January 29, 1998) Service Class
</TABLE>
23
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done in writing approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the
Fund)
24
<PAGE>
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
1. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a) Voting Instruction Card(s)
b) One proxy notice and statement (one document)
c) Return envelope (postage pre-paid by Company) addressed to the
company or its tabulation agent
d) "Urge buckslip" - optional, but recommended. )This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.
e) Cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity legal.
1. The above contents should be received by the Company at least 7 business
days before mail date. Individual in charge at Company reviews and approves
the contents of the mailing package to ensure correctness and completeness.
Copy of this approval sent to Fidelity Legal.
2. Package mailed by the Company.
The Fund MUST allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but NOT including) the meeting,
counting backwards.
3. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure and
has not been required by Fidelity in the past.
4. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
25
<PAGE>
5. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible) of
the procedure are "hand verified," i.e., examined as to why they did not
complete the system.
Any questions on those Cards are usually remedied individually.
6. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
7. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) Fidelity Legal must
review and approve tabulation format.
8. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may reasonably request an earlier deadline if required to
calculate the vote in time for the meeting.
9. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
10. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
11. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Investment Companies
Available: AIM, Bankers Trust, Baron Capital, Colonial, Delaware, Dreyfus,
Janus, Kemper, Lincoln National Investments, MFS, Neuberger
Berman, Templeton
27
<PAGE>
SCHEDULE A
AMENDED AS OF FEBRUARY 15, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
Lincoln Life & Annuity Separate LN650NY Growth Opportunities
Account R - Service Class
Lincoln New York Account N AN426NY Growth Opportunities
for Variable Annuities - Initial Class
Lincoln Life & Annuity Flexible LN615NY - LNY Growth Opportunities
Premium Variable Life Account M - Service Class
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF FEBRUARY 15, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Baron Capital Funds Trust
Delaware Group Premium Fund
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Investments
MFS Variable Insurance Trust
Neuberger & Berman AMT
Templeton Variable Products Series Fund
1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused these
Amendments to Schedules A and C to be executed in its name and on its behalf
by its duly authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
Date LINCOLN LIFE & ANNUITY COMPANY
------------------------- OF NEW YORK
By:
----------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS III
-------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
-------------------------
By: ----------------------------
Name:
----------------------------
Title:
----------------------------
2
<PAGE>
SCHEDULE A
AMENDED AS OF MAY 1, 2000
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
<CAPTION>
Form Numbers of Contracts
Name of Separate Account Funded By Separate Account Fidelity Fund (Class)
- ------------------------ -------------------------- ---------------------
<S> <C> <C>
LLANY Separate Account R for LN650NY Growth Opportunities
Flexible Premium Variable Life (SVUL) - Service Class
Insurance
LN 655 Growth Opportunities
(SVUL II) - Service Class
Lincoln New York Separate Account AN426NY Growth Opportunities
N for Variable Annuities (ChoicePlus) - Initial Class
Lincoln Life & Annuity Flexible LN660NY Growth Opportunities
Premium Variable Life Account M (VUL) - Service Class
</TABLE>
<PAGE>
SCHEDULE C
AMENDED AS OF MAY 1, 2000
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
Alliance Variable Products Series Fund
American Variable Insurance Series (AVIS)
BT Insurance Funds Trust
Baron Capital Funds Trust
Delaware Group Premium Fund
Janus Aspen Series
Liberty Variable Investment Trust
Lincoln National Investments
MFS Variable Insurance Trust
Neuberger & Berman AMT
OCC Accumulation Trust
Oppenheimer Funds
Templeton Variable Products Series Fund
1
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused these
Amendments to Schedules A and C to be executed in its name and on its behalf
by its duly authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
Date LINCOLN LIFE & ANNUITY COMPANY
--------------------- OF NEW YORK
By:
-------------------------
Name: Troy D. Panning
Title: CFO/2nd Vice-President
Date VARIABLE INSURANCE PRODUCTS FUNDS III
----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
2
<PAGE>
SCHEDULE A
AMENDED AS OF OCTOBER 15, 1999
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
<TABLE>
Name of Separate Account and Policy Form Numbers of Contracts
Date Established by Board of Directors Funded by Separate Account
- -------------------------------------- --------------------------
<S> <C>
Lincoln Life & Annuity Variable GAC96-111
Annuity Account L GAC91-101
Lincoln Life & Annuity Flexible Premium LN650NY
Variable Account R
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedule A to be executed in its name and on its behalf by its
duly authorized representative and its seal to be hereunder affixed hereto as
of the date specified below.
Date LINCOLN LIFE & ANNUITY
------------------------ COMPANY OF NEW YORK
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date VARIABLE INSURANCE PRODUCTS
------------------------ FUNDS II
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
------------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
<PAGE>
SCHEDULE C
AMENDED AS OF OCTOBER 15, 1999
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth Fund
AIM International Equity Fund
AIM V.I. Value Fund
BARON CAPITAL FUNDS TRUST
Baron Capital Asset Fund
BT INSURANCE FUNDS TRUST
EAFE Index Fund
Equity 500 Index Fund
Small Cap Index Fund
Calvert Responsibiltiy Invested Balanced Portfolio
DELAWARE GROUP PREMIUM FUND, INC.
Delchester Series
Devon Series
Emerging Markets Series
REIT Series
Small Cap Value Series
Trend Series
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund: Small Cap Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
Growth Opportunities Portfolio
JANUS ASPEN SERIES
Janus Aspen Series Balanced Portfolio
Janus Aspen Series Worldwide Growth Portfolio
<PAGE>
LINCOLN NATIONAL (LN)
LN Bond Fund
LN Capital Appreciation Fund
LN Equity-Income Fund
LN Global Asset Allocation Fund
LN Money Market Fund
LN Social Awareness Fund
MFS-Registered Trademark- VARIABLE INSURANCE TRUST
MFS Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
AMT Mid-Cap Growth Portfolio
AMT Partners Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Templeton International Fund - Class 2
Templeton Stock Fund - Class 2
TWENTIETH CENTURY'S TCI PORTFOLIOS, INC.
TCI Growth
TCI Balanced
T. Rowe Price International Series, Inc.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to Schedule C to be executed in its name and on its behalf by its
duly authorized representative and its seal to be hereunder affixed hereto as
of the date specified below.
Date LINCOLN LIFE & ANNUITY
---------------------- COMPANY OF NEW YORK
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date VARIABLE INSURANCE PRODUCTS
----------------------- FUNDS II
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date FIDELITY DISTRIBUTORS CORPORATION
-----------------------
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
<PAGE>
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC. AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT made as of September 21, 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 Lincoln Life & Annuity Company of New York, a life
insurance company organized as a corporation under New York 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 V (15)
and 6e-3 (T) V (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);
1
<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 SHARE
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
2
<PAGE>
describing Portfolio purchase 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 sub-account of each Account.
3
<PAGE>
1.7 The Trust shall furnish, on or before the ex-dividend date, notice to
the 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 II.
OBLIGATIONS OF THE PARTIES: FEES AND EXPENSES
4
<PAGE>
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 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; (ii) 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.
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2.5 Except as provided in 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.
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 "LLANY" 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.
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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 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.
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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 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 3(c)(1) or 3(c)(7) thereof, the Company
represents and warrants that:
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(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
(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.
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
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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 an amount not less that the minimum
coverage required by Rule 17g-1 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
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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.
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
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(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 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.
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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-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then 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-3M,
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 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,
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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 accurately derived from Trust Documents as
defined in Section 5.2 (a)((i)) 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
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 Partys 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
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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 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, 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
may 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:
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(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 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.
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(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
(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,
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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.
18
<PAGE>
(d) The Company and the Underwriter agree promptly to notify the
Trust 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 the Account, or the sale or acquisition of
share of the Trust.
ARTICLE VI.
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.
19
<PAGE>
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 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
20
<PAGE>
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.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Karen L. Skidmore, Senior Corporate Counsel
If to the Company:
Lincoln Life & Annuity Company of New York
120 Madison Street, 17th Floor
New York, NY 13202
Attention: Bob Sheppard, Esq.
WITH A COPY TO
The Lincoln National Life insurance Company
1300 South Clinton Street, 2H-02
Fort Wayne, IN 46802
Attention: Kelly D. Clevenger, Vice President
ARTICLE VIII.
MISCELLANEOUS
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 if any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of 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
21
<PAGE>
granting exemptive relief there from 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 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.
22
<PAGE>
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:
Lincoln Life & Annuity Company of New York
------------------------------------------
By its authorized officer
By:
Name: Phillip L. Holstein
Title: President
The Trust:
Templeton Variable Products Series Fund
---------------------------------------
By its authorized officer
By:
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant Secretary
The Underwriter:
Franklin Templeton Distributors, Inc.
-------------------------------------
By its authorized officer
By:
Name: Deborah R. Gatzek
Title: Senior Vice President, Assistant Secretary
23
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1. LLANY Separate Account R for Flexible Premium Variable Life Insurance
Date Established: 1/29/98
SEC Registration Number: 333-46113
2. Lincoln Life & Annuity Flexible Premium Variable Life Account M
Date Established: 11/24/97
SEC Registration Number: 333-42507
24
<PAGE>
SCHEDULE B
TRUST PORTFOLIOS AND CLASSES AVAILABLE
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
25
<PAGE>
SCHEDULE C
VARIABLE LIFE INSURANCE CONTRACTS
ISSUED BY LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
REPRESENTATIVE
CONTRACT FORM NUMBER
- -------- -----------
1. LLANY Separate Account R for Flexible Premium Variable Life insurance
Title: SVUL I Form: LN650NY
SEC Registration Number: 333-46113
2. Lincoln Life &Annuity Flexible Premium Variable Life Account M
Title: VUL I Form: LN605NY
SEC Registration Number: 333-42507
26
<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
27
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
The Lincoln Life & Annuity Company of New York, Templeton Variable
Products Series Fund and Franklin Templeton Distributors, Inc. hereby amend
their Fund Participation Agreement dated as of September 21, 1998, 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.
<TABLE>
<S> <C>
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK TEMPLETON VARIABLE PRODUCTS SERIES FUND
By its authorized officer By its authorized officer
By: By:
---------------------------------------- ----------------------------------------
Name: Name: Karen L. Skidmore
Title: 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
</TABLE>
<PAGE>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2
----------------------------------------------------------------------------------------
<S> <C> <C>
CONTRACT/PRODUCT SVUL I VUL I
NAME AND TYPE
----------------------------------------------------------------------------------------
REGISTERED (Y/N) Yes Yes
----------------------------------------------------------------------------------------
SEC REGISTRATION 811-08651 811-08559
NUMBER --1940 ACT
----------------------------------------------------------------------------------------
REPRESENTATIVE LN650NY LN605NY
FORM NUMBERS
----------------------------------------------------------------------------------------
SEPARATE ACCOUNT LLANY Separate Lincoln Life & Annuity
NAME/DATE Account R Flexible Premium
ESTABLISHED Variable Life Account M
----------------------------------------------------------------------------------------
SEC REGISTRATION 333-46113 333-42507
NUMBER -- 1933 ACT
----------------------------------------------------------------------------------------
TEMPLETON TVP - Templeton TVP - Templeton Asset
VARIABLE International Fund Allocation Fund -- Class 1
PRODUCTS SERIES Class 2- Templeton Templeton Investment
FUND ("TVP") - Investment Counsel, Inc. Counsel, Inc.
