<PAGE>
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
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LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F
(AMERICAN LEGACY ESTATE BUILDER)
(Formerly: Lincoln National Flexible Premium Life Account F)
(Exact Name of Registrant)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
1300 South Clinton Street
P.O. Box 1110
Fort Wayne, IN 46801
(Complete address of depositor's principal executive offices)
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Brian Burke, Counsel
The Lincoln National Life Insurance Company
1300 South Clinton Street, P.O. Box 1110
Fort Wayne, IN 46801
(Name and complete address of agent for service)
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Copy to:
Robert J. Routier, Esquire
Routier & Johnson, P.C.
1700 K Street, N.W.
Washington, DC 20006
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Title and amount of securities being registered: Flexible premium variable life
insurance policies.
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
[_] Check box if it is proposed that this filing will become effective on (date)
at (time) pursuant to Rule 487.
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),
may determine.
<PAGE>
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F
CROSS REFERENCE SHEET TO PROSPECTUS
Cross reference sheet pursuant to Rule 404(c) showing location in
prospectus of information required by Items of Form N-8B-2.*
<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
- -------------------------- ---------------------
<S> <C>
Organization and General Information
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1. (a) Name of trust Cover, Definitions
(b) Title of each class of securities issued Cover, Premium Payment and Allocation of
Premiums
2. Name and address of each depositor Cover, Lincoln Life
3. Name and address of custodian Safekeeping of the Account's Assets
4. Name and address of principal underwriter Distribution of the Policy
5. State in which organized Lincoln Life, The General Account, The
Separate Account
6. Date of organization The Separate Account
General Description of the Trust and
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Securities of the Trust
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9. Material litigation Legal Proceedings
10. (a),(b) Type of Securities Cover, Premium Payment and Allocation of
Premiums
(c) Rights of securityholders re: Cover, Right to Examine Policy, Loans,
withdrawal or redemption Withdrawals, Surrender of the Policy, Proceeds
and Payment Options
(d) Rights of securityholders Cover, Policy Termination, Exchange of Lincoln
re: conversion, transfer or partial Life Universal Life Policies, Transfer Between
withdrawal Subaccounts, Transfer to and from the General
Account, Withdrawals, Surrender of the Policy,
Proceeds and Payment Options, Loans
</TABLE>
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<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
- -------------------------- ---------------------
<S> <C>
(e) Rights of securityholders Policy Lapse and Reinstatement
re: lapses, default, and
reinstatement
(f) Provisions re: voting rights Voting Rights
(g) Notice to securityholders Reports and Records
(h) Consent of Security Holders Additions, Deletions or Substitutions of
Investments, Premium Payment and Allocation of
Premiums
(j) Other principal features Caption in Prospectus
---------------------
Death Benefit and Death Benefit Types, Death
Benefit Guarantees, Policy Changes, Policy
Information Concerning Securities Value, General Provisions
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Underlying Trust's Securities
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11. Unit of specified securities in which Cover, The Separate Account
securityholders have an interest
12. (a)-(d) Name of company, and name and Cover, The Separate Account
address of its custodian
Information Concerning Loads, Fees, Charges
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and Expenses
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Cover, Charges and Deductions
13. (a) With respect to each load, fee, charge
and expense
(b) Deductions for sales charges Cover, Charges and Deductions
(c) Sales load as percentage of amount Cover, Charges and Deductions
invested
(d)-(g) Other loads, fees and expenses Cover, Charges and Deductions
Information Concerning Operation of Trust
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14. Procedure for applications for and Requirements for Issuance of a Policy
issuance of trust's securities
15. Procedure for receipt of payments from Premium Payment and Allocation of Premiums
purchases of trust's securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
- -------------------------- ---------------------
<S> <C>
16. Acquisition and disposition of underlying Cover, The Separate Account, Premium Payment
securities and Allocation of Premiums
17. (a) Procedure for withdrawal Cover, Right to Examine Policy, Loans,
Withdrawals, Surrender of the Policy, Proceeds
and Payment Options
(b) Redemption or repurchase Cover, Right to Examine Policy, Loans,
Withdrawals, Surrender of the Policy, Proceeds
and Payment Options
(c) Cancellation or resale Cover, Right to Exchange Policy, Loans,
Withdrawals, Surrender of the Policy, Proceeds
and Payment Options
18. Purchase of underlying securities The Separate Account, Premium Payment and
Allocation of Premiums
19. Procedure for keeping records and Reports and Records
furnishing information to securityholders
21. (a) and (b) Loans to securityholders Loans
23. Bonding arrangements for depositor Safekeeping of the Account's Assets
24. Other material provisions General Provisions
Organization, Personnel and Affiliated
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Persons of Depositor
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Organization and Operations of Depositor
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25. Form, state and date of organization of Lincoln Life
depositor
27. General character of business of Lincoln Life
depositor
28. (a) 5% ownership Lincoln Life
(b) Business experience of officers and Executive Officers and Directors of Lincoln
directors of the depositor Life
Companies Owning Securities of Depositor
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
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<S> <C>
29. Each company owning 5% of Lincoln Life, The General Account, The
voting securities of depositor Separate Account
Distribution and Redemption of Securities
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Distribution of Securities
35. Distribution Distribution of the Policy
38. (a) General description of method Distribution of the Policy
of distribution of securities
(b) Selling agreement between trust Distribution of the Policy
or depositor and underwriter
(c) Substance of current agreements Distribution of the Policy
Principal Underwriter
39. (a) and (b) Principal Underwriter Distribution of the Policy
41. Character of Underwriter's Distribution of the Policy
business
Offering Price or Acquisition Value of
Securities of Trust
44. Information concerning offering The Separate Account, Policy Value
price or acquisition valuation of
securities of trust (All underlying
securities are shares in registered
investment companies.)
Redemption Value of Securities of Trust
46. Information concerning redemption The Separate Account, Policy Value
valuation of securities of trust
(All underlying shares are shares
in a registered investment company.)
Purchase and Sale of Interests in Underlying
Securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number in Form N-8B-2 Caption in Prospectus
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<S> <C>
47. Maintenance of Position Cover, The Separate Account
Information Concerning Trustee or
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Custodian
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48. Custodian of trust Safekeeping of the Account's Assets
50. Lien on trust assets The Separate Account
Information Concerning Insurance of
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Holders of Securities
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51. (a) Name and address of insurer Cover, Lincoln Life
(b) Types of policies Cover, Premium Payment and Allocation
of Premiums, Federal Tax Matters
(c) Risks insured and excluded Policy Benefits, General Provisions
(d) Coverage Cover, Requirements for Issuance of a
Policy, Premiums Payment and Allocation
of Premiums
(e) Beneficiaries Policy Benefits
(f) Terms of cancellation and Policy Lapse and Reinstatement
reinstatement
(g) Method of determining amount The Separate Account, Policy Value
of premium paid by holder
Policy of Registrant
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52. (a) and (c) Selection of portfolio Addition, Deletion or Substitution of
portfolio securities Investments
Regulated Investment Company
53. (a) Taxable status of trust Federal Tax Matters
Financial and Statistical Information
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59. Financial Statements Financial Statements
</TABLE>
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<PAGE>
*Items not listed are not applicable to this Registration Statement
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F INDIVIDUAL FLEXIBLE
PREMIUM VARIABLE LIFE INSURANCE POLICY
issued by:
Lincoln National Life Insurance Co.
1300 South Clinton Street
P.O. Box 1110
Fort Wayne, Ind. 46801
(800) 348-0851
The flexible premium variable life insurance policy (policy) offered by Lin-
coln National Life Insurance Co. (Lincoln Life) and described in this prospec-
tus is designed to provide life insurance protection. A policy generally may
be issued only to persons age 80 or younger and only for an initial premium of
$10,000 or more. The owner may pay a single premium, or subject to certain re-
strictions, vary the frequency and amount of premium payments.
An owner may choose to allocate amounts to the General Account of Lincoln Life
(General Account) or to the Lincoln Life Flexible Premium Variable Life Ac-
count F (Separate Account). Amounts allocated to the Separate Account will be
invested in the Class 2 shares of the American Variable Insurance Series,
which has nine funds available:
. Global Growth Fund
. Growth Fund
. International Fund
. Growth-Income Fund
. Asset Allocation Fund
. High-Yield Bond Fund
. Bond Fund
. U.S. Government/AAA-Rated Securities Fund
. Cash Management Fund
The amount of the death benefit may, and the policy value will, reflect the
investment experience of the chosen subaccounts of the Separate Account and
interest credited to the policy by the General Account, as well as the timing
and amount of premiums, and the charges assessed in connection with the poli-
cy. As long as the policy remains in force, the death benefit will not be less
than the current specified amount of the policy. The policy will remain in
force so long as net cash surrender value is sufficient to pay the monthly de-
ductions imposed in connection with the policy. The owner bears the entire in-
vestment risk for all amounts allocated to the Separate Account; no minimum
policy value or net cash surrender value is guaranteed.
The purchase and ownership of the policy involves various charges which are
explained under the heading Charges and deductions on page 7.
It may not be advantageous to purchase a policy: (1) as a replacement for an-
other type of life insurance; or,
(2) to obtain additional insurance protection if the purchaser already owns
another flexible premium variable life insurance policy.