PORTFOLIOS AND
CLASSES - ADVISER TVP - Templeton Stock TVP - Templeton
Fund -- Class 2 - International Fund -- Class
Templeton Investment 1- Templeton Investment
Counsel, Inc. Counsel, Inc.
TVP - Templeton Stock
Fund -- Class 1 -
Templeton Investment
Counsel, Inc.
----------------------------------------------------------------------------------------
</TABLE>
<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
AIM International Equity Fund
Baron Capital Asset Fund
BT Equity 500 Index Fund
BT Small Cap Index Fund
BT EAFE Equity Index Fund
Delaware Emerging Markets Series
Delaware Small Cap Value Series
Delaware Trend Series
Delaware Delchester Series
Delaware Devon Series
Delaware REIT Series
Fidelity VIP Equity-Income Portfolio
Fidelity VIP II Asset Manager Portfolio
Fidelity VIP II Investment Grade Bond Portfolio
Fidelity VIP II Contrafund -- Service Class
Fidelity VIP III Growth Opportunities -- Service Class
Janus Aspen Balanced Portfolio
Janus Aspen Worldwide Growth Portfolio
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
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
AMT Partners Fund
AMT Mid-cap Growth Fund
OpCap Global Equity Portfolio
OpCap Managed Portfolio
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
The Lincoln Life & Annuity Company of New York, Templeton Variable
Products Series Fund, and Franklin Templeton Distributors, Inc. hereby amend
their Fund Participation Agreement dated as of September 21, 1999, and as
amended on October 15, 1999 ("Agreement"), by:
1. Adding Franklin Templeton Variable Insurance Products Trust, an
open-end management investment company organized as a business trust
under Massachusetts law, as a party to the Agreement between and 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 (the "Underwriter") and
Lincoln Life & Annuity Company of New York, a life insurance company
organized as a corporation under New York law (the "Company"). Both
Templeton Variable Products Series Fund and Franklin Templeton
Variable Insurance Products Trust shall hereinafter be referred to as
the "Trust."
2. Adding a new Section, "Agreement"
AGREEMENT
1.0 Form of Agreement. This Agreement shall also create a
separate agreement for each Trust and the Underwriter as though
each Trust and the Underwriter had executed an identical Fund
Participation Agreement with the Company. No rights,
responsibilities or liabilities arising under the Agreement as it
pertains to one Trust shall be enforceable by or against any
party to the Agreement as it pertains to another Trust.
3. Adding Franklin Templeton Variable Insurance Products Trust to
Article VII, "Notices"
If to the Trust:
Franklin Templeton Variable Insurance Products Trust
777 Mariners Island Blvd.
San Mateo, CA 94404
Attention: Karen Skidmore, Assistant Vice
President, Assistant Secretary
4. Replacing Schedule A-C of the Agreement with Amended Schedule
A-C, attached;
5. Replacing Schedule D of the Agreement with Amended Schedule D,
attached;
6. Adding Schedule E to the Agreement, attached. (REDACTED)
1
<PAGE>
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 Life & Annuity Company of New York Templeton Variable Products Series Fund
- ------------------------------------------ ---------------------------------------
By its authorized officer By its authorized officer
By: By:
Name: Troy D. Panning Name: Karen L. Skidmore
Title: CFO/2nd Vice President Title: Assistant Vice President and
Assistant Secretary
Franklin Templeton Distributors, Inc.
---------------------------------------
By its authorized officer
By:
Name: Phillip J. Kearns
Title: Vice President
</TABLE>
2
<PAGE>
SCHEDULE A-C
CONTRACTS ISSUED BY LINCOLN LIFE &
ANNUITY COMPANY OF NEW YORK
<TABLE>
<CAPTION>
- ----------------------- ------------------------------ -------------------------------- -------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
- ----------------------- ------------------------------ -------------------------------- -------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT SVUL I VUL I Delaware - Lincoln New York
NAME AND TYPE Choice Variable Annuity
- ----------------
- ----------------------- ------------------------------ -------------------------------- -------------------------------
REGISTERED (Y/N) Yes Yes Yes
- ----------------------- ------------------------------ -------------------------------- -------------------------------
SEC REGISTRATION 811-08651 811-08559 811-09763
NUMBER - 1933 ACT
- ----------------------- ------------------------------ -------------------------------- -------------------------------
REPRESENTATIVE LN650NY LN605NY AN426NY
FORM NUMBERS
- ----------------------- ------------------------------ -------------------------------- -------------------------------
SEPARATE ACCOUNT LLANY Separate Account R for Lincoln Life & Annuity Lincoln New York Separate
NAME/DATE Flexible Premium Variable Flexible Premium Variable Life Account N for Variable
ESTABLISHED Life Insurance Account M Annuities
- ----------------------- ------------------------------ -------------------------------- -------------------------------
SEC REGISTRATION 333-46113 333-42507 333-93875
NUMBER - 1940 ACT
- ----------------------- ------------------------------ -------------------------------- -------------------------------
TEMPLETON VARIABLE TVP - Templeton Asset TVP - Templeton Asset VIP - Franklin Small Cap
PRODUCTS SERIES Allocation Fund - Class 1 Allocation Fund - Class 1 Fund Class 2 - Franklin
FUND ("TVP"), Templeton Investment Templeton Investment Counsel, Advisors, Inc.
FRANKLIN TEMPLETON Counsel, Inc. Inc.
VARIABLE INSURANCE VIP - Mutual Shares
PRODUCTS TRUST TVP - Templeton TVP - Templeton International Securities Fund Class 2 -
("VIP") -PORTFOLIOS International Fund - Class Fund - Class 1- Templeton Franklin Mutual Advisers, LLC
AND CLASSES - 1- Templeton Investment Investment Counsel, Inc.
ADVISER Counsel, Inc. VIP - Templeton International
TVP - Templeton Stock Fund - Fund Class 2 - Templeton
TVP - Templeton Stock Fund - Class 1 - Investment Counsel, Inc. (as
Class 1 - Templeton Templeton Investment Counsel, of May 1, 2000, Templeton
Investment Counsel, Inc. Inc. International Securities Fund)
VIP - Templeton Global Growth
Fund Class 2 - Templeton
Global Advisors Limited (as
of May 1, 2000, Templeton
Growth Securities Fund)
- ----------------------- ------------------------------ -------------------------------- -------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------- ------------------------------- -------------------------------- -------------------------------
CONTRACT 4 CONTRACT 5 CONTRACT 6
- ----------------------- ------------------------------- -------------------------------- -------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT CVUL LVUL - I
NAME AND TYPE CVUL Series III VUL
- ----------------
- ----------------------- ------------------------------- -------------------------------- -------------------------------
REGISTERED (Y/N) Yes Yes
- ----------------------- ------------------------------- -------------------------------- -------------------------------
SEC REGISTRATION 811-09257 811-08559
NUMBER - 1933 ACT
- ----------------------- ------------------------------- -------------------------------- -------------------------------
REPRESENTATIVE LN920NY LN615NY
FORM NUMBERS LN925 LN660NY
- ----------------------- ------------------------------- -------------------------------- -------------------------------
SEPARATE ACCOUNT LLANY Separate Account S for Lincoln Life & Annuity
NAME/DATE Flexible Premium Variable Flexible Premium Variable Life
ESTABLISHED Life Insurance Account M
- ----------------------- ------------------------------- -------------------------------- -------------------------------
SEC REGISTRATION 333-74325 333-42507
NUMBER - 1940 ACT
- ----------------------- ------------------------------- -------------------------------- -------------------------------
TEMPLETON VARIABLE VIP - Franklin Small Cap Fund TVP - Templeton International
PRODUCTS SERIES Class 2 - Franklin Advisers, Fund Class 2 - Templeton
FUND ("TVP"), Inc. Investment Counsel, Inc. (as
FRANKLIN TEMPLETON of May 1, 2000, Templeton
VARIABLE INSURANCE International Securities Fund)
PRODUCTS TRUST
("VIP") -PORTFOLIOS VIP - Templeton Global Growth
AND CLASSES - Fund Class 2 - Templeton
ADVISER Global Advisors Limited (as of
May 1, 2000, Templeton Growth
Securities Fund)
- ----------------------- ------------------------------- -------------------------------- -------------------------------
</TABLE>
4
<PAGE>
SCHEDULE D
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
<TABLE>
<S> <C>
AIM V.I.Capital Appreciation Fund Fidelity VIP Equity Income Portfolio
AIM V.I. Diversified Income Fund Fidelity VIP Growth
AIM V.I. Growth Fund Fidelity VIP High Income
AIM V.I. International Fund Fidelity VIP Overseas
AIM V.I. Value Fund Fidelity VIP II Asset Manager Portfolio
Fidelity VIP II Investment Grade Bond Portfolio
Fidelity VIP II Contrafund
Fidelity VIP III Growth Opportunities
Alliance Premier Growth Janus Aspen Balanced Portfolio
Alliance Growth and Income Janus Aspen Global Technology
Alliance Growth Janus Aspen Flexible Income
Alliance Technology Janus Aspen Worldwide Growth Portfolio
AMT Partners Fund Lincoln National Money Market Fund
AMT Mid-cap Growth 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
Avis Global Small Capitalization MFS Emerging Growth Series
Avis Growth MFS Total Return Series
Avis International MFS Utilities Series
Avis Growth-Income MFS Research
Avis Bond
Avis U.S. Government/AAA-Rated SecuritiesFund
Baron Capital Asset Fund OpCap Global Equity Portfolio
Opcap Managed Portfolio
BT EAFE Equity Index Fund
BT Equity 500 Index Fund
BT Small Cap Index Fund
Delaware Premium Aggressive Growth Fund
Delaware Devon Series
Delaware Emerging Markets Series
Delaware High Yield Series
Delaware International Series
Delaware Premium Growth & Income
Delaware REIT Series
Delaware Small Cap Value Series
Delaware Trend Series
</TABLE>
5
<PAGE>
SCHEDULE E
(REDACTED)
6
<PAGE>
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into as of this 15th day of July 1998, by
and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, a New York 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);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
<PAGE>
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, Lincoln Financial Advisors Corporation ("LFA"), 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 I. 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.
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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 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 LFA, 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.
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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 111. 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,
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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
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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 (i.e. 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.