The policy is or may be a Modified Endowment Contract. A life insurance policy
becomes a Modified Endowment Contract if the premiums paid for the policy ex-
ceed certain limits referred to as the 7-pay limitation. Because the initial
premium exceeds the 7-pay limitation, the policy will be a Modified Endowment
Contract unless it is purchased with cash values transferred from a pre-exist-
ing life insurance policy which is not a Modified Endowment Contract and the
transfer meets the requirements for a tax-free exchange. The taxation of loans
or withdrawals from, or surrenders of, a Modified Endowment Contract is gener-
ally less favorable than applies to such distributions from a life insurance
policy that is not a Modified Endowment Contract. In particular, loans, with-
drawals, or surrenders made from a Modified Endowment Contract are normally
reportable income to the extent of any gain in the policy and such income will
also be subject to an additional 10% income tax if income is received before
the owner attains age 59 1/2.
This prospectus is valid only if accompanied or preceded by a current prospec-
tus for American Variable Insurance Series.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR BY ANY STATE REGULATORY AGENCY, NOR HAS THE COMMIS-
SION, OR ANY STATE REGULATORY AGENCY, PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this prospectus carefully and retain it for future reference.
The date of this prospectus is.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SUMMARY OF THE POLICY 1
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LINCOLN LIFE AND THE SEPARATE ACCOUNT
Lincoln Life 3
The General Account 3
The Separate Account 3
American Variable Insurance Series 4
The investment advisor 4
Addition, deletion or substitution of investments 4
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THE POLICY
Requirements for issuance of a policy 4
Units and unit values 5
Premium payment and allocation of premiums 5
Dollar cost averaging program 6
Effective date 6
Right to examine policy 6
Policy termination 7
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CHARGES AND DEDUCTIONS
Surrender charges 7
Cost of insurance charges 7
Policy value charge 8
Other policy charges 8
Charges against the Separate Account 8
Reduction of charges 8
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POLICY BENEFITS
Death benefit 8
Policy changes 9
Policy value 9
Transfer between subaccounts 10
Transfer to and from General Account 10
Withdrawals 10
Loans 11
Policy lapse and reinstatement 11
No Lapse Benefit 12
Surrender of the policy 12
Proceeds and payment options 12
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GENERAL PROVISIONS
The contract 12
Suicide 12
Representations and contestability 13
Incorrect age or sex 13
Change of owner or beneficiary 13
Assignment 13
Reports and records 13
Projection of benefits and values 13
Postponement of payments 13
Accelerated Benefit Election Rider 14
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DISTRIBUTION OF THE POLICY 14
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FEDERAL TAX MATTERS
Tax status of the policy 14
Tax treatment of policy benefits 15
Taxation of the Separate Account 16
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VOTING RIGHTS 17
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STATE REGULATION OF LINCOLN LIFE
AND THE SEPARATE ACCOUNT 17
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SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS 17
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LEGAL PROCEEDINGS 17
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EXPERTS 18
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ADDITIONAL INFORMATION 18
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APPENDIX A: Executive Officers & Directors
of Lincoln National Life
Insurance Co. 19
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APPENDIX B: Illustrations of policy values 21
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APPENDIX C: Definitions for Separate
Account F 34
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FINANCIAL STATEMENTS
</TABLE>
i
<PAGE>
SUMMARY OF THE POLICY
The following summary is intended to give you a brief explanation of the most
important features of your policy. The summary is not comprehensive and is en-
tirely qualified by more specific information contained elsewhere in this pro-
spectus. Throughout this prospectus, in order to make the following documents
more understandable, we have italicized the special terms.
WHAT TYPE OF POLICY AM I PURCHASING?
Your policy is a flexible premium variable life insurance policy whose primary
purpose is to provide life insurance protection on the insured. As long as
your policy remains in force, the policy will provide for: (1) the payment of
a death benefit to a beneficiary upon the insured's death; and (2) policy loan
privileges, withdrawal privileges and surrender privileges.
HOW DOES THE LIFE INSURANCE PROTECTION WORK?
The policy provides for the payment of benefits upon the death of the insured.
So long as your policy remains in force, the minimum death benefit proceeds
payable will be the current specified amount, reduced by any outstanding loan
and any due and unpaid charges. Under certain conditions, for issue ages under
age 76, a no lapse benefit guarantees that the policy will stay in force for
the first 10 policy years, even if poor net investment results and policy
charges might otherwise cause the policy to lapse.
HOW ARE THE PREMIUMS FLEXIBLE?
The owner will normally choose to pay an initial single premium approximately
equal to 100% of the federal maximum premium limitation (as defined in Section
7702 of the Internal Revenue Code of 1986, as amended). However, any owner who
at any time has not yet paid the current federal maximum premium limitation
may, subject to certain restrictions, make premium payments at any time and in
any amount and at any frequency.
WHAT MAKES MY POLICY VARIABLE?
Your policy is described as variable because the death benefit and the policy
value can vary with the investment performance of amounts you have allocated
to the subaccounts you have selected. While you bear the entire investment
risk on such amounts, you also enjoy the opportunity to obtain market rates of
return on those amounts.
WHAT FUNDS ARE AVAILABLE TO SELECT?
You have the option to allocate amounts to one or more subaccounts of the Sep-
arate Account. Currently the owner may select from the Class 2 shares of the
American Variable Insurance Series, which consists of nine funds:
The Global Growth Fund seeks long-term growth of capital by investing primar-
ily in common stocks or securities with common stock characteristics of is-
suers domiciled around the world. [PLEASE NOTE: AS OF THE DATE OF THIS PRO-
SPECTUS, THE GLOBAL GROWTH FUND IS NOT YET AVAILABLE IN ALL STATES. PLEASE
CONTACT YOUR INVESTMENT DEALER FOR MORE INFORMATION ABOUT THE GLOBAL GROWTH
FUND'S AVAILABILITY.]
The Growth Fund seeks growth of capital by investing primarily in common
stocks or securities with common stock characteristics, such as convertible
preferred stock, which demonstrate the potential for appreciation.
The International Fund seeks long term growth of capital by investing primar-
ily in securities of issuers domiciled outside the United States.
The Growth-Income Fund seeks high growth of capital and income by investing
primarily in common stocks or securities which demonstrate the potential for
appreciation and/or dividends.
The Asset Allocation Fund seeks high total return (including income and capi-
tal gains) consistent with preservation of capital over the long term through
a diversified portfolio that can include common stocks and other equity-type
securities, bonds and other intermediate and long-term fixed-income securities
and money market instruments in any combination.
The High-Yield Bond Fund seeks high current income and secondarily seeks capi-
tal appreciation by investing primarily in intermediate and long term corpo-
rate obligations, with emphasis on higher yielding, higher risk, lower rated
or unrated securities. IN ADDITION TO OTHER RISKS, HIGH-YIELD, HIGH-RISK BONDS
(ALSO KNOWN AS "JUNK BONDS") ARE SUBJECT TO GREATER FLUCTUATIONS IN VALUE AND
RISK OF LOSS OF INCOME AND PRINCIPAL DUE TO DEFAULT BY THE ISSUER THAN ARE IN-
VESTMENTS IN LOWER YIELDING, HIGHER RATED BONDS. FOR FURTHER INFORMATION ON
THE RISKS ASSOCIATED WITH SUCH SECURITIES, PLEASE REFER TO THE PROSPECTUS FOR
THE AMERICAN VARIABLE INSURANCE SERIES, WHICH MUST ACCOMPANY OR PRECEDE THIS
PROSPECTUS AND WHICH SHOULD BE READ CAREFULLY.
The Bond Fund seeks as high a level of current income as is consistent with
the preservation of capital by investing in a broad variety of fixed income
securities.
The U.S. Government/AAA-Rated Securities Fund seeks a high level of current
income consistent with prudent investment risk and preservation of capital by
investing primarily in a combination of securities guaranteed by the United
States Government and other debt securities rated AAA or Aaa.
The Cash Management Fund seeks high current yield while preserving capital by
investing in a diversified selection of money market instruments.
1
<PAGE>
HOW ARE PREMIUMS PROCESSED?
You determine in the application what portions of net premiums are to be allo-
cated to the General Account or the various subaccounts of the Separate Ac-
count. Prior to the record date, net premiums are automatically allocated to
the General Account. After the record date, the policy value and all subsequent
net premiums will automatically be invested in the General Account and the
subaccounts of the Separate Account in accord with your instructions in the ap-
plication. You may change future allocations of net premiums at any time with-
out charge by notifying us in writing. Subject to certain restrictions, you may
transfer amounts among the General Account and the subaccounts of the Separate
Account.
WHEN DOES MY POLICY TERMINATE?
Your policy may terminate due to any one of the following: voluntary return or
surrender of the policy, lapse due to insufficient net cash surrender value, or
payment of the death benefit. During the free look period, you may return the
policy for a refund of all premiums paid. Anytime after the free look period,
you may surrender the policy and receive its net cash surrender value.
DO I HAVE ACCESS TO THE POLICY VALUES?
You may access the net cash surrender value through loans or withdrawals. You
may borrow up to 100% of the net cash surrender value at any time. In addition,
subject to some restrictions and charges, you may withdraw portions of the net
cash surrender value. Loans reduce the death benefit proceeds by the amount of
the loan. Withdrawals reduce the specified amount by an amount proportionate to
the amount of policy value withdrawn. For example, if 10% of the policy value
is withdrawn, the specified amount will be reduced by 10% of the specified
amount. Both loans and withdrawals reduce future policy values and may have
federal income tax consequences.
WHAT CHARGES AND DEDUCTIONS ARE MADE FROM MY POLICY?