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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 Trust's 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, in accordance 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 Trust's 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 Trust's
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
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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
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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
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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
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 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,
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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 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 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 otherwise, 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;
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as limited by and in accordance with the provisions of this
Article VIII.
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 VIII. The indemnification provisions contained in
this Article VIII shall survive any termination of this Agreement.
13
<PAGE>
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 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 this 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
14
<PAGE>
(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 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. (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:
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
C/O THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 South Clinton Street
Fort Wayne, Indiana 46802-3506
Facsimile No.: (219) 455-1773
Attn: Kelly D. Clevenger
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attention: Robert O. Sheppard, Esq.
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.
16
<PAGE>
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.
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.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By its authorized officer,
By:
Title:
MFS VARIABLE INSURANCE TRUST, ON BEHALF OF
THE
PORTFOLIOS
By its authorized officer and not individually,
By:
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By:
James R. Bordewick, Jr.
Senior Vice President and
Associate General Counsel
18
<PAGE>
As of July 15, 1998
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<S><C>
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
Lincoln Life & Annuity Flexible Flexible Premium Variable Life MFS Emerging Growth Series
Premium Variable Life MFS Total Return Series
Account M WS Utilities Series
LLANY Separate Account R for
Flexible Premium Variable Life
Insurance
</TABLE>
19
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of the
15th day of July 1998, by and among MFS Variable Insurance Trust, Lincoln Life &
Annuity Company of New York 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 May 1,
1999.
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
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:
Arnold D. Scott
Senior Executive Vice President
#29215
<PAGE>
As of May 1, 1999
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<S><C>
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTOR BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
Lincoln Life & Annuity Flexible / / Variable Universal Life I MFS Emerging Growth Series
Premium Variable Life / / Lincoln Variable Universal Life MFS Total Return Series
Account M MFS Utilities Series
LLANY Separate Account R for / / Survivorship Variable MFS Emerging Growth Series
Flexible Premium Variable Life Universal Life I MFS Total Return Series
Insurance / / Lincoln Survivorship Variable MFS Utilities Series
Universal Life
LLANY Separate Account S For / / Corporate Specialty Markets MFS Total Return Series
Flexible Previum Variable Life COLI (CVUL) MFS Utilities Series
Insurance MFS Capital
Opportunitites Series
MFS Research Series
</TABLE>
#29215
<PAGE>
AMENDMENT NO. 3 TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of the
15th day of July 1998, as amended, by and among MFS Variable Insurance Trust,
Lincoln Life & Annuity Company of New York 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 February 15,
2000.
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
By its authorized officer,
By:
Title:
MFS VARIABLE INSURANCE TRUST,
on behalf of the Portfolios By its authorized officer,
By:
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES
COMPANY
By its authorized officer,
By:
Chairman, Chief Executive Officer
<PAGE>
As of February 15, 2000
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
<S> <C> <C>
Lincoln Life & Annuity Flexible / / Variable Universal Life I MFS Emerging Growth Series
Premium Variable Life / / Lincoln Variable Universal MFS Total Return Series
Account M Life MF S Utilities Series
/ / Flexible Premium Variable
Life - Two Insureds
LLANY Separate Account R for / / Survivorship Variable MFS Emerging Growth Series
Flexible Premium Variable Life Universal Life I MFS Total Return Series
Insurance / / Lincoln Survivorship, Variable MFS Utilities Series
Universal Life
LLANY Separate Account S For / / Corporate Specialty Markets MFS Total Return Series
Flexible Premium Variable Life COLI (CVUL) MFS Utilities Series
Insurance MFS Capital
Opportunities Series
MFS Research Series
Lincoln New York Account N Delaware - Lincoln New York MFS Emerging Growth Series
for Variable Annuities Choice Plus Variable Annuity MFS Total Return Series
MFS Utilities Series
MFS Research
</TABLE>
<PAGE>
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the _____st day of _____ 1998, by and among BT
Insurance Funds Trust ("TRUST"), a Massachusetts business trust, Bankers
Trust Company ("ADVISER"), a New York banking corporation, and Lincoln Life &
Annuity Company of New York ("LIFE COMPANY"), a life insurance company
organized under the laws of the State of New York.
WHEREAS, TRUST 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)(1 5) 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 redemptiion 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 p.m. 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 p.m. 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 TRUST's 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 11. 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 the State of New
York and that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that LINCOLN FINANCIAL ADVISORS
CORPORATION, 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
4
<PAGE>
registration is available prior to any issuance or sale of the Variable
Contracts, and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
(including 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
immediately upon having a reasonable basis for believing that the Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5 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 accordance 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 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
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COMPANY shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses.
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 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.
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4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by TRUST or its designee,
except with the written permission of TRUST 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 Article V. The
TRUST will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes substantially the same
conditions and undertakings as are imposed on LIFE COMPANY by this Article V.
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
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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 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
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been declined by a vote of a majority of Variable Contract owners materially
and adversely affected by the irreconcilable material conflict.]
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 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 V1. 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
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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:
(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 required under
the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and /or warranty made by LIFE COMPANY in this
Agreement or arise out of
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or result from any other material breach of this Agreement by LIFE
COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party 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:
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(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of TRUST (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished in
writing to ADVISER 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
required 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
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qualify as a "regulated investment company" under Subchapter M of
the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by 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 VIII. TERM: TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
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(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;
(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;
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(f) At the option of TRUST if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if TRUST reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by LIFE
COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's 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;
(j) 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
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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 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
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If to LIFE COMPANY:
Lincoln Life & Annuity Company of New York
120 Madison Street
Suite 1700
Syracuse, N.Y. 13202
Attn: Robert 0. Sheppard, Esq.
With a copy to :
Lincoln National Life Insurance
1300 S. Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly P. Clevenger
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
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entering into a separate Agreement with LIFE COMPANY so that it is as if each
of the Portfolios had signed a separate Agreement with LIFE COMPANY and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
10.8 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:
19
<PAGE>
BANKERS TRUST COMPANY
By:
Name:
Title:
Vice President
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By:
Name:
Title:
20
<PAGE>
Appendix A
BT Insurance Funds Trust Portfolios
Equity 500 Index Fund
<PAGE>
Appendix B
Separate Accounts
1) Lincoln Life & Annuity Flexible Premium Variable Life Account M
2) LLANY Separate Account R for Flexible Premium Variable Life Insurance
<PAGE>
AMENDMENT NO. 3
to the
FUND PARTICIPATION AGREEMENT
AMENDMENT, dated as of May 1, 2000, to the Fund Participation Agreement
dated as of the 1st day of October, 1998 (the "Agreement"), by and between BT
Insurance Funds Trust ("Trust"), Bankers Trust Company ("Adviser"), and LINCOLN
LIFE & ANNUITY COMPANY OF NEW YORK ("Life Company").
WHEREAS, Trust, Life Company and Adviser wish to revise Appendix B to the
Agreement;
NOW, THEREFORE, in accordance with Section 10.9 of the Agreement, Trust,
Life Company and Adviser hereby agree as follows:
1. 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:
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:_____________________________________
Name:
Title:
BANKERS TRUST COMPANY
By:_____________________________________
Name:
Title:
<PAGE>
APPENDIX B
(Revised effective May 1, 2000)
SEPARATE ACCOUNTS
1) Lincoln Life & Annuity Flexible Premium Variable Life Account M
2) LLANY Separate Account R for Flexible Premium Variable Life Insurance
3) Lincoln New York Separate Account N for Variable Annuities
4) LLANY Separate Account S for Flexible Premium Variable Life Insurance
<PAGE>
FUND PARTICIPATION AGREEMENT
BETWEEN
THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
AND
LINCOLN NATIONAL BOND FUND, INC.
THIS AGREEMENT, made and entered into this 25th day of September, 1998, by
and between Lincoln National Bond Fund, Inc. a corporation organized under the
laws of Maryland (the "Fund"), and THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW
YORK, a New York insurance corporation (the "Company"), on its own behalf and on
behalf of each separate account of the Company named in Schedule 1 to this
Agreement as in effect at the time this Agreement is executed and such other
separate accounts that may be added to Schedule 1 from time to time in
accordance with the provisions of Article XI of this Agreement (each such
account referred to as the "Account"; collectively, the "Accounts").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts (collectively referred to as "Variable
Insurance Products," the owners of such products being referred to as "Product
owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the Fund filed with the Securities and Exchange Commission
(the "SEC") and the SEC has declared effective a registration statement
(referred to herein as the "Fund Registration Statement" and the prospectus
contained therein, or filed pursuant to Rule 497 under the 1933 Act, referred to
herein as the "Fund Prospectus") on Form N-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; and
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.
2
<PAGE>
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 and purchase requests from the Account (but
not from the general account of the Company), and receipt on any
Business Day by the Company as such limited agent of the Fund
prior to the time prescribed in the current Fund Prospectus
(which as of the date of execution of this Agreement is 4 p.m.,
E.S.T.) shall constitute receipt by the Fund on that same
Business Day, provided that the Fund receives notice of such
redemption or purchase request by 9:00 a.m., E.S.T. on the next
following Business Day. For purposes of this Agreement, "Business
Day" shall mean any day on which the New York Stock exchange is
open for trading.
(b) The Company shall pay for the shares on the same day
that it places an order with the Fund to purchase those Fund
shares for an Account. Payment for Fund shares will be made by
the Account or the Company in Federal Funds transmitted to the
Fund by wire to be received by 11:00 a.m., E.S.T. on the day the
Fund is properly notified of the purchase order for shares. The
Fund will confirm receipt of each trade and these confirmations
will be received by the Company via Fax or E-mail by 3:00 p.m.
E.S.T. If Federal Funds are not received on time, such funds will
be invested, and shares purchased thereby will be issued, as soon
as practicable.
(c) Payment for shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the Company
by wire on the same day the Fund is notified of the redemption
order of shares, except that the Fund reserves the right to delay
payment of redemption proceeds, but in no event may such payment
be delayed longer than the period permitted under Section 22(e)
of the 1940 Act. The Fund shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption
proceeds if securities must be redeemed; the Company alone shall
be responsible for such action.
1.5. Issuance and transfer of Fund shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Fund shares will be recorded in an appropriate ledger
for the Account or the appropriate subaccount of the Account.
1.6. The Fund shall furnish notice as soon as reasonably practicable
to the Company of any income dividends or capital gain distributions payable on
any shares. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
shares in the form of additional shares of that Fund. The Company reserves the
right, on its behalf and on behalf of the Account, to revoke this election and
to receive all such
3
<PAGE>
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
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
4
<PAGE>
Company further represents and warrants that it is an insurance company duly
organized and validly existing under applicable law and that it has legally and
validly authorized each Account as a separate account under Section 4240 of the
New York Insurance Law, and has registered or, prior to the issuance of any
Contracts, will register each Account (unless exempt therefrom) as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
separate account for its Contracts, and that it will maintain such registrations
for so long as any Contracts issued under them are outstanding.