SURRENDER CHARGE. During the first 12 years of the policy, a surrender charge,
will be deducted from your policy value upon lapse or voluntary surrender. The
surrender charge during the first two policy years is calculated as 6.5% of
premiums paid. The surrender charge will not exceed $43 per $1000 of specified
amount. The surrender charge in a given policy year will equal the amounts
shown below.
<TABLE>
<CAPTION>
Percent of premiums
During policy year paid
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<S> <C>
1 6.5%
2 6.5%
3 6.0%
4 6.0%
5 5.5%
6 5.5%
7 5.0%
8 5.0%
</TABLE>
<TABLE>
<CAPTION>
Percent of premiums
During policy year paid
- ------------------------------------------------------------------------------
<S> <C>
9 4.5%
10 4.5%
11 4.0%
12 2.0%
</TABLE>
COST OF INSURANCE CHARGE. The policy value will be reduced on each monthly an-
niversary day by the cost of insurance charge. See page 13 for more detailed
information. The cost of insurance charge ceases when the insured attains age
100.
POLICY VALUE CHARGE. The policy value will be reduced on each monthly anniver-
sary day by the policy value charge. The policy value charge is .10% of the
policy value each month during the first 10 policy years and is .0166666% of
the policy value each month thereafter. The policy value charge ceases when the
insured attains age 100.
OTHER POLICY CHARGES. A monthly administrative charge of $5.00 is deducted from
the policy value on any monthly anniversary day when the policy value is less
than $50,000. Currently, no charge is made for transfers of amounts among the
General Account and the subaccounts, although a maximum of $10 per transfer may
be charged. A withdrawal charge of $20 is deducted from the amount of any with-
drawal of policy value.
CHARGES AGAINST THE SEPARATE ACCOUNT. A daily mortality and expense risk charge
currently equal to .0016438% (equivalent to an annual rate of .60%) of the
daily net assets of the Separate Account is imposed. This charge is guaranteed
not to exceed .00246575% (equivalent to an annual rate of .90%).
No charges are currently made from the Separate Account for federal or state
income taxes. Should Lincoln Life determine that such taxes may be imposed, the
company reserves the right to make deductions from the policy to pay those tax-
es.
In addition, because the Separate Account purchases shares of the funds in-
volved, the value of the net assets of these subaccounts of the Separate Ac-
count will reflect the fees of the Investment Advisor and other miscellaneous
expenses incurred by those funds. It is estimated that, in the aggregate, such
fees and expenses for the funds, expressed as an annual percentage of each
fund's net assets, will range from .41% to .75%. In addition to these fees and
expenses, and pursuant to a 12b-1 plan, the Class 2 shares of each fund also
bear expenses equal to .25% annually of each fund's net assets. See page 8 for
more detailed information.
HOW IS MY POLICY AND ITS BENEFITS TAXED?
The taxation of life insurance death benefits and distributions is complex and
is discussed in detail under "Federal tax matters" on pages 14-16. You should
note in particular that the taxation of loans, withdrawals and surrenders of a
life insurance policy that becomes
2
<PAGE>
a Modified Endowment Contract is generally less favorable than applies to such
distributions from a life insurance policy that is not a Modified Endowment
Contract. Your policy will be a Modified Endowment Contract if the premiums
you pay exceed certain limits referred to as the 7-pay limitation (see pages
15-16). Because the initial premium always exceeds the 7-pay limitation, your
policy will be a Modified Endowment Contract unless you purchase the policy
with cash values transferred from a pre-existing life insurance policy which
is not a Modified Endowment Contract and the transfer meets the requirements
for a tax-free exchange. You should note, in particular, that loans, withdraw-
als, and surrenders made from a Modified Endowment Contract are normally re-
portable income to the extent of any gain in the policy and such income will
also be subject to an additional 10% income tax if income is received before
you attain age 59 1/2. A qualified tax advisor should be able to help you de-
termine the tax status of your policy.
LINCOLN LIFE AND THE SEPARATE ACCOUNT
LINCOLN LIFE
Lincoln National Life Insurance Co. is a stock life insurance company incorpo-
rated under the laws of Indiana on June 12, 1905. Lincoln Life is principally
engaged in offering individual life insurance policies and annuity contracts,
and ranks among the largest United States stock life insurance companies in
terms of assets and life insurance in force. Lincoln Life is also one of the
leading life reinsurers in the United States. Lincoln Life is licensed in all
states (except New York) and the District of Columbia, Guam, and the Common-
wealth of the Northern Mariana Islands.
Lincoln Life is wholly owned by Lincoln National Corp., a publicly held insur-
ance holding company incorporated under Indiana law on January 5, 1968. The
principal office of Lincoln Life is located at 1300 South Clinton Street, Fort
Wayne, Ind. 46802. The Principal office of Lincoln National Corp. is located
at 200 East Berry Street, Fort Wayne, Ind. 46802. Through subsidiaries, Lin-
coln National Corp. engages primarily in the issuance of health-life insurance
and annuities, property-casualty insurance, and other financial services.
THE GENERAL ACCOUNT
The General Account refers to the General Account of Lincoln Life. The General
Account consists of all assets owned by Lincoln Life other than those allo-
cated to any of its separate accounts, including the Separate Account. The
General Account supports Lincoln Life's insurance and annuity obligations. Be-
cause of applicable exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933, and
the General Account has not been registered as an investment company under the
Investment Company Act of 1940.
THE SEPARATE ACCOUNT
Lincoln Life Flexible Premium Variable Life Account F (Separate Account) was
established by Lincoln Life as a separate account on May 29, 1987 to fund
variable life insurance policies. Although the assets of the Separate Account
are the property of Lincoln Life, the laws of Indiana under which the Separate
Account was established provide that the assets in the Separate Account at-
tributable to the policies are not chargeable with liabilities arising out of
any other business which Lincoln Life may conduct. The assets of the Separate
Account shall, however, be available to cover the liabilities of the General
Account of Lincoln Life to the extent that the Separate Account's assets ex-
ceed its liabilities arising under the policies supported by it. The assets of
the Separate Account will be valued once daily at the close of regular trading
(currently 4:00 p.m. New York time) on each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on the following holi-
days: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
The Separate Account has been registered as an investment company under the
Investment Company Act of 1940 and meets the definition of "separate account"
under federal securities laws. Registration with the Securities and Exchange
Commission does not involve supervision of the management or investment prac-
tices or policies of the Separate Account or Lincoln Life by the Commission.
The Separate Account is divided into nine subaccounts. Each subaccount invests
exclusively in shares of one of the classes of one of the funds comprising the
American Variable Insurance Series: the Global Growth Fund, the Growth Fund,
the International Fund, the Growth- Income Fund, the Asset Allocation Fund,
the High-Yield Bond Fund, the Bond Fund, the U.S. Government/ AAA-Rated Secu-
rities Fund, and the CashManagement Fund. Income and both realized and
unrealized gains or losses from the assets of the Separate Account are cred-
ited to or charged against the Separate Account without regard to the income,
gains or losses arising out of any other business Lincoln Life may conduct.
The funds are also invested in by variable annuity contract holders. For an
explanation of the risk involved with such mixed and/or shared funding, see
the prospectus for the underlying funds.
There is no assurance that any fund of the American Variable Insurance Series
will achieve its stated investment objective. For a complete description of
the American Variable Insurance Series, please refer to the prospectus for the
series which must accompany or precede this prospectus and which should be
read carefully.
3
<PAGE>
THE AMERICAN VARIABLE INSURANCE SERIES
The series was organized as a Massachusetts business trust in 1983 and is reg-
istered as a diversified, open-end management investment company under the In-
vestment Company Act of 1940. Diversified means not owning too great a per-
centage of the securities of any one company. An open-end company is one
which, in this case, permits Lincoln Life to sell its shares back to the se-
ries when you make a withdrawal, surrender the policy, or transfer from one
fund to another. Management investment company is a legal term for a mutual
fund. These definitions are very general. The precise legal definitions for
these terms are contained in the Investment Company Act of 1940.
The series has nine separate portfolios of funds. Funds as sets are segregated
and a shareholder's interest is limited to those funds in which the share-
holder owns shares. The series has adopted a plan pursuant to Rule 18f-3 under
the Investment Company Act of 1940 to permit the series to establish a multi-
ple class distribution system for all of its portfolios. The series' Board of
Trustees may at any time establish additional funds or classes, which may or
may not be available to the Separate Account.
Under the multi-class system adopted by the series, shares of each multi-class
fund represent an equal pro rata interest in that fund and, generally, have
identical voting, dividend, liquidation, and other rights, preferences, pow-
ers, restrictions, limitations, qualifications and terms and conditions, ex-
cept that: (1) each class has a different designation; (2) each class of
shares bears its class expenses; (3) each class has exclusive voting rights on
any matter submitted to shareholders that relates solely to its distribution
arrangement; and (4) each class has separate voting rights on any matter sub-
mitted to shareholders in which the interests of one class differ from the in-
terests of any other class. Expenses currently designated as class expenses by
the series' Board of Trustees under the plan pursuant to Rule 18f-3 include,
for example, service fees paid under 12b-1 plan to cover servicing fees paid
to dealers selling the policy as well as related expenses incurred by Lincoln
Life.
Each fund has two classes of shares, designated as Class 1 shares and Class 2
shares. Class 1 and 2 differ primarily in that Class 2 (but not Class 1)
shares are subject to a 12b-1 plan. Only Class 2 shares are available under
the policy.