2.2. The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall remain
registered under the 1940 Act for so long as the Fund shares are sold. The Fund
further represents and warrants that it is a corporation duly organized and in
good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). The Fund further represents and warrants that it
will make every effort to continue to qualify and to maintain such qualification
(under Subchapter M or any successor or similar provision), and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
2.4. The Fund represents and warrants that it will comply with Section
817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and at
the time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code. The
Company shall make every effort to maintain such treatment and shall notify the
Fund immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the future.
2.6. The Fund represents that the Fund's investment policies, fees and
expenses, and operations are and shall at all times remain in material
compliance with the laws of the state of Maryland, to the extent required to
perform this Agreement. The Fund, however, makes no representation as to whether
any aspect of its operations (including, but not limited to, fees and expenses
and investment policies) otherwise complies with the insurance laws or
regulations of any state. The Company alone shall be responsible for informing
the Fund of any investment restrictions imposed by state insurance law and
applicable to the Fund.
2.7. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
5
<PAGE>
3.1. The Fund shall provide the Company with as many copies of the
current Fund Prospectus as the Company may reasonably request. If requested by
the Company in lieu thereof, the Fund at its expense shall provide to the
Company a camera-ready copy, and electronic version, of the current Fund
Prospectus suitable for printing and other assistance as is reasonably necessary
in order for the Company to have a new Contracts Prospectus printed together
with the Fund Prospectus in one document. See Article V for a detailed
explanation of the responsibility for the cost of printing and distributing Fund
prospectuses.
3.2. The Fund Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Fund and the Fund shall provide
such Statement free of charge to the Company and to any outstanding or
prospective Contract owner who requests such Statement.
3.3. (a) The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and other
communications to shareholders (except proxy material), in each
case in a form suitable for printing, as determined by the
Company. The Fund shall be responsible for the costs of printing
and distributing these materials to Contract owners.
(b) The Fund at its expense shall be responsible for preparing,
printing and distributing its proxy material. The Company will
provide the appropriate Contract owner names and addresses to the
Fund for this purpose.
3.4. The Company shall furnish to the Fund, prior to its use, each
piece of sales literature or other promotional material in which the Fund is
named. No such material shall be used, except with the prior written permission
of the Fund. The Fund agrees to respond to any request for approval on a prompt
and timely basis. Failure of the Fund to respond within 10 days of the request
by the Company shall relieve the Company of the obligation to obtain the prior
written permission of the Fund.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund other
than the information or representations contained in the Fund Registration
Statement or Fund Prospectus, as such Registration Statement and Prospectus may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature or other promotional material approved by
the Fund, except with the prior written permission of the Fund. The Fund agrees
to respond to any request for permission on a prompt and timely basis. If the
Fund does not respond within 10 days of a request by the Company, then the
Company shall be relieved of the obligation to obtain the prior written
permission of the Fund.
3.6. The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information 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
6
<PAGE>
Company for distribution to Contract owners, or in sales literature or other
promotional material approved in writing by the Company, except with the prior
written permission of the Company. The Company agrees to respond to any request
for permission on a prompt and timely basis. If the Company fails to respond
within 10 days of a request by the Fund, then the Fund is relieved of the
obligation to obtain the prior written permission of the Company.
3.7. The Fund will provide to the Company at least one complete copy
of all Fund Registration Statements, Fund Prospectuses, Statements of Additional
Information, annual and semi-annual reports and other reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Fund or Fund shares, within 20 days after the filing
of such document with the SEC or other regulatory authorities.
3.8. The Company will provide to the Fund at least one complete copy
of all Contracts Registration Statements, Contracts Prospectuses, Statements of
Additional Information, Annual and Semi-annual Reports, sales literature and
other promotional materials, and all amendments or supplements to any of the
above, that relate to the Contracts, within 20 days after the filing of such
document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft
versions of any registration statements, prospectuses, statements of additional
information, reports, proxy statements, solicitations for voting instructions,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
3.10. For purposes of this Article III, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine or
other periodical, radio, television, telephone or tape recording, videotape
display, computer net site, signs or billboards, motion pictures or other public
media), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, in print or electronically,
including brochures, circulars, research reports, market letters, form letters,
seminar texts, or reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, Statements of Additional
Information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act or
the 1933 Act.
ARTICLE IV. Voting
7
<PAGE>
4.1 Subject to applicable law and the requirements of Article VII, the
Fund shall solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the requirements of Article VII, the
Company shall:
(a) vote Fund shares attributable to Contract owners in
accordance with instructions or proxies received in timely
fashion from such Contract owners;
(b) vote Fund shares attributable to Contract owners for
which no instructions have been received in the same proportion
as Fund shares of such Series for which instructions have been
received in timely fashion; and
(c) vote Fund shares held by the Company on its own behalf
or on behalf of the Account that are not attributable to Contract
owners in the same proportion as Fund shares of such Series for
which instructions have been received in timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. FEES AND EXPENSES
All expenses incident to performance by the Fund under this Agreement
(including expenses expressly assumed by the Fund pursuant to this Agreement)
shall be paid by the Fund to the extent permitted by law. Except as may
otherwise be provided in Section 1.4 and Article VII of this Agreement, the
Company shall not bear any of the expenses for the cost of registration and
qualification of the Fund shares under Federal and any state securities law,
preparation and filing of the Fund Prospectus and Fund Registration Statement,
the preparation of all statements and notices required by any Federal or state
securities law, all taxes on the issuance or transfer of Fund shares, and any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act.
The Fund is responsible for the cost of printing and distributing Fund
Prospectuses and SAIs to existing Contract owners. (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 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.
8
<PAGE>
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-1 to finance distribution expenses.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Company agrees to report to the Board of Directors of the
Fund (the "Board") any potential or existing conflicts between the interests of
Product Owners of all separate accounts investing in the Fund, and to assist the
Board in carrying out its responsibilities under Section 6e-3(T) of the 1940
Act, by providing all information reasonably necessary for the Board to consider
any issues raised, including information as to a decision to disregard voting
instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested Board
Members, determines that a material irreconcilable conflict exists, the Board
shall give prompt notice to all Participating Insurance Companies.
(a) If a majority of the whole Board, after notice to the
Company and a
9
<PAGE>
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 Contract owners and, as
appropriate, segregating the assets of any particular group
(i.e., variable annuity Contract owners, variable life insurance
policy owners, or variable Contract owners of one or more
Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the
option of making such a change; and (ii) establishing a new
registered mutual fund or management separate account; or (iii)
taking such other action as is necessary to remedy or eliminate
the material irreconcilable conflict.
(b) If the Company disagrees with the Board's determination,
the Company shall file a written protest with the Board,
reserving its right to dispute the determination as between just
the Company and the Fund and to seek reimbursement from the Fund
for the reasonable costs and expenses of resolving the conflict .
After reserving that right the Company, although disagreeing with
the Board that it (the Company) was responsible for the conflict,
shall take the necessary steps, under protest, to remedy the
conflict, substantially in accordance with paragraph (a) just
above, for the protection of Contract owners.
(c) As between the Company and the Fund, if within 45 days
after the Board's determination the Company elects to press the
dispute, it shall so notify the Board in writing. The parties
shall then attempt to resolve the matter amicably through
negotiation by individuals from each party who are authorized to
settle the matter. If the matter has not been amicably resolved
within 60 days from the date of the Company's notice of its
intent to press the dispute, then before either party shall
undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance
with the CPR Rules for Non-Administered Arbitration of Business
Disputes, by a sole arbitrator; PROVIDED, HOWEVER, that if one
party has requested the other party to seek an amicable
resolution and the other party has failed to participate, the
requesting party may initiate arbitration before expiration of
the 60-day period set out just above.
If within 45 days of the commencement of the process to
select an arbitrator the parties cannot agree upon the
arbitrator, then he or she will be selected from the CPR Panels
of Neutrals. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of
arbitration shall be Fort Wayne, Indiana. The Arbitrator is not
empowered to award damages in excess of compensatory damages.
10
<PAGE>
(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 Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company shall withdraw (without charge or penalty) the Account's investment in
the Fund, if the Fund so elects.
7.4. For purposes of this Article, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable conflict. However, in no event will the
Fund be required to establish a new funding medium for any variable contract,
nor will the Company be required to establish a new funding medium for any
Contract, if in either case an offer to do so has been declined by a vote of a
majority of affected Contract owners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Fund and each person who controls or is associated with
the Fund (other than another Participating Insurance Company) within the meaning
of such terms under the federal securities laws and any officer, trustee,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid with the prior written consent of the Company in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which
11
<PAGE>
they were made; provided that this obligation to indemnify shall
not apply if such statement or omission or such alleged statement
or alleged omission was made in reliance upon and in conformity
with information furnished in writing to the Company by the Fund
(or a person authorized in writing to do so on behalf of the
Fund) for use in the Contracts Registration Statement, Contracts
Prospectus or in 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
12
<PAGE>
foregoing, against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid with the prior written consent
of the Fund in settlement of, any action, suit or proceeding or any claim
asserted), to which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities:
(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
13
<PAGE>
Article VI of this Agreement; and (ii) to provide the Company
with accurate information sufficient for it to calculate its
accumulation and/or annuity unit values in timely fashion as
required by law and by the Contracts Prospectuses); or
(e) arise out of any material breach by the Fund of this
Agreement.
This indemnification will be in addition to any liability which the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("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.
14
<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 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
15
<PAGE>
the Fund; or
(h) at the option of the Company if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of
the Code, or under any successor or similar provision, or if the
Company reasonably believes, based on an opinion of its counsel,
that the Fund may fail to so qualify; or
(i) at the option of the Company if the Fund fails to meet
the diversification requirements specified in Section 817(h) of
the Code and any regulations thereunder; or
(j) at the option of the Fund if the Contracts cease to
qualify as annuity 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
16
<PAGE>
required by law or regulation.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, the Fund will, at the
option of the Company, continue to make available additional Fund
shares for so long after the termination of this Agreement as the
Company desires, pursuant to the terms and conditions of this
Agreement as provided in paragraph (b) below, for all Contracts
in effect on 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
17
<PAGE>
party(ies) may from time to time specify in writing to the other party.
If to the Fund:
Lincoln National Bond Fund, Inc.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
If to the Company:
Lincoln Life and Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attn: Troy Panning
ARTICLE XIII. MISCELLANEOUS
13.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
13.4. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
13.5. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
ARTICLE XIV. PRIOR AGREEMENTS
This Amended and Restated Fund Participation Agreement, as of its
effective date, hereby
18
<PAGE>
supersedes any and all prior agreements to purchase shares between Lincoln Life
and Annuity Company of New York and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN NATIONAL BOND FUND, INC.