THE INVESTMENT ADVISOR
Capital Research and Management Company, an investment management organization
founded in 1931, is the investment advisor to the series and other mutual
funds, including those in The American Funds Group. Capital Research and Man-
agement Co. is located at 333 South Hope Street, Los Angeles, Calif. 90071 and
135 South State College Boulevard, Brea, Calif. 92621. Capital Research and
Management is registered with the Securities and Exchange Commission as an in-
vestment adviser.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
Lincoln Life does not control the investment advisor and therefore cannot
guarantee that the American Variable Insurance Series or any particular funds
will be available for investment by the subaccounts. Lincoln Life reserves the
right, subject to compliance with applicable law, to make additions to, dele-
tions from, or substitutions for the shares that are held by the Separate Ac-
count or that the Separate Account may purchase. Lincoln Life reserves the
right to eliminate the shares of any fund and to substitute shares of another
open-end, registered investment company, if the shares are no longer available
for investment, or if in the judgment of Lincoln Life further investment in
any fund should become inappropriate in view of the purposes of the Separate
Account. Lincoln Life will not substitute any shares attributable to an own-
er's interest in a subaccount of the Separate Account without notice and prior
to approval of the Securities and Exchange Commission, to the extent required
by the Investment Company Act of 1940 or other applicable law. Nothing con-
tained herein shall prevent the Separate Account from purchasing other securi-
ties for other classes of policies, or from permitting a conversion between
classes of policies on the basis of requests made by policy owners.
Lincoln Life also reserves the right to establish additional subaccounts of
the Separate Account, each of which would invest in a new fund or series of a
fund or in shares of another investment company, with a specified investment
objective. New subaccounts may be established when, at the sole discretion of
Lincoln Life, marketing needs or investment conditions warrant, and any new
subaccounts may be made available to existing policy owners on a basis to be
determined by Lincoln Life. Lincoln Life may also eliminate one or more
subaccounts if, in its sole discretion, marketing, tax, or investment condi-
tions warrant.
In the event of any such substitution or change, Lincoln Life may by appropri-
ate endorsement make such changes in the policy as may be necessary or appro-
priate to reflect such substitution or change. If deemed by Lincoln Life to be
in the best interests of persons having voting rights under the Policies, the
Separate Account may be operated as a management company under the Investment
Company Act of 1940, it may be deregistered under that Act in the event such
registration is no longer required, or it may be combined with other Lincoln
Life separate accounts.
THE POLICY
REQUIREMENTS FOR ISSUANCE OF A POLICY
Individuals wishing to purchase a policy must send a completed application to
Lincoln Life, 1300 South Clinton Street, Fort Wayne, Ind. 46802. The minimum
acceptable premium is $10,000. A policy will generally be
4
<PAGE>
issued only to insureds 80 years of age or under who supply satisfactory evi-
dence of insurability sufficient to Lincoln Life. Acceptance is subject to Lin-
coln Life's underwriting rules and, except in California, Lincoln Life reserves
the right to reject an application for any reason.
UNITS AND UNIT VALUES
The value of policy monies invested in each subaccount is accounted for through
the use of units and unit values. A unit is an accounting unit of measure used
to calculate the value of an investment in a specified subaccount. A unit value
is the dollar value of a unit in a specified subaccount on a specified valua-
tion date. Whenever an amount is invested in a subaccount (due to net premium
payments, loan payments, or transfer of values into a subaccount), the amount
purchases units in that subaccount; the number of units purchased is determined
by dividing the dollar amount of the transaction by the unit value on the day
the transaction is made. Similarly, whenever an amount is redeemed from a
subaccount (due to loans and loan interest charges, surrenders and surrender
charges, withdrawals and withdrawal charges, transfers of values out of a
subaccount, income tax deductions (if any), policy value charges, monthly ad-
ministrative charges, or cost of insurance charges), units are redeemed from
that subaccount; the number of units redeemed is determined by dividing the
dollar amount of the transaction by the unit value on the day the transaction
is made.
The unit value is also used to measure the net investment results in a
subaccount. The policy value on any valuation day is the sum of the amounts al-
located to each subaccount plus the amounts allocated to the General Account
plus any outstanding loan. The value of each subaccount on each valuation day
is determined by multiplying the number of units held by a policy in each
subaccount by the unit value for that subaccount as determined for that valua-
tion day.
The unit value for a subaccount on a specified valuation date is determined by
dividing the value of all assets owned by that subaccount, net of the
subaccount's liabilities (including any accrued but unpaid daily mortality and
expense risk charges), by the total number of units held by policies in that
subaccount. Net investment results do not increase or decrease the number of
units held by the subaccount.
PREMIUM PAYMENT AND ALLOCATION OF PREMIUMS
Subject to certain limitations, an owner has flexibility in determining the
frequency and amount of premiums. The initial premium is the only premium pay-
ment required under the policy, although additional premiums may be necessary
to keep the policy in force. Payment of the initial premium will not guarantee
that the policy will remain in force. The amount of the initial premium is
based on the insured's issue age and the specified amount of the policy and is
normally approximately equal to 100% of the federal maximum premium limitation
at issue, as described below. The initial premium may be as little as 80% of
the federal maximum premium limitation at issue, but if the initial premium is
less than 98% of the limitation, higher cost of insurance charges will result.
Any owner who has not chosen to pay the federal maximum premium limitation at
issue may pay additional premiums up to the limitation at any time. However,
Lincoln Life reserves the right to require evidence of insurability if the pay-
ment of any premium will increase the death benefit by more than the amount of
the premium paid. The failure to pay the maximum premium will not of itself
cause the policy to lapse, nor will the payment of the maximum premium guaran-
tee that the policy will remain in force. The policy will lapse any time out-
standing loans exceed policy value less surrender charge, or policy value less
outstanding loans and less surrender charge is insufficient to pay certain
monthly deductions, and a grace period expires without a sufficient payment.
(See Policy lapse and reinstatement, page 11.) Subject to the initial premium
requirements and the maximum premium limitations established under section 7702
of the Internal Revenue Code 1986, as amended (the Code), an owner may make
unscheduled premium payments at any time in any amount during the lifetime of
the insured. Monies received that are not designated as premium payments will
be assumed to be loan repayments if there is an outstanding loan on the policy;
otherwise, such monies will be assumed to be an unscheduled premium payment.
PREMIUM LIMITATIONS. In no event can the total of all premiums paid, both
scheduled and unscheduled, exceed the current maximum premium limitations es-
tablished for life insurance policies to meet the definition of life insurance,
as set forth under Section 7702 of the Code. Those limitations will vary by is-
sue age, sex, classification, benefits provided, and even policy duration. If
at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limitation, Lincoln Life will only accept that por-
tion of the premium which will make total premiums equal that amount. Any part
of the premium in excess of that amount will first be applied to reduce any
outstanding loan on the policy, and any further excess will be refunded to the
owner within 7 days of receipt and no further premiums will be accepted until
allowed by subsequent maximum premium limitations.
The tax status of a policy and the tax treatment of distributions from a policy
are dependent in part on whether or not the policy becomes a Modified Endowment
Contract. A policy will become a Modified Endowment Contract if premiums paid
into the policy exceed certain limits referred to as the 7-pay limitation. Be-
cause the initial premium exceeds the 7-pay limitation, the policy will be a
Modified Endowment Contract unless it has been
5
<PAGE>
purchased with cash values transferred from a pre-existing life insurance pol-
icy which is not a Modified Endowment Contract and the transfer meets the re-
quirements for a tax-free exchange. The taxation of life insurance death bene-
fits and distributions is complex and is discussed in detail under "Federal
tax matters" on pages 14-16. Of particular note is the fact that the taxation
of loans, withdrawals, and surrenders of a life insurance policy that becomes
a Modified Endowment Contract is generally less favorable than applies to such
distributions from a life insurance policy that is not a Modified Endowment
Contract.
Lincoln Life reserves the right to require evidence of insurability if the
payment of any premium will increase the death benefit by more than the amount
of the premium paid.
NET PREMIUMS. The net premium equals the premium paid.
ALLOCATION OF NET PREMIUMS. In the application for a policy, the owner can al-
locate net premiums or portions thereof to the General Account and the
subaccounts of the Separate Account. Notwithstanding the allocation in the ap-
plication, all net premiums received prior to the record date will initially
be allocated to the General Account. Net premiums received prior to the record
date will be credited to the policy on the later of the policy date or the
date the premium is received. The record date is the date the policy is re-
corded on the books of Lincoln Life as an in-force policy, and may coincide
with the policy date. Net premiums will continue to be allocated to the Gen-
eral Account until the record date. When the assets of the Separate Account
are next valued following the record date, the value of the policy's assets in
the General Account will automatically be transferred to the General Account
and the subaccounts of the Separate Account in accord with the owner's per-
centage allocation in the application. No charge will be imposed for this ini-
tial transfer. Net premiums paid after the record date will be credited to the
policy on the date they are received and will be allocated in accord with the
owner's instructions in the application. The minimum percentage of each pre-
mium that may be allocated to the General Account or to any subaccount of the
Separate Account is 10%; percentages must be in whole numbers. The allocation
of future net premiums may be changed without charge at any time by providing
written notification on a form suitable to Lincoln Life, unless the owner has
made previous arrangements with Lincoln Life to allow the allocation of future
net premiums to be changed upon telephone request.
The value of the amount allocated to subaccounts of the Separate Account will
vary with the investment experience of these subaccounts and the owner bears
the entire investment risk. The value of the amount allocated to the General
Account will earn a current interest rate guaranteed to be at least equal to
the General Account guaranteed interest rate shown on the Policy Schedule.