Signature:
------------------------------------------------------------
Name: Kelly D. Clevenger
-----------------------------------------------------------------
Title: President
----------------------------------------------------------------
LINCOLN LIFE ANNUITY COMPANY OF NEW YORK (Company)
Signature:
------------------------------------------------------------
Name: Phillip Holstein
-----------------------------------------------------------------
#78396 Title: President & CEO, Lincoln Life & Annuity Company of New York
----------------------------------------------------------------
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of________________
LLANY ACCOUNT Q VARIABLE ANNUITY
19
<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 September 25, 1998
GROUP MULTI FUND
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of October 15, 1999
LLANY ACCOUNT Q VARIABLE ANNUITY
LLANY SEPARATE ACCOUNT R
<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
GROUP MULTI FUND
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE -- SVUL
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL BOND FUND, INC.
Signature:
--------------------------------------------------
Name: Kelly D. Clevenger
-------------------------------------------------------
Title: President
------------------------------------------------------
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Signature
---------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of February 15, 2000
LINCOLN NEW YORK ACCOUNT Q VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R
LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES
<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 February 15, 2000
GROUP MULTI FUND
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - SVUL
DELAWARE-LINCOLN NEW YORK CHOICE PLUS VARIABLE ANNUITY
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.
Date: ____________ LINCOLN NATIONAL BOND FUND, INC.
By:
----------------------------------------------------
Kelly D. Clevenger
President
Date: _____________ LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
----------------------------------------------------
Troy D. Panning
CFO/2nd Vice President
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Bond Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of May 1, 2000
LINCOLN LIFE & ANNUITY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN NEW YORK SEPARATE ACCOUNT N FOR VARIABLE ANNUITIES
LLANY ACCOUNT Q FOR VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LLANY SEPARATE ACCOUNT S FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<PAGE>
AMENDMENT TO
SCHEDULE 2
Lincoln National Bond Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
GROUP MULTI FUND
LINCOLN SVUL
LINCOLN SVUL II
DELAWARE-LINCOLN NEW YORK CHOICE PLUS VARIABLE ANNUITY
LINCOLN CVUL
LINCOLN CVUL SERIES III
LINCOLN VUL
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.
Signature:
--------------------------------------------------
Kelly D. Clevenger
President
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Signature:
--------------------------------------------------
Troy D. Panning
CFO/2nd Vice President
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated November 2,
1998, by and among Lincoln Life & Annuity Company of New York and Lincoln
National 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 4, Article 2.1 is replaced in its entirety with the following:
"The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the
issuance thereof (unless exempt therefrom), (b) that the Contracts will
be issued in compliance in all material respects with all applicable
Federal and state laws and (c) that the Company will require of every
person distributing the Contracts that the Contracts be offered and sold
in compliance in all material respects with all applicable Federal and
state laws. The Company further represents and warrants that it is an
insurance company duly organized and validly existing under applicable
law and that it has legally and validly authorized each Account as a
separate account under Section 4240 of the New York Insurance Law, and
has registered or, prior to the issuance of any Contracts, will register
each Account (unless exempt therefrom) as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a separate
account for its Contracts, and that it will maintain such registrations
for so long as any Contracts issued under them are outstanding."
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to the
Fund Participation Agreement to be executed in its name and behalf by its duly
authorized officer on the date specified below.
LINCOLN NATIONAL BOND FUND, INC.
Date: By:
Name: Kelly D. Clevenger
---------------------
Title: President
---------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By:
Name: Joanne B. Collins
------------------
Title: President
------------------
<PAGE>
FUND PARTICIPATION AGREEMENT
BETWEEN
THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
AND
LINCOLN NATIONAL MONEY MARKET FUND, INC.
THIS AGREEMENT, made and entered into this day of , 1998, by
and between Lincoln National Money Market Fund, Inc. a corporation organized
under the laws of Maryland (the "Fund"), and LINCOLN LIFE AND ANNUITY COMPANY OF
NEW YORK, a New York insurance corporation (the "Company"), on its own behalf
and on behalf of each separate account of the Company named in Schedule 1 to
this Agreement as in effect at the time this Agreement is executed and such
other separate accounts that may be added to Schedule 1 from time to time in
accordance with the provisions of Article XI of this Agreement (each such
account referred to as the "Account"; collectively, the "Accounts").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
policies and variable annuity contracts (collectively referred to as "Variable
Insurance Products," the owners of such products being referred to as "Product
owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the Fund filed with the Securities and Exchange Commission (the
"SEC") and the SEC has declared effective a registration statement (referred to
herein as the "Fund Registration Statement" and the prospectus contained
therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein as
the "Fund Prospectus") on Form N-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 E-mail by 3:00 p.m.
E.S.T. If Federal Funds are not received on time, such funds will
be invested, and shares purchased thereby will be issued, as soon
as practicable.
(c) Payment for shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the Company
by wire on the same day the Fund is notified of the redemption
order of shares, except that the Fund reserves the right to delay
payment of redemption proceeds, but in no event may such payment
be delayed longer than the period permitted under Section 22(e)
of the 1940 Act. The Fund shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption
proceeds if securities must be redeemed; the Company alone shall
be responsible for such action.
1.5. Issuance and transfer of Fund shares will be by book entry only. Stock
certificates will not be issued to the Company or the Account. Purchase and
redemption orders for Fund shares will be recorded in an appropriate ledger for
the Account or the appropriate subaccount of the Account.
1.6. The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income dividends or capital gain distributions payable on any
shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any shares in
the form of additional shares of that Fund. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends in cash. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.7. The Fund shall use its best efforts to make the net asset value per
share available to the Company by 7:00 p.m., E.S.T. each Business Day, and in
any event, as soon as reasonably practicable after the net asset value per share
is calculated, and shall calculate such net asset value in accordance with the
then currently effective Fund Prospectus. The Fund shall not be liable for
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<PAGE>
any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company to the
Fund.
1.8. (a) The Company may withdraw the Account's investment in the
Fund only: (i) as necessary to facilitate Contract owner
requests; (ii) upon a determination by a majority of the Fund
Board, or a majority of disinterested Fund Board members, that an
irreconcilable material conflict exists among the interests of
(x) any Product Owners or (y) the interests of the Participating
Insurance Companies investing in the Fund; (iii) upon requisite
vote of the Contract owners having an interest in the Fund to
substitute the shares of another investment company for shares in
accordance with the terms of the Contracts; (iv) as required by
state and/or federal laws or regulations or judicial or other
legal precedent of general application; or (v) at the Company's
sole discretion, pursuant to an order of the SEC under Section
26(b) of the 1940 Act.
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that the Fund
shares may be sold to other insurance companies (subject to
Section 1.9 hereof) and the cash value of the Contracts may be
invested in other investment companies.
(c) The Company shall not, without prior notice to the Fund
(unless otherwise required by applicable law), take any action to
operate the Accounts as management investment companies under the
1940 Act.
1.9. The Fund agrees that Fund shares will be sold only to Participating
Insurance Companies and their separate accounts. The Fund will not sell Fund
shares to any insurance company or separate account unless an agreement
complying with Article VII of this Agreement is in effect to govern such sales.
No Fund shares will be sold to the general public.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants (a) that the Contracts are
registered under the 1933 Act or will be so registered before the issuance
thereof, (b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws and (c) that the Company
will require of every person distributing the Contracts that the Contracts be
offered and sold in compliance in all material respects with all applicable
Federal and state laws. The Company further represents and warrants that it is
an insurance company duly organized and validly existing under applicable law
and that it has legally and validly authorized each Account as a separate
account under Section 4240 of the New York Insurance Law and has registered or,
prior to the issuance of any Contracts, will register each Account (unless
exempt therefrom) as a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a separate account for its Contracts, and that it
will maintain such registrations for so long as any Contracts issued under them
are outstanding.
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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. 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.
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Fund shall provide the Company with as many copies of the current
Fund Prospectus as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund at its expense shall provide to the Company a
camera-ready copy, and electronic version, of the current Fund Prospectus
suitable for printing and other assistance as is reasonably necessary in order
for the Company to have a new Contracts Prospectus printed together with the
Fund Prospectus in one document. See Article V for a detailed explanation of the
responsibility for the cost of printing and distributing Fund prospectuses.
3.2. The Fund Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Fund and the Fund shall provide
such Statement free of charge to the Company and to any outstanding or
prospective Contract owner who requests such Statement.
3.3. (a) The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and other
communications to shareholders (except proxy material), in each case
in a form suitable for printing, as determined by the Company. The
Fund shall be responsible for the costs of printing and distributing
these materials to Contract owners.
(b) The Fund at its expense shall be responsible for preparing,
printing and distributing its proxy material. The Company will provide
the appropriate Contract owner names and addresses to the Fund for
this purpose.
3.4. The Company shall furnish to the Fund, prior to its use, each piece of
sales literature or other promotional material in which the Fund is named. No
such material shall be used, except with the prior written permission of the
Fund. The Fund agrees to respond to any request for approval on a prompt and
timely basis. Failure of the Fund to respond within 10 days of the request by
the Company shall relieve the Company of the obligation to obtain the prior
written permission of the Fund.
3.5. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund other than the
information or representations contained in the Fund Registration Statement or
Fund Prospectus, as such Registration Statement and Prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund,
except with the prior written permission of the Fund. The Fund agrees to respond
to any request for permission on a prompt and timely basis. If the Fund does not
respond within 10 days of a request by the Company, then the Company shall be
relieved of the obligation to obtain the prior written permission of the Fund.
3.6. The Fund shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account or the Contracts
other than the information
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or representations contained in the Contracts Registration Statement or
Contracts Prospectus, as such Registration Statement and Prospectus may be
amended or supplemented from time to time, or in published reports of the
Account which are in the public domain or approved in writing by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved in writing by the Company, except with the prior written
permission of the Company. The Company agrees to respond to any request for
permission on a prompt and timely basis. If the Company fails to respond within
10 days of a request by the Fund, then the Fund is relieved of the obligation to
obtain the prior written permission of the Company.
3.7. The Fund will provide to the Company at least one complete copy of all
Fund Registration Statements, Fund Prospectuses, Statements of Additional
Information, annual and semi-annual reports and other reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Fund or Fund shares, within 20 days after the filing
of such document with the SEC or other regulatory authorities.
3.8. The Company will provide to the Fund at least one complete copy of all
Contracts Registration Statements, Contracts Prospectuses, Statements of
Additional Information, Annual and Semi-annual Reports, sales literature and
other promotional materials, and all amendments or supplements to any of the
above, that relate to the Contracts, within 20 days after the filing of such
document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft versions of
any registration statements, prospectuses, statements of additional information,
reports, proxy statements, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
3.10. For purposes of this Article III, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine or
other periodical, radio, television, telephone or tape recording, videotape
display, computer net site, signs or billboards, motion pictures or other public
media), sales literature (I.E., any written communication distributed or made
generally available to customers or the public, in print or electronically,
including brochures, circulars, research reports, market letters, form letters,
seminar texts, or reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, Statements of Additional
Information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under NASD rules, the 1940 Act or
the 1933 Act.
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ARTICLE IV. Voting
4.1 Subject to applicable law and the requirements of Article VII, the Fund
shall solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the requirements of Article VII, the
Company shall:
(a) vote Fund shares attributable to Contract owners in
accordance with instructions or proxies received in timely
fashion from such Contract owners;
(b) vote Fund shares attributable to Contract owners for
which no instructions have been received in the same proportion
as Fund shares of such Series for which instructions have been
received in timely fashion; and
(c) vote Fund shares held by the Company on its own behalf
or on behalf of the Account that are not attributable to Contract
owners in the same proportion as Fund shares of such Series for
which instructions have been received in timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. FEES AND EXPENSES
All expenses incident to performance by the Fund under this Agreement
(including expenses expressly assumed by the Fund pursuant to this Agreement)
shall be paid by the Fund to the extent permitted by law. Except as may
otherwise be provided in Section 1.4 and Article VII of this Agreement, the
Company shall not bear any of the expenses for the cost of registration and
qualification of the Fund shares under Federal and any state securities law,
preparation and filing of the Fund Prospectus and Fund Registration Statement,
the preparation of all statements and notices required by any Federal or state
securities law, all taxes on the issuance or transfer of Fund shares, and any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act.
The Fund is responsible for the cost of printing and distributing Fund
Prospectuses and SAIs to existing Contractowners. (If for this purpose the
Company decided to print the Fund Prospectuses and SAIs in a booklet or separate
booklets containing disclosure for the Contracts and for underlying funds other
than those of the Fund, then the Fund shall pay only its proportionate share of
the total cost to distribute the booklet to existing Contractowners.)
The Company is responsible for the cost of printing and distributing Fund
prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for
existing Contractowners. The Company shall have the final decision on choice of
printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
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6.1. The Fund undertakes to comply with Subchapter M and Section 817(h) of
the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration Statements under
the 1933 Act and the Account's Registration Statement under the 1940 Act from
time to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company shall
register and qualify the Contracts for sale to the extent required by applicable
securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under the 1933
Act and the 1940 Act from time to time as required in order to effect for so
long as Fund shares are sold the continuous offering of Fund shares as described
in the then currently effective Fund Prospectus. The Fund shall register and
qualify Fund shares for sale to the extent required by applicable securities
laws of the various states.
6.4. The Company shall be responsible for assuring that any prospectus
offering a Contract that is a life insurance contract where it is reasonably
possible that such Contract would be deemed a "modified endowment contract," as
that term is defined in Section 7702A of the Code, will describe the
circumstances under which a Contract could be treated as a modified endowment
contract (or policy).
6.5. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of Directors, a
majority of whom are not interested persons of the Fund, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Company agrees to report to the Board of Directors of the Fund
(the "Board") any potential or existing conflicts between the interests of
Product Owners of all separate accounts investing in the Fund, and to assist the
Board in carrying out its responsibilities under Section 6e-3(T) of the 1940
Act, by providing all information reasonably necessary for the Board to consider
any issues raised, including information as to a decision to disregard voting
instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested Board
Members, determines that a material irreconcilable conflict exists, the Board
shall give prompt notice to all Participating Insurance Companies.
(a) If a majority of the whole Board, after notice to the
Company and a reasonable opportunity for the Company to appear
before it and present its case, determines that the Company is
responsible for said conflict, and if the Company agrees with
that determination, the Company shall, at its sole cost and
expense, take
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<PAGE>
whatever steps are necessary to remedy the material
irreconcilable conflict. These steps could include: (i)
withdrawing the assets allocable to some or all of the affected
Accounts from the Fund and reinvesting such assets in a different
investment vehicle, or submitting the question of whether such
segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of
any particular group (i.e., variable annuity Contract owners,
variable life insurance policy owners, or variable Contract
owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (ii)
establishing a new registered mutual fund or management separate
account; or (iii) taking such other action as is necessary to
remedy or eliminate the material irreconcilable conflict.
(b) If the Company disagrees with the Board's determination,
the Company shall file a written protest with the Board,
reserving its right to dispute the determination as between just
the Company and the Fund and to seek reimbursement from the Fund
for the reasonable costs and expenses of resolving the conflict .
After reserving that right the Company, although disagreeing with
the Board that it (the Company) was responsible for the conflict,
shall take the necessary steps, under protest, to remedy the
conflict, substantially in accordance with paragraph (a) just
above, for the protection of Contract owners.
(c) As between the Company and the Fund, if within 45 days
after the Board's determination the Company elects to press the
dispute, it shall so notify the Board in writing. The parties
shall then attempt to resolve the matter amicably through
negotiation by individuals from each party who are authorized to
settle the matter. If the matter has not been amicably resolved
within 60 days from the date of the Company's notice of its
intent to press the dispute, then before either party shall
undertake to litigate the dispute it shall be submitted to
non-binding arbitration conducted expeditiously in accordance
with the CPR Rules for Non-Administered Arbitration of Business
Disputes, by a sole arbitrator; PROVIDED, HOWEVER, that if one
party has requested the other party to seek an amicable
resolution and the other party has failed to participate, the
requesting party may initiate arbitration before expiration of
the 60-day period set out just above.
If within 45 days of the commencement of the process to
select an arbitrator the parties cannot agree upon the
arbitrator, then he or she will be selected from the CPR Panels
of Neutrals. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of
arbitration shall be Fort Wayne, Indiana. The Arbitrator is not
empowered to award damages in excess of compensatory damages.
(d) If the Board shall determine that the Fund or another
was responsible for the conflict, then the Board shall notify the
Company immediately of that determination. The Fund shall assure
the Company that it (the Fund) or that
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<PAGE>
other Participating Insurance Company as applicable, shall, at
its sole cost and expense, take whatever steps are necessary to
eliminate the conflict.
(e) Nothing in Sections 7.2(b) or 7.2(c) shall constitute a
waiver of any right of action which the Company may have against
other Participating Insurance Companies for reimbursement of all
or part of the costs and expenses of resolving the conflict.
7.3. If a material irreconcilable conflict arises because of the Company's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
shall withdraw (without charge or penalty) the Account's investment in the Fund,
if the Fund so elects.
7.4. For purposes of this Article, a majority of the disinterested members
of the Board shall determine whether or not any proposed action adequately
remedies any irreconcilable conflict. However, in no event will the Fund be
required to establish a new funding medium for any variable contract, nor will
the Company be required to establish a new funding medium for any Contract, if
in either case an offer to do so has been declined by a vote of a majority of
affected Contract owners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless the Fund and each person who controls or is associated with the
Fund (other than another Participating Insurance Company) within the meaning of
such terms under the federal securities laws and any officer, trustee, director,
employee or agent of the foregoing, against any and all losses, claims, damages
or liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid with the
prior written consent of the Company in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if
such statement or omission or such alleged statement or alleged
omission was made in reliance upon and in conformity with
information furnished in writing to the Company by the Fund (or a
person authorized in writing to do so on behalf of the Fund) for
use in the Contracts Registration Statement, Contracts Prospectus
or in
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the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact by or on behalf of
the Company (other than statements or representations contained
in the Fund Registration Statement, Fund Prospectus or sales
literature or other promotional material of the Fund not supplied
by the Company or persons under its control) or wrongful conduct
of the Company or persons under its control with respect to the
sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other
promotional material of the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the Company;
or
(d) arise as a result of any failure by the Company to
provide the services and furnish the materials or to make any
payments under the terms of this Agreement; or
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Fund shares on a timely
basis in accordance with the procedures set forth in Article I;
or
(f) arise as a result of the Company's providing the Fund
with inaccurate information, which causes the Fund to calculate
its Net Asset Values incorrectly.
This indemnification will be in addition to any liability which the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.2. INDEMNIFICATION BY THE FUND. The Fund agrees to indemnify and hold
harmless the Company and each person who controls or is associated with the
Company within the meaning of such terms under the federal securities laws and
any officer, director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid with the prior written consent of the Fund in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
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(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Fund Registration Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature or other promotional
material of the Fund, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made; provided that this obligation to indemnify shall
not apply if such statement or omission or alleged statement or
alleged omission was made in reliance upon and in conformity with
information furnished in writing by the Company to the Fund for
use in the Fund Registration Statement, Fund Prospectus (or any
amendment or supplement thereto) or sales literature for the Fund
or otherwise for use in connection with the sale of the Contracts
or Fund shares; or
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact made by the Fund
(other than statements or representations contained in the Fund
Registration Statement, Fund Prospectus or sales literature or
other promotional material of the Fund not supplied by the
Distributor or the Fund or persons under their control) or
wrongful conduct of the Fund or persons under its control with
respect to the sale or distribution of the Contracts or Fund
shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contract's
Registration Statement, Contracts Prospectus or sales literature
or other promotional material for the Contracts (or any amendment
or supplement thereto), or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances in which they were made, if such statement
or omission was made in reliance upon information furnished in
writing by the Fund to the Company (or a person authorized in
writing to do so on behalf of the Fund); or
(d) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this
Agreement (including, but not by way of limitation, a failure,
whether unintentional or in good faith or otherwise: (i) to
comply with the diversification requirements specified in
Sections 2.4 and 6.1 in Article VI of this Agreement; and (ii) to
provide the Company with accurate information sufficient for it
to calculate its accumulation and/or annuity unit values in
timely fashion as required by law and by the Contracts
Prospectuses); or
(e) arise out of any material breach by the Fund of this
Agreement.
This indemnification will be in addition to any liability which the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. INDEMNIFICATION PROCEDURES. After receipt by a party
entitled to indemnification
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("indemnified party") under this Article VIII of notice of the
commencement of any action, if a claim in respect thereof is to
be made by the indemnified party against any person obligated to
provide indemnification under this Article VIII ("indemnifying
party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify
the indemnifying party will not relieve it from any liability
under this Article VIII, except to the extent that the omission
results in a failure of actual notice to the indemnifying party
and such indemnifying party is damaged solely as a result of the
failure to give such notice. The indemnifying party, upon the
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the state of Maryland,
without giving effect to the principles of conflicts of law.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant,
and the terms hereof shall be limited, interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon 120 days advance written
notice to the other parties; or
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(b) at the option of the Company if shares of the Fund are
not available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of the election to
terminate for such cause shall be furnished by the Company.