Owners should periodically review their allocations of premiums and values in
light of market conditions, interest rates, and overall estate planning re-
quirements.
DOLLAR COST AVERAGING PROGRAM
The owner may wish to make uniform monthly transfers from the General Account
to one or more of the subaccounts over a 12, 24 or 36-month period through the
Dollar Cost Averaging (DCA) program. Under the program, the owner designates
the total amount of policy value ($5000 minimum) to be transferred from the
General Account to the chosen subaccounts in accord with the most recent pre-
mium allocation. The transfers continue until the end of the DCA period or un-
til the policy value allocated to the General Account has been exhausted,
whichever occurs sooner. DCA may also be terminated upon written request by
the owner.
The theory of DCA is that transfers of uniform dollar amounts purchase a
greater number of subaccount units when unit values are relatively low than
are purchased when unit values are higher. This has the effect, when purchases
are made at fluctuating prices, of reducing the aggregate average cost per
unit to less than the average of the unit values on the same purchase dates.
However, participation in the DCA program does not assure the owner of a
greater return on purchases under the program, nor will it prevent or neces-
sarily alleviate losses in a declining market.
There are no charges associated with the DCA program. In order to participate
in (or terminate participation in) the DCA program, the owner must complete a
written request on a form suitable to Lincoln Life.
EFFECTIVE DATE
For all coverage provided in the original application, the effective date will
be the policy date, provided the policy has been delivered and the initial
premium has been paid prior to death and prior to any change in health or any
other factor affecting insurability of the insured as shown in the applica-
tion. The policy date is ordinarily the earlier of the date the full initial
premium is received or the date on which the policy is approved for issue by
Lincoln Life.
For any insurance that has been reinstated, the effective date will be the
first monthly anniversary day on or next following the day the application for
reinstatement is approved.
RIGHT TO EXAMINE POLICY
The owner may, until a specified period of time has expired, examine the pol-
icy and return it for refund of all premiums paid. The applicable period of
time will depend on the state in which the policy is issued, but will not ex-
pire sooner than the latest of ten days after receipt of the policy, 45 days
after Part 1 of the application is completed, or ten days after the Notice of
Withdrawal Right is mailed or delivered to the owner. Upon cancellation the
policy will be void from the beginning.
6
<PAGE>
An owner wanting a refund should return the policy to either Lincoln Life at
its Home Office or to the registered agent who sold it.
POLICY TERMINATION
All coverage under the policy will terminate when any one of the following oc-
curs: 1) the grace period ends without payment of required premium, 2) the
policy is surrendered, or 3) the insured dies. Under certain defined condi-
tions, Lincoln Life will continue to keep the policy in force despite insuffi-
cient net cash surrender value (See No lapse benefit, page 12).
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the policy to compensate Lincoln
Life for:
1. providing the insurance benefit set forth in the policy;
2. administering the policy;
3. assuming certain risks in connection with the policy;
4. incurring expenses in distributing the policy.
The nature and amount of these charges are described in the following.
SURRENDER CHARGES
Surrender charges are deducted upon surrender of the policy during the first
12 policy years. The following table shows the surrender charge as a percent
of premiums paid. The surrender charge will not exceed $43 per $1,000 of spec-
ified amount.
<TABLE>
<CAPTION>
Percent of
During policy year premiums paid
- ------------------------------------------------------------------------------
<S> <C>
1 6.5%
2 6.5%
3 6.0%
4 6.0%
5 5.5%
6 5.5%
7 5.0%
8 5.0%
9 4.5%
10 4.5%
11 4.0%
12 2.0%
</TABLE>
COST OF INSURANCE CHARGES
On the policy date and on each monthly anniversary day following, cost of in-
surance charges will be deducted from the policy value. Ordinarily, the cost
of insurance charges are deducted in proportion to the values in the
subaccounts. The cost of insurance charges may be made by some other method if
requested by the owner, and if such method is acceptable to Lincoln Life.
The current cost of insurance charges depend currently upon these variables:
the amount of the initial premium as a percentage of the federal maximum pre-
mium limitation, the classification of the insured, the amount of policy val-
ue, and the maximum cost of insurance deduction allowed under state insurance
laws. The current cost of insurance deduction each month is calculated by mul-
tiplying the policy value by the appropriate percentage rate described below.
The current cost of insurance deduction may never exceed the maximum cost of
insurance deduction allowed under state insurance laws. The cost of insurance
charge ceases when the insured reaches age 100.
If the initial premium is at least 98% of the federal maximum premium limita-
tion at issue, the current monthly percentage rate used to calculate the cost
of insurance deduction is .05% for select non-tobacco users and .10% for se-
lect tobacco users. If the initial premium is less than 98% of the maximum
limitation, higher percentage rates will be used. If the insured's classifica-
tion is other than select non-tobacco user or select tobacco user, higher per-
centages will also be used. The current cost of insurance deduction may never
exceed the maximum cost of insurance deduction allowed under state insurance
laws, as calculated according to the Cost of Insurance provision of the poli-
cy.
The current monthly cost of insurance rates may be changed by Lincoln Life
from time to time. A change in the current cost of insurance rates will apply
to all persons of the same attained age, sex and rate class and whose policies
have been in effect for the same length of time. The cost of insurance rates
will not exceed those described in the table of guaranteed maximum insurance
rates shown in the policy. These rates are based on the 1980 Commissioner's
Standard Ordinary Mortality Table, Age Last Birthday, for attained ages under
sixteen; on the 1980 Commissioner's Standard Ordinary Nonsmoker Mortality Ta-
ble, Age Last Birthday, or the 1980 Commissioner's Standard Ordinary Smoker
Mortality Table, Age Last Birthday, for attained ages sixteen and over, de-
pending on the tobacco usage of the insured. Select rate classes have guaran-
teed rates which do not exceed 100% of the applicable table. In states requir-
ing unisex rates, in federally qualified pension plan sales, in employer spon-
sored situations, and in any other situation where unisex rates are required
by law, the cost of insurance rates (whether current or guaranteed) are not
based on sex.
The rate class of an insured will affect the cost of insurance rate. Lincoln
Life currently places insureds into a select rate class or rate classes in-
volving a higher mortality risk. In an otherwise identical policy, insureds in
the select rate class will have a lower cost of insurance than those in rate
classes with higher mortality risk.
7
<PAGE>
POLICY VALUE CHARGE
On the policy date and on each monthly anniversary day following, a policy
charge will be deducted from the policy value. Ordinarily, the policy value
charge is deducted in proportion to the values in the subaccounts. The policy
value charge may be deducted by some other method if requested by the owner,
and if such method is acceptable to Lincoln Life.
During the first 10 policy years, the policy value charge each month is .10% of
the policy value; thereafter, the policy value charge is .0166666%. The policy
value charge ceases when the insured reaches age 100.
OTHER POLICY CHARGES
A monthly administrative charge of $5.00 is deducted from the policy value on
any monthly anniversary day when the policy value is less than $50,000. Cur-
rently, no charge is made for transfers of amounts among the General Account
and the subaccounts, although a maximum of $10 per transfer may be charged in
the future. A withdrawal charge of $20 is deducted from the amount of any with-
drawal of policy value other than full surrender of the policy. The monthly ad-
ministrative charge, the transfer charge, and the withdrawal charge cease when
the insured reaches age 100.
Lincoln Life also reserves the right to deduct from the policy value any
amounts charged for federal or other Governmental income taxes that might re-
sult from a change in the current tax laws. Current tax laws do not charge in-
come taxes on the policy value.
CHARGES AGAINST THE SEPARATE ACCOUNT
Several charges are made directly or indirectly against the Separate Account
and have the effect of reducing net investment results credited to the
subaccounts.
FUND CHARGES AND EXPENSES. The investment advisor for each of the funds deducts
a daily charge as a percent of the net assets in each fund as an asset manage-
ment charge. Each of the funds also deducts a 12b-1 fee for Class 2 shares.
These charges have the effect of reducing the investment results credited to
the subaccounts.
Because the Separate Account purchases shares of the funds involved, the value
of the net assets of the subaccounts of the Separate Account will reflect not
only the charges and fees of the Investment Advisor, but also other miscellane-
ous expenses incurred by those funds. The asset management charges, 12b-1 fees,
miscellaneous expenses and total expenses for each of the funds are currently
estimated, on the basis of their most recent fiscal year experience where ap-
plicable, to be as follows:
<TABLE>
<CAPTION>
Asset 12b-1 Misc.
Fund Mgt. Charge* Fees* Expenses* Total*
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Global Growth** .69% .25% .06% 1.00%
Growth .42% .25% .02% .69%
International .61% .25% .08% .94%
</TABLE>
<TABLE>
<CAPTION>
Asset 12b-1 Misc.
Fund Mgt. Charge* Fees* Expenses* Total*
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth-Income .39% .25% .02% .66%
Asset Allocation .47% .25% .02% .74%
High-Yield Bond .50% .25% .03% .78%
Bond .51% .25% .01% .77%
U.S. Gov't/AAA-Rated .51% .25% .02% .78%
Cash Management .45% .25% .02% .72%
</TABLE>
* Expressed as an annual percentage of each fund's average daily net assets.
** New fund, with no prior fiscal year experience.
See the funds' prospectus for more complete information about the expenses of
the funds.