Termination shall be effective ten days after the giving of
notice by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to
the sale of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Fund shares;
(d) at the option of the Company upon institution of formal
proceedings against the Fund, the investment advisor or any sub-
investment advisor, by the NASD, the SEC, or any state securities
or insurance commission or any other regulatory body; or
(e) upon requisite vote of the Contract owners having an
interest in the Fund (unless otherwise required by applicable
law) and written approval of the Company, to substitute the
shares of another investment company for the corresponding shares
of the Fund in accordance with the terms of the Contracts; or
(f) at the option of the Fund in the event any of the
Contracts are not registered, issued or sold in accordance with
applicable Federal and/or state law; or
(g) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of
disinterested Fund Board members, that an irreconcilable material
conflict exists among the interests of (i) any Product owners or
(ii) the interests of the Participating Insurance Companies
investing in the Fund; or
(h) at the option of the Company if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of
the Code, or under any successor or similar provision, or if the
Company reasonably believes, based on an opinion of its counsel,
that the Fund may fail to so qualify; or
(i) at the option of the Company if the Fund fails to meet
the diversification requirements specified in Section 817(h) of
the Code and any regulations thereunder; or
(j) at the option of the Fund if the Contracts cease to
qualify as annuity
15
<PAGE>
contracts or life insurance policies, as applicable, under the
Code, or if the Fund reasonably believes that the Contracts may
fail to so qualify; or
(k) at the option of the Fund if the Fund shall determine,
in its sole judgment exercised in good faith, that either (1) the
Company shall have suffered a material adverse change in its
business or financial condition; or (2) the Company shall have
been the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations
of the Fund; or
(l) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that:
(1) the Fund shall have suffered a material adverse change in its
business or financial condition; or (2) the Fund shall have been
the subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of the
Company; or
(m) automatically upon the assignment of this Agreement
(including, without limitation, any transfer of the Contracts or
the Accounts to another insurance company pursuant to an
assumption reinsurance agreement) unless the non-assigning party
consents thereto or unless this Agreement is assigned to an
affiliate of the Company or the Fund, as the case may be.
10.2. NOTICE REQUIREMENT. Except as otherwise provided in Section 10.1, no
termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to the other party of its
intent to terminate, which notice shall set forth the basis for such
termination. Furthermore:
(a) In the event that any termination is based upon the
provisions of Article VII or the provisions of Section 10.1(a) of
this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, such
prior written notice shall be given at least ninety (90) days
before the effective date of termination, or sooner if required
by law or regulation.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, the Fund will, at the
option of the Company, continue to make available additional Fund
shares for so long after the termination of this Agreement as the
Company desires, pursuant to the terms and conditions of this
Agreement as provided in paragraph (b) below, for all Contracts
in effect on
16
<PAGE>
the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without
limitation, if the Company so elects to make additional Fund
shares available, the owners of the Existing Contracts or the
Company, whichever shall have legal authority to do so, shall be
permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making
of additional purchase payments under the Existing Contracts.
(b) If Fund shares continue to be made available after such
termination, the provisions of this Agreement shall remain in
effect except for Section 10.1(a) and thereafter either the Fund
or the Company may terminate the Agreement, as so continued
pursuant to this Section 10.3, upon prior written notice to the
other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Fund, need not be
for more than six months.
(c) The parties agree that this Section 10.3 shall not apply
to any termination made pursuant to Article VII, and the effect
of such Article VII termination shall be governed by the
provisions set forth or incorporated by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts and to add
new classes of variable annuity contracts and variable life insurance policies
to be issued by the Company through new or existing Separate Accounts investing
in the Fund. The provisions of this Agreement shall be equally applicable to
each such separate account and each such class of contracts or policies, unless
the context otherwise requires. Any such amendment must be signed by the parties
and must bear an effective date for that amendment.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party(ies) at the address of such party(ies) set forth below
or at such other address as such party(ies) may from time to time specify in
writing to the other party.
If to the Fund:
Lincoln National Money Market Fund, Inc.
1300 South Clinton Street
Fort Wayne, Indiana 46802
Attn: Kelly D. Clevenger
17
<PAGE>
If to the Company:
Lincoln Life and Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
Attn: Troy Panning
ARTICLE XIII. MISCELLANEOUS
13.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
13.4. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
13.5. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms.
ARTICLE XIV. PRIOR AGREEMENTS
This Fund Participation Agreement, as of its effective date, hereby
supersedes any and all prior agreements to purchase shares between Lincoln Life
and Annuity Company of New York and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
LINCOLN NATIONAL MONEY MARKET FUND, INC.
18
<PAGE>
Signature:
-----------------------------------------------
Name: Kelly D. Clevenger
---------------------------------------------------
Title: President
--------------------------------------------------
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
Signature:
-----------------------------------------------
Name: Phillip Holstein
---------------------------------------------------
Title: President, Treasurer & Director, Lincoln Life and
Annuity Company of New York
--------------------------------------------------
#78509
SCHEDULE 1
Lincoln National Money Market Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of
------------
LLANY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LLANY ACCOUNT Q VARIABLE ANNUITY
LLANY ACCOUNT R FOR VARIABLE LIFE
19
<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
-------------
VUL I
GROUP MULTI FUND
SVUL I
<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
VUL I
GROUP MULTI FUND
SVUL
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.
Signature:
-------------------------------------------------
Name: Kelly D. Clevenger
-------------------------------------------------------
Title: President
------------------------------------------------------
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Sgnature
---------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Money Market Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of February 15, 2000
LINCOLN LIFE & ANNUITY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN NEW YORK ACCOUNT Q VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R
LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES
<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 February 15, 2000
VUL I
GROUP MULTI FUND
SVUL
DELAWARE-LINCOLN NEW YORK CHOICE PLUS VARIABLE ANNUITY
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.
Date: ____________ LINCOLN NATIONAL MONEY MARKET FUND, INC.
By:
---------------------------------
Kelly D. Clevenger
President
Date: _____________ LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By:
---------------------------------
Troy D. Panning
CFO/2nd Vice President
<PAGE>
AMENDMENT TO
SCHEDULE 1
Lincoln National Money Market Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of May 1, 2000
LINCOLN LIFE & ANNUITY FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN NEW YORK SEPARATE ACCOUNT N FOR VARIABLE ANNUITIES
LLANY ACCOUNT Q FOR VARIABLE ANNUITIES
LLANY SEPARATE ACCOUNT R FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LLANY SEPARATE ACCOUNT S FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<PAGE>
AMENDMENT TO
SCHEDULE 2
Lincoln National Money Market Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
VUL I
GROUP MULTI FUND
LINCOLN SVUL
LINCOLN SVUL II
DELAWARE-LINCOLN NEW YORK CHOICEPLUS VARIABLE ANNUITY
LINCOLN VUL
LINCOLN CVUL
LINCOLN CVUL SERIES III
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL MONEY MARKET FUND, INC.
Signature:
--------------------------------
Kelly D. Clevenger
President
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Signature:
--------------------------------
Troy D. Panning
CFO/2nd Vice President
<PAGE>
The Fund Participation Agreement (the "Agreement"), dated November 2, 1998,
by and among Lincoln Life & Annuity Company of New York and Lincoln National
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 4, Article 2.1 is replaced in its entirety with the following:
"The Company represents and warrants (a) that the Contracts are registered
under the 1933 Act or will be so registered before the issuance thereof
(unless exempt therefrom), (b) that the Contracts will be issued in
compliance in all material respects with all applicable Federal and state
laws and (c) that the Company will require of every person distributing the
Contracts that the Contracts be offered and sold in compliance in all
material respects with all applicable Federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing under applicable law and that it has legally
and validly authorized each Account as a separate account under Section
4240 of the New York Insurance Law, and has registered or, prior to the
issuance of any Contracts, will register each Account (unless exempt
therefrom) as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a separate account for its Contracts, and that it
will maintain such registrations for so long as any Contracts issued under
them are outstanding."
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to the
Fund Participation Agreement to be executed in its name and behalf by its duly
authorized officer on the date specified below.
LINCOLN NATIONAL MONEY MARKET
FUND, INC.
Date: By:
Name: Kelly D. Clevenger
------------------------
Title: President
------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By:
Name: Joanne B. Collins
------------------------
Title: President
------------------------
<PAGE>
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.