MORTALITY AND EXPENSE RISK CHARGE. A daily mortality and expense risk charge
currently equal to .0016438% (equivalent to an annual rate of .60%) of the
daily net assets of the Separate Account is imposed. This charge is guaranteed
not to exceed .00246575% (equivalent to an annual rate of .90%).
The mortality risk assumed is that insureds may live for a shorter period of
time than estimated and, therefore, a greater amount of death benefits will be
payable. The expense risk assumed is that expenses incurred in issuing and ad-
ministering the policies will be greater than estimated.
REDUCTION OF CHARGES
The surrender charge, the policy value charge, and the monthly administrative
charge set forth in this prospectus may be reduced because of special circum-
stances that result in lower sales or administrative expenses. In particular,
these charges will not be deducted on policies issued to employees and regis-
tered representatives of any member of the selling group and their spouses and
minor children, or to officers, directors, trustees or bona-fide full-time em-
ployees of Lincoln National Corp. or The Capital Group Company, Inc. or their
affiliated or managed companies (based on the owner's status at the time the
policy was purchased). The amounts of any reductions will reflect the reduced
sales and administrative expenses resulting from the special circumstances. Re-
ductions will not be unfairly discriminatory against any person, including the
affected policy owners and owners of all other policies funded by the Separate
Account.
POLICY BENEFITS
DEATH BENEFIT
The initial death benefit is equal to the specified amount chosen by the owner.
Lincoln Life may also impose certain limitations on the maximum specified
amount allowable.
As long as the policy remains in force (see Policy lapse and reinstatement,
page 11), Lincoln Life will, upon
8
<PAGE>
proof of the insured's death, pay the death benefit proceeds of the policy to
the named beneficiaries. The proceeds may be paid in cash or under one or more
of the payment options set forth in the policy. (See Proceeds and payment op-
tions, page 12.) The death benefit proceeds payable will be increased by any
unearned cost of insurance charge, and will be reduced by any outstanding loan
and any due and unpaid charges. (See Policy lapse and reinstatement, page 11.)
The death benefit is the greater of the specified amount of the policy or a
specified percentage of the policy value on or prior to the date of death. The
specified percentage at any time is based on the attained age of the insured
as of the beginning of the policy year.
* The specified percentages are shown in the table below:
<TABLE>
<CAPTION>
Attained Specified Attained Specified Attained Specified
age percentage age percentage age percentage
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 OR
YOUNGER 250% 59 134% 91 104%
41 243 60 130 92 103
42 236 61 128 93 102
43 229 62 126 94 101
44 222 63 124 95 OR 100
45 215 64 122 OLDER
46 209 65 120
47 203 66 119
48 197 67 118
49 191 68 117
50 185 69 116
51 178 70 115
52 171 71 113
53 164 72 111
54 157 73 109
55 150 74 107
56 146 75 105
57 142 THROUGH
58 138 90
</TABLE>
EXAMPLES. For this example, assume that the insured is under the age of 40 and
that there is no outstanding policy loan. A policy with a specified amount of
$250,000 will generally pay $250,000 in life insurance death benefits. Howev-
er, because the life insurance death benefit cannot be less than 250% (the ap-
plicable specified percentage) of policy value, any time the policy value of
this policy exceeds $100,000, the life insurance death benefit will exceed the
$250,000 specified amount. If the policy value equals or exceeds $100,000,
each additional dollar added to the policy value will increase the life insur-
ance death benefit by $2.50. Thus, for a policy with a specified amount of
$250,000 and a policy value of $200,000, the beneficiary will be entitled to a
life insurance death benefit of $500,000 (250% x $200,000); a policy value of
$300,000 will yield a life insurance death benefit of $750,000 (250% x
$300,000); a policy value of $500,000 will yield a life insurance death bene-
fit of $1,250,000 (250% x $500,000). Similarly, so long as policy value ex-
ceeds $100,000, each dollar withdrawn from the policy value will reduce the
life insurance death benefit by $2.50. If at any time the policy value multi-
plied by the specified percentage is less than the specified amount, the life
insurance death benefit will equal the specified amount of the policy.
The above example describes a scenario which includes favorable investment
performance. In addition, the applicable percentage of 250% that is used is
for ages 40 or younger. Because the applicable percentage decreases as the at-
tained age increases, the impact of the applicable percentage on the death
benefit payment levels will be lessened as the attained age progresses beyond
age 40.
POLICY CHANGES
The specified amount may not be voluntarily increased or decreased. However,
withdrawals reduce the specified amount by an amount proportionate to the
amount of policy value withdrawn. For example, if 10% of the policy value is
withdrawn, the specified amount will be reduced by 10% of the specified
amount.
POLICY VALUE
The policy provides for the accumulation of policy value. The policy value
will vary with the investment performance of the General Account and of the
Separate Account, as well as other factors. In particular, policy value also
depends on any premiums received, any policy loans, and withdrawals, and any
charges and deductions assessed the policy. The policy has no guaranteed mini-
mum policy value or net cash surrender value.
On the policy date, the policy value will be the initial premium, minus the
sum of the following: the cost of insurance for the first month, the monthly
administrative charge (if any), and the policy value charge for the first
month.
On each monthly anniversary day, the policy value is equal to the sum of the
following:
a. The policy value on the preceding day;
b. Any increase due to net investment results in the value of the subaccounts
to which the investment amount is allocated;
c. Interest at not less than the rate shown on the policy schedule on amounts
allocated to the General Account;
d. Interest at not less than the rate shown on the policy schedule on any
outstanding loan amount; and
e. Any premiums received since the preceding day.
Minus the sum of the following:
f. Any decrease due to net investment results in the value of the subaccounts
to which the investment amount is allocated;
g. Any withdrawals;
9
<PAGE>
h. Any amount charged against the investment amount for federal or other gov-
ernmental income taxes;
i. The cost of insurance for the following month;
j. The monthly administrative charge, if any, for the following month;
k. The policy value charge for the following month; and
l. Any charges for extra benefits.
On any day other than a monthly anniversary day, the policy value is equal to
the sum of the following:
a. The policy value on the preceding day;
b. Any increase due to net investment results in the value of the subaccounts
to which the investment amount is allocated;
c. Interest at not less than the rate shown on the policy schedule on amounts
allocated to the General Account;
d. Interest at not less than the rate shown on the policy schedule on any
outstanding loan amount; and
e. Any net premiums received since the preceding day.
Minus the sum of the following:
f. Any decrease due to net investment results in the value of the subaccounts
to which the investment amount is allocated;
g. Any withdrawals; and
h. Any amount charged against the investment amount for federal or other gov-
ernmental income taxes.
The charges and deductions described above are further discussed in Charges
and deductions, page 7.
NET INVESTMENT RESULTS. The net investment results are the changes in the unit
values of the subaccounts from the previous valuation day to the current day.
The net investment results are equal to the per unit change in the market
value of each fund's assets, reduced by the per unit share of the asset man-
agement charge, the 12b-1 fee, any miscellaneous expenses incurred by the
fund, and the mortality and expense risk charge for the period, and increased
by the per unit share of any dividends credited by the fund to the subaccount
during the period.
The value of the assets in the funds will be taken at their fair market value
in accordance with accepted accounting practices and applicable laws and regu-
lations.
The charges listed above are explained further in Charges against the separate
account, page 8.
TRANSFER BETWEEN SUBACCOUNTS
Any time after the record date, the owner may request to transfer an amount
from one subaccount to another. The request to transfer funds must be in writ-
ing on a form suitable to Lincoln Life. Transfers may be made by telephone re-
quest only if the owner has previously authorized telephone transfer in writ-
ing on a form suitable to Lincoln Life. Lincoln Life will follow reasonable
procedures to determine that the telephone requester is authorized to request
such transfer, including requiring certain identifying information contained
in the written authorization. If such procedures are followed, Lincoln Life
will not be liable for any loss arising from any telephone transfer. Transfers
will take effect on the date that the request in writing or by telephone is
received at the Home Office of Lincoln Life. The minimum amount which may be
transferred between subaccounts is $100. The maximum number of transfers al-
lowed in a policy year is twelve. A transfer charge of $10 is made for each
transfer and may be deducted from the amount transferred; however, the trans-
fer charge is currently being waived for all transfers.
TRANSFER TO AND FROM THE GENERAL ACCOUNT
Any time after the record date, the owner may also request to transfer amounts
from the Separate Account to the General Account. However, transfers from the
General Account to the Separate Account are subject to some restrictions. A
maximum of 20% of the policy value allocated to the General Account may be
transferred to the Separate Account in any period of 12 consecutive months.
However, as a current practice, the 20% maximum transfer limitation does not
apply for the first six policy months. There is no minimum transfer amount;
however, if the amount allocated to theGeneral Account is $500 or less, the
owner may transfer the entire allocated amount out of the General Account. A
transfer charge of $10 is made for each transfer and may be deducted from the
amount transferred; however, the transfer charge is currently being waived for
all transfers.
WITHDRAWALS
Anytime during the lifetime of the insured, a cash withdrawal may be made from
the policy value. The amount and timing of the withdrawal is subject to cer-
tain limitations. The minimum withdrawal is $1000 and only one withdrawal may
be made during a policy year. During the first 10 policy years, the maximum
withdrawal is 10% of the net cash surrender value at the time of the withdraw-
al. The owner should be aware that withdrawals may result in tax liability.
Withdrawals other than full surrender of the policy incur a $20 withdrawal
charge.
Withdrawals reduce the specified amount by an amount proportionate to the
amount of policy value withdrawn. For example, if 10% of the policy value is
withdrawn,
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the specified amount will be reduced by 10% of the specified amount. Ordinari-
ly, the amount of any withdrawal will be deducted from the General Account and
subaccounts in proportion to the values of each.
LOANS
At any time while the policy is in force the owner may make written request
for a loan against the policy. A written loan agreement will be executed be-
tween the owner and Lincoln Life. The policy will be the sole security for the
loan, and the policy must be assigned to Lincoln Life as part of the loan
agreement. Ordinarily, the loan will be processed within seven days from the
date the request for a loan is received at the Home Office of Lincoln Life.
Payments may be postponed under certain circumstances. (See Postponement of
payments, page 13.)
A loan taken from, or secured by, a policy may have federal income tax conse-
quences. In particular, adverse tax consequences may occur if the policy
lapses with outstanding loans. (See Federal tax matters, pages 14-16.)
LOAN AMOUNT. The amount of all outstanding loans with interest may not exceed
the policy value less surrender charge as of the date of the policy loan. If
at any time the total of policy loans plus loan interest equals or exceeds the
policy value less surrender charge, notice will be sent to the last known ad-
dress of the owner, and any assignee of record, and the policy will enter into
the grace period. If sufficient payment is not received within 61 days after
notice is mailed, the policy will lapse and terminate without value. (See Pol-
icy lapse and reinstatement, page 11.) In addition, the presence of any out-
standing policy loan negates the no lapse benefit (if present) until the loan
is repaid.
LOAN INTEREST. Interest on any loan will be payable annually in arrears at an
annual rate of 6.0%. Any interest not paid when due will be added to the loan
amount and will bear interest at the same policy loan rate.
DEDUCTION OF LOAN AND LOAN INTEREST. The amount of any loan or unpaid loan in-
terest will be deducted from the General Account and the subaccounts and sub-
sequently will earn interest at the then currently declared annual rate, which
may not be less than the annual rate of 4.0%. The current annual rate is 6.0%.
The amount will remain a part of the policy value, but will not be increased
or decreased by investment results in the Separate Account. Therefore, the
policy value could be more or less than what it would have been if the policy
loan had not been made, depending on the investment results in the Separate
Account compared to the interest credited on the loan. In this way, a loan may
have a permanent effect upon both the policy value and the death benefit and
may increase or decrease the potential for policy lapse. In addition, out-
standing policy loans reduce the death benefit proceeds. Ordinarily, the
amount of any loan or unpaid loan interest will be deducted from the General
Account and subaccounts in proportion to the values of each. The deduction may
be made by some other method if the owner requests it, and if such method is
acceptable to Lincoln Life.
EFFECT OF LOANS ON POLICY CHARGES. The existence of a policy loan on a monthly
anniversary day does not directly affect the calculation of the policy value
charge, the cost of insurance charge, or the monthly administrative charge;
these charges are currently determined by the policy value, which includes any
policy loan. The mortality and expense risk charge, asset management expenses,
12b-1 fees, and miscellaneous funds expenses are not incurred on any policy
loan.
LOAN REPAYMENTS. Loan repayments will ordinarily be allocated to the General
Account and the subaccounts in accord with the most recent premium allocation.
They may be allocated by some other method if the owner requests it, and if
such method is acceptable to Lincoln Life. Any loan not repaid at the time of
surrender of the policy or death of the insured will be deducted from the
amount otherwise payable.
POLICY LAPSE AND REINSTATEMENT
Except during the period of any no lapse benefit, insurance coverage under the
policy will be continued in force until the net cash surrender value is insuf-
ficient to cover the monthly deductions. Lapse will only occur when the policy
value less surrender charges and less outstanding policy loans is insufficient
to cover the cost of insurance deductions and a grace period expires without a
sufficient payment. Insurance coverage will continue during the grace period,
but the policy will be deemed to have no policy value for purposes of policy
loans and surrenders.
A grace period of 61 days will begin on the date Lincoln Life sends a notice
of any shortfall to the last known address of the owner or any assignee. The
owner must, during the grace period, make a payment sufficient to cover the
monthly deductions and any other charges due under the policy until the end of
the grace period. Failure to make a sufficient payment during the grace period
will cause the policy to lapse. Any net cash surrender value will be returned
to the owner. If the insured dies during the grace period, any due and unpaid
monthly deductions will be deducted from the death benefit.
A lapsed policy may be reinstated at any time within five years after the date
of lapse by submitting evidence of insurability satisfactory to Lincoln Life
and a premium sufficient to keep the policy in force for two months. The ef-
fective date of a reinstatement will be the first monthly anniversary day on
or next following the day the application for reinstatement is approved.
11
<PAGE>
NO LAPSE BENEFIT
Provided no outstanding loan existing on the policy, the policy provides a no
lapse benefit. The no lapse benefit guarantees that the policy will not lapse
prior to the no lapse benefit expiration date shown on the policy schedule.
Currently, the no lapse benefit expires 10 years from the policy date if the
issue age of the insured is age 75 or younger. For issue ages 76 and older,
the no lapse benefit expires 1 year from the policy date. Lincoln Life may at
any time lengthen or shorten the no lapse benefit for future new policies, but
will not unfairly discriminate among policy owners in determining the length
of the no lapse benefit.
SURRENDER OF THE POLICY
The owner may surrender the policy at any time during the lifetime of the in-
sured and receive the net cash surrender value. The net cash surrender value
is equal to the policy value minus any surrender charge, minus any outstanding
loan and minus any unpaid loan interest. The request must be made in writing
on a form suitable to Lincoln Life. The request will be effective the date the
request is received in the Home Office of Lincoln Life, or at a later date if
so requested by the owner. Ordinarily, the surrender will be processed within
seven days from the date the request for surrender is received at the Home Of-
fice of Lincoln Life. The tax treatment of a surrendered policy is discussed
under Federal tax matters, pages 14-16.
PROCEEDS AND PAYMENT OPTIONS
PROCEEDS. The amount payable under the policy on the surrender of the policy,
or upon the death of any insured person, is called the proceeds of the policy.
The proceeds to be paid on the death of the insured will be the death benefit
minus any outstanding policy loan, and minus any unpaid loan interest. The
proceeds to be paid on the surrender of the policy will be the net cash sur-
render value.
Any amount to be paid at the death of the insured or any other termination of
this policy will be paid in one sum unless otherwise provided. Interest will
be paid on this amount from date of death to date of payment at a specified
rate, not less than that required by law. All or part of the sum of this
amount and such interest credited to date of payment will be applied to any
payment option.
To the extent allowed by law, proceeds are not to be subject to any claims of
a beneficiary's creditors.
PAYMENT OPTIONS. Upon written request, all or part of the proceeds and inter-
est credited thereon may be applied to any payment option available from Lin-
coln Life at the time payment is to be made. Under certain conditions, payment
options will only be available with the consent of Lincoln Life. Such condi-
tions will exist if the proceeds to be settled under any option are $2,500 or
less, or if any installment or interest payment is $25 or less. In addition,
if any payee is a corporation, partnership, association, trustee, or assignee,
approval by Lincoln Life is needed before any proceeds can be applied to a
payment option.
The owner may elect any payment option while the insured is alive and may
change that election if that right has been reserved. When the proceeds become
payable to a beneficiary, the beneficiary may elect any payment option if the
proceeds are available to the beneficiary in one sum.
The option date is any date the policy terminates under the termination provi-
sion.
Any proceeds payable under the policy may also be settled under any other
method of settlement offered by Lincoln Life on the option date. Additional
interest as determined by Lincoln Life may be paid or credited from time to
time in addition to the payments guaranteed under a payment option.
When proceeds become payable under a payment option, a payment contract will
be issued to the payee in exchange for the policy. Such payment contract may
not be assigned. Any change in payment option may be made only if it is pro-
vided for in the payment contract. Under some of the payment options, proceeds
may be withdrawn under such payment option if provided for in the payment con-
tract. The amount to be withdrawn varies by the payment option.
GENERAL PROVISIONS
THE CONTRACT
The entire contract consists of the policy plus the application and any sup-
plemental application, plus any riders, plus any amendments. The policy is is-
sued in consideration of the application and payment of the initial premium.
Only statements in the application and any supplemental applications can be
used to contest the validity of the policy or defend a claim. These statements
are, in the absence of fraud, considered representations and not warranties. A
change in the policy will be binding on Lincoln Life only if the change is in
writing and the change is made by the President, Vice President, Secretary, or
Assistant Secretary of Lincoln Life.
The policy is nonparticipating; it will not share in the profit or surplus
earnings of Lincoln Life.
SUICIDE
If the insured commits suicide, while sane or insane, within two years from
the policy date, the total liability of Lincoln Life under the policy will be
the premiums paid, minus any policy loan, and minus any loan interest due.
If the insured commits suicide, while sane or insane, within two years from
the effective date of any rein-
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<PAGE>
statement, our total liability with respect to such reinstatement will be the
premiums paid, minus any withdrawals, since the effective date of the rein-
statement, minus any policy loan plus loan interest thereon.
REPRESENTATIONS AND CONTESTABILITY
All statements made in an application by, or on behalf of, the insured will,
in the absence of fraud, be deemed representations and not warranties. State-
ments may be used to contest a claim or validity of the policy only if these
statements are contained in the application for issue, reissue, or reinstate-
ment, or in any supplemental application, and a copy of that application or
supplemental application is attached to the policy. The policy will not be
contestable after it has been in force for two years during the lifetime of
the insured. Also, any reinstatement will not be contestable after that rein-
statement has been in force two years from its effective date during the life-
time of the insured. Any contest will then be based only on the application
for the reinstatement and will be subject to the same conditions as for con-
test of the policy.