<TABLE>
<S><C>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National Management Corporation |
| | 100% - Pennsylvania - Management Company |
|
| | City Financial Partners Limited |
|--| 100% - England/Wales - Distribution of |
| | life assurance & pension products |
|
|--| The Kyoei Lincoln Reinsurance Services Co., Ltd. |
| | 90% - Japan |
|
|--| 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. |
|--| (formerly Financial Services Department, Inc.)|
| | 100% - Indiana - Insurance Agency |
|
| | Financial Investments, Inc. |
|--| (formerly Insurance Alternatives, Inc.) |
| | 100% - Indiana - Insurance Agency |
|
|--| The Financial Resources Department, Inc. |
| | 100% - Michigan - Insurance Agency |
|
|--| Investment Alternatives, Inc. |
| | 100% - Pennsylvania - Insurance Agency |
|
|--| The Investment Center, Inc. |
| | 100% - Tennessee - Insurance Agency |
|
|--| The Investment Group, Inc. |
| 100% - New Jersey - Insurance Agency |
-1-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
| | Lincoln National Financial Institutions Group, Inc. |
|--| (formerly 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 Improved Housing, Inc. |
| | 100% - Indiana |
|
|--| Lincoln National (China) Inc. |
| | 100% - Indiana - China Representative Office |
|
|--| Lincoln National Intermediaries, Inc. |
| 100% - Indiana - Reinsurance Intermediary |
-2-
<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 - Mutual Fund Distributor & Broker/Dealer |
| | 1% Equity - Delaware Capital Management, Inc. |
| | 1% Equity - Delaware Distributors, Inc. |
|
|--| Founders Holding, 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 |
-3-
<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. |
| |
| | | Delaware Capital Management, Inc. |
| |--| (formerly 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. |
| |--| (formerly Delaware Investment & Retirement Services, Inc.) |
| | 100% - Delaware - Registered Transfer Agent & Investment Advisor |
|
|--| Lynch & Mayer, Inc. |
| | 100% - Indiana - Investment Advisor |
| |
| |--| Lynch & Mayer Securities Corp. |
| | 100% - Delaware - Securities Broker |
|
| | Vantage Global Advisors, Inc. |
|--| (formerly Modern Portfolio Theory Associates, Inc.) |
| 100% - Delaware - Investment Advisor |
-4-
<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 Advisor |
|
|--| The Lincoln National Life Insurance Company |
| 100% - Indiana |
|
|--| AnnuityNet, Inc. |
| | 100% Indiana - Distribution of annuity products |
| |
| |--| AnnuityNet Insurance Agency, Inc. |
| | | 100% - Indiana - Insurance Agency |
| |
| |--| AnnuityNet Insurance Agency of Massachusetts, Inc. |
| | | 100% - Massachusetts - Insurance Agency |
| |
| |--| AnnuityNet of Alabama, Inc. |
| | | 100% - Alabama - Insurance Agency |
| |
| |--| AnnuityNet of New Mexico, Inc. |
| | 100% - New Mexico - Insurance Agency |
|
|--| Lincoln National Insurance Associates, Inc. |
| | (formerly 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. |
| | | (formerly CIGNA Associates of Massachusetts, Inc.) |
| | | 100% - Massachusetts - Insurance Agency |
| |
| |--| Lincoln National Insurance Associates of Ohio, Inc. |
| | | (formerly CIGNA Associates of Ohio Agency, Inc.) |
| | | 100% - Ohio - Insurance Agency |
| |
| |--| Lincoln National Insurance Associates of Hawaii, Inc. |
| | 100% - Hawaii - Insurance Agency |
|
| | Sagemark Consulting, Inc. |
|--| (formerly CIGNA Financial Advisors, Inc.) |
| | 100% - Connecticut - Broker Dealer |
|
|--| First Penn-Pacific Life Insurance Company |
| | 100% - Indiana |
| |
| |--| First Penn-Pacific Securities, Inc. |
| | 100% - Illinois - Broker Dealer |
|
|--| Lincoln Life & Annuity Company of New York |
| 100% - New York |
-5-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| The Lincoln National Life Insurance Company |
| 100% - Indiana |
|
| | Lincoln Life and Annuity Distributors, Inc. |
|--| (formerly Lincoln Financial Group, Inc.; |
| | Lincoln National Sales Corporation) |
| | 100% - Indiana - Insurance Agency |
| |
| | | Lincoln Financial Advisors Corporation |
| |--| (formerly 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. |
|
|--| 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 Aggressive Growth Fund, Inc. |
| | 100% - Maryland - Mutual Fund |
|
|--| Lincoln National Bond Fund, Inc. |
| | 100% - Maryland - Mutual Fund |
|
|--| Lincoln National Capital Appreciation Fund, Inc. |
| | 100% - Maryland - Mutual Fund |
|
|--| Lincoln National Equity-Income Fund, Inc. |
| | 100% - Maryland - Mutual Fund |
|
| | Lincoln National Global Asset Allocation Fund, Inc. |
|--| (formerly Lincoln National Putnam Master Fund, Inc.) |
| | 100% - Maryland - Mutual Fund |
|
| | Lincoln National Growth and Income Fund, Inc. |
|--| (formerly Lincoln National Growth Fund, Inc.) |
| | 100% - Maryland - Mutual Fund |
|
|--| 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 |
-6-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| |
| |--| Lincoln Realty Capital Corporation |
| | | 100% - Indiana - General Business Corporation |
| |
| |--| 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 |
| |
| |--| Wakefield Tower Alpha Limited |
| | 100% - Cayman Islands |
|
|--| Lincoln National Management Services, Inc. |
| | 100% - Indiana - Underwriting and Management Services |
|
|--| Lincoln National Realty Corporation |
| | 100% - Indiana - Real Estate |
|
|--| Lincoln National Reinsurance Company (Barbados) Limited |
| | 100% - Barbados |
|
| | Lincoln National Reinsurance Company Limited |
|--| (formerly Heritage Reinsurance, Ltd.) |
| 100% ** - Bermuda |
|
| | 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.) |
-7-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National Risk Management, Inc. |
| | 100% - Indiana - Risk Management Services |
|
|--| Lincoln National Structured Settlement, Inc. |
| | 100% - New Jersey |
|
|--| Lincoln National (UK) PLC |
| 100% - England/Wales - Holding Company |
|
| | Allied Westminster & Company Limited |
|--| (formerly 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 |
|--| (formerly Laurentian Financial Advisers Ltd.) |
| | 100% - England/Wales - Sales Company |
|
| | Lincoln Financial Group PLC |
|--| (formerly Laurentian Financial Group PLC) |
| 100% - England/Wales - Holding Company |
|
| | Lincoln ISA Management Limited |
|--| (formerly Lincoln Unit Trust Management Limited; |
| Laurentian Unit Trust Management Limited) |
| 100% - England/Wales - Unit Trust Management |
-8-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
|--| Lincoln National (UK) PLC |
| 100% - England/Wales - Holding Company |
|
| | Lincoln Financial Group PLC |
|--| (formerly Laurentian Financial Group PLC) |
| | 100% - England/Wales - Holding Company |
| |
| | | Lincoln Milldon Limited |
| |--| (formerly Laurentian Milldon Limited) |
| | | 100% - England/Wales - Sales Company |
| |
| |--| Laurtrust Limited |
| | | 100% - England/Wales - Pension Scheme Trustee (Inactive) |
| |
| | | Lincoln Management Services Limited |
| |--| (formerly 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 (Dormant) |
|
|--| LN Management Limited |
| | 100% - England/Wales - Administrative Services (Dormant) |
| |
| |--| UK Mortgage Securities Limited |
| | 100% - England/Wales - Inactive |
|
|--| Liberty Press Limited |
| | 100% - England/Wales - Printing Services |
-9-
<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 |
-10-
<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 (formerly Lincoln Investment Management Ltd.) |
| | 100% - England/Wales - Investment Management Services |
| |
| |--| CL CR Management Ltd. |
| | 50% - England/Wales - Administrative Services |
|
| | Lincoln Independent Limited |
|--| (formerly Laurentian Independent Financial Planning Ltd.) |
| | 100% - England/Wales - Independent Financial Adviser |
|
| | Lincoln Investment Management Limited |
|--| (formerly 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 |
|--| (formerly Lincoln National (Jersey) Limited) |
| | 100% - England/Wales - Dormant |
|
|--| Lincoln National (Guernsey) Limited |
| | 100% - England/Wales - Dormant |
|
|--| Lincoln SBP Trustee Limited |
| 100% - England/Wales |
-11-
<PAGE>
| Lincoln National Corporation |
| Indiana - Holding Company |
|
| | Lincoln Re Risk Management Services, Inc. |
|--| (formerly Underwriters & Management Services, Inc.) |
| | 100% - Indiana - Underwriting Services |
|
| | Linsco Reinsurance Company |
|--| (formerly Lincoln National Reinsurance Company) |
| | 100% - Indiana - Property/Casualty |
|
|--| Old Fort Insurance Company, Ltd. |
| | 100% ** - Bermuda |
| |
| | | Lincoln National Underwriting Services, Ltd. |
| |--| 10% - England/Wales - Life/Accident/Health Underwriter |
| | | (Remaining 90% owned by Lincoln National Reinsurance Co.) |
| |
| |--| Solutions Holdings, Inc. |
| | 100% - Delaware - General Business Corporation |
| |
| |--| Solutions Reinsurance Limited 100% - Bermuda - Class |
| | III Insurance Co. |
|
| | Servicios de Evaluacion de Riesgos, S. de R.L. de C.V. |
|--| 49% - Mexico - Reinsurance Underwriter (Remaining 51% owned by Lincoln |
| National Reinsurance Co.) |
</TABLE>
Footnotes:
- ----------
** 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 $10.00 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.
-12-
<PAGE>
ATTACHMENT #1
LINCOLN LIFE AND ANNUITY DISTRIBUTORS, INC.
CORPORATE AGENCY SUBSIDIARIES
<TABLE>
<S> <C>
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Financial and Insurance Services Corporation (Walnut Creek, CA)
3) California Fringe Benefit and Insurance Marketing Corporation (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)
18) Lincoln Southwest Financial Group, Inc. (AZ)
</TABLE>
-13-
<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 dormant 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 dormant 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 as 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.
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).
-14-
<PAGE>
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.
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.
-15-
<PAGE>
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 1, 1998-DECEMBER 31, 1998
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
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 effective June 10,
1998.
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.
-16-
<PAGE>
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 1, 1999-DECEMBER 31, 1999
JANUARY 1999
a. Lincoln Unit Trust Management changed its name on January 5, 1999, to
Lincoln ISA Management Limited.
FEBRUARY 1999
a. Removal of Lincoln Southwest Financial Group, Inc. -- company's term of
existence expired July 18, 1998.
JULY 1999
a. Addition of First Penn-Pacific Securities, Inc., incorporated as a Illinois
corporation and a wholly-owned subsidiary of First Penn-Pacific Life
Insurance Company on June 14, 1999.
b. Addition of Lincoln Realty Capital Corporation, incorporated as an Indiana
corporation and a wholly-owned subsidiary of The Lincoln National Life
Insurance Company on July 9, 1999.
AUGUST 1999
a. Deletion of Professional Financial Planning, Inc. - company dissolved
August 25, 1999.
-17-
<PAGE>
NOVEMBER 1999
a. Addition of Lincoln National Insurance Associates of Hawaii, Inc.,
incorporated as a wholly-owned subsidiary of Lincoln National Insurance
Associates, Inc. as a Hawaii domiciled corporation effective December 8,
1998.
b. Addition of AnnuityNet of Alabama, Inc., an Alabama corporation and a
wholly-owned subsidiary of AnnuityNet, Inc., incorporated on November 4,
1999.
c. Addition of AnnuityNet of New Mexico, Inc., a New Mexico corporation and a
wholly-owned subsidiary of AnnuityNet, Inc., incorporated on November 1,
1999.
DECEMBER 1999
a. Addition of Wakefield Tower Alpha Limited, a Cayman Islands Corporation,
effective December 15, 1999, with 100% of the ordinary shares owned by The
Lincoln National Life Insurance Company. One (1) G Share is held by a third
party.
JANUARY 1, 2000-DECEMBER 31, 2000
JANUARY 2000
a. Addition of AnnuityNet Insurance Agency of Massachusetts, Inc., a
Massachusetts Corporation and a wholly-owned subsidiary of AnnuityNet,
Inc., incorporated on January 1, 2000.
FEBRUARY 2000
a. Addition of The Kyoei Lincoln Reinsurance Services Co., Ltd., a Japanese
Corporation in which Lincoln National Corporation has a 90% ownership
interest. The remaining 10% is owned by The Kyoei Life Insurance Co., Ltd.
The date of incorporation in Japan was February 29, 2000.
MARCH 2000
a. Name change of Underwriters & Management Services, Inc. to Lincoln Re Risk
Management Services, Inc. effective March 1, 2000.
b. Lincoln National Corporation disposed of its 49% investment in Seguros
Serfin Lincoln, S.A. effective March 30, 2000.
APRIL 2000
a. Lincoln Life and Annuity Distributors, Inc. stock was transferred via
capital contribution from Lincoln National Corporation to The Lincoln
National Life Insurance Company effective April 7, 2000.
b. Change in ownership percentage of Lincoln National Insurance Associates of
Ohio, Inc. from a 91% owned subsidiary to a wholly-owned subsidiary of
Lincoln National Insurance Associates, Inc. effective April 17, 2000.
c. Reinstatement of Lincoln Southwest Financial Group, Inc. in the State of
Arizona effective April 25, 2000.
-18-