INCORRECT AGE OR SEX
If there is an error in the age or sex of the insured, the excess of the death
benefit over the policy value will be adjusted as necessary to that which
would be purchased by the most recent cost of insurance charge at the correct
age and sex.
CHANGE OF OWNER OR BENEFICIARY
The owner of the policy is the owner identified in the application, or a suc-
cessor. All rights of the owner belong to the owner while the insured is
alive. The rights pass to the estate of the owner if the owner dies before the
insured. The owner may transfer all ownership rights and privileges to a new
owner. The request must be in writing on a form suitable to Lincoln Life. The
change will be effective the day that the request is received in the Home Of-
fice of Lincoln Life. Lincoln Life will not be responsible for any payment or
other action taken before having recorded the transfer. A change of ownership
will not, in and of itself, affect the interest of any beneficiary. A change
of ownership may have tax consequences.
The beneficiary is identified in the application for the policy, and will re-
ceive the proceeds when the insured dies. The beneficiary may be changed by
the owner while the insured is alive, and provided that any prior designation
does not prohibit such a change. A change will revoke any prior designation of
the beneficiary. The request to change beneficiary must be in writing on a
form suitable to Lincoln Life. Lincoln Life reserves the right to require the
policy for endorsement of the change of beneficiary designation.
If not otherwise provided, the interest of any beneficiary who dies before the
insured will pass to any other beneficiaries according to their interest. Fur-
thermore, if no beneficiary survives the insured, the proceeds will be paid in
one sum to the owner, if living. If the owner is not living, the proceeds will
be paid to the owner's estate.
ASSIGNMENT
Any assignment of the policy will not be binding on Lincoln Life unless it is
in writing on a form suitable to Lincoln Life and is received at the Home Of-
fice. Lincoln Life will not be responsible for the validity of any assignment,
and reserves the right to require the policy for endorsement of any assign-
ment. An assignment of the policy may have tax consequences.
REPORTS AND RECORDS
Lincoln Life will maintain all records relating to the Separate Account. Lin-
coln Life will mail to the owner at least once each year a report, without
charge, which will show the current policy value, the current net cash surren-
der value, the current death benefit, any current policy loans, any premiums
paid, any policy charges deducted, and any withdrawals made. The report will
also include any other data that may be required where the contract is deliv-
ered. In addition, Lincoln Life will pro- vide to policy owners semi-annually,
or otherwise as may be required by regulations under the Investment Company
Act of 1940, a report containing information about the operations of the
funds.
Lincoln Life has entered into an agreement with Delaware Management Holdings,
Inc., 2005 Market Street, Philadelphia, PA 19203, an affiliate of Lincoln
Life, to provide accounting services to the Separate Account.
PROJECTION OF BENEFITS AND VALUES
At the owner's request, Lincoln Life will provide a report to the owner which
shows projected future results. The request must be in writing on a form suit-
able to Lincoln Life. The report will be comparable in format to those shown
in Appendix B and will be based on assumptions in regard to the death benefit
as may be specified by the owner, planned premium payments as may be specified
by the owner, and such other assumptions as are necessary and specified either
by the owner or Lincoln Life. A reasonable fee may be charged for this projec-
tion.
POSTPONEMENT OF PAYMENTS
Payments of any amount payable on surrender, loan, withdrawal, or benefits
payable at death may be postponed whenever: (i) the New York Stock Exchange is
closed other than customary week-end and holiday closings, or trading on the
New York Stock Exchange is restricted as determined by the Securities and Ex-
change Commission; (ii) the Commission by order permits postponement for the
protection of owners; or (iii) an emergency exists, as determined by the Com-
mission, as a result of which disposal of securities is not reasonably practi-
cal or it is not reasonably practical to determine the value of the Separate
Account's net assets.
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<PAGE>
Transfers may also be postponed under such circumstances.
Requests for surrender, policy loan, or withdrawal of policy values attribut-
able to a premium paid by check may be delayed until such time as the check
has cleared the owner's bank.
ACCELERATED BENEFIT ELECTION RIDER
This rider is available to issue ages 0 through 80 and gives the owner the
right to receive a portion of the death benefit prior to death if the insured
is diagnosed as having an illness which with reasonable medical certainty will
cause death within 12 months. Upon receipt of proof of loss, up to one-half of
the eligible death benefit (as defined in the rider) may be advanced to the
owner in cash as an initial accelerated benefit. A limited amount of subse-
quent accelerated benefit is also available to pay premiums and interest
charges required on the policy. The amount of all advanced accelerated bene-
fits creates an interest-bearing lien against the death benefit otherwise pay-
able at death. There is no cost of insurance for this rider, but an adminis-
trative expense charge is payable upon application for benefits.
The availability of this rider is subject to approval by the State Insurance
Department of the State in which the policy is issued, and is also subject to
the current underwriting and issue procedures in place at the time of the ap-
plication. The underwriting and issue procedures are subject to change without
notice.
DISTRIBUTION OF THE POLICY
Lincoln Life intends to offer the policy in all jurisdictions where it is li-
censed to do business. The principal business address of Lincoln Life is 1300
South Clinton Street, Fort Wayne, Ind. 46802. American Fund Distributors, Inc.
(AFD), the principal underwriter for the policies, is registered with the Se-
curities and Exchange Commission as a broker-dealer, and is a member of the
National Association of Securities Dealers (NASD). The principal business ad-
dress of AFD is 333 S. Hope Street, 52nd Floor, Los Angeles, California 90071.
The policy will be sold by individuals who, in addition to being licensed as
life insurance agents for Lincoln Life, are also its registered representa-
tives. The policy will also be sold by properly licensed representatives of
independent broker-dealers which in turn have selling agreements with AFD and
have been appropriately licensed by state insurance departments as agents of
Lincoln Life. These representatives ordinarily receive commissions and service
fees up to 5.25% of all premiums paid, plus .25% of accumulated policy values
in the second policy year and each year thereafter. The broker-dealer or local
agency receives additional compensation on all premiums paid. In some situa-
tions, the broker-dealer or local agency may elect to share its commission
with the registered representative. Selling representatives may also be eligi-
ble for bonuses and non-cash compensation if certain production levels are
reached. All compensation is paid from Lincoln Life's resources.
FEDERAL TAX MATTERS
The following discussion is intended to provide a general description of the
federal income tax considerations associated with the policy. It does not pur-
port either to be complete or to cover all situations; this discussion is not
intended to be taken as tax advice. Consult a qualified tax advisor for more
complete information. This discussion is based upon Lincoln Life's understand-
ing of the present federal income tax laws as they are currently interpreted
by the Internal Revenue Service. No representation is made as to the likeli-
hood of continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Federal tax laws may change
without notice and as a result the taxable consequences to the insured, policy
owner, or beneficiary may be altered.
TAX STATUS OF THE POLICY
Section 7702 of the Internal Revenue Code of 1986, as amended (the Code) in-
cludes a definition of a life insurance contract for Federal tax purposes.
This definition can be satisfied by complying with either of two tests set
forth in section 7702. Although the Secretary of the Treasury (the Treasury)
is authorized to prescribe regulations interpreting the manner in which the
tests under section 7702 are to be applied, such regulations have not been is-
sued. In addition, section 7702 of the Code was amended by imposing certain
modified requirements with respect to the mortality (i.e., cost of insurance)
and other expense charges that are to be used in determining compliance of
such contracts with section 7702. Guidance as to how these modified require-
ments are to be applied is extremely limited. If a policy were determined not
to be a life insurance contract for purposes of section 7702, such policy
would not provide most of the tax advantages normally provided by a life in-
surance contract.
The exchange of an existing life insurance policy entered into before October
21, 1988, might cause such a policy to be treated as entered into after Octo-
ber 20, 1988, and in such circumstances, the policy would be subject to modi-
fied mortality and other expense charge requirements. Accordingly, the owner
of a policy entered into before October 21, 1988, should contact a competent
tax advisor before exchanging or making any other change, to such a policy to
determine whether the exchange or change would cause the policy to be treated
as entered into after October 20, 1988.
For a policy that is issued on the basis of a select rate class, while there
is some uncertainty due to the limited guidance on the modified section 7702
require-
14
<PAGE>
ment, Lincoln Life nonetheless believes that such a policy should meet the
section 7702 definition of a life insurance contract. For a policy that is is-
sued on a substandard basis (i.e., rate class involving higher than select
mortality risk), there is even more uncertainty, in particular as to how the
modified requirements are to be applied in determining whether such a policy
meets the section 7702 definition of a life insurance contract. Thus, it is
not clear whether or not such a policy would satisfy section 7702, particu-
larly if the owner pays the full amount of premiums permitted under the poli-
cy. If it is subsequently determined that a policy does not satisfy section
7702, Lincoln Life will take whatever steps are appropriate and necessary to
cause such a policy to comply with section 7702, including possibly refunding
any premiums paid that exceed the limitations allowable under section 7702
(together with interest or other earnings on any such premiums refunded as re-
quired by law). For these reasons, Lincoln Life reserves the right to modify
the policy as necessary to qualify it as a life insurance contract under sec-
tion 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by regula-
tion or otherwise for the investments of the Separate Account to be "ade-
quately diversified" in order for the policy to be treated as a life insurance
contract for federal tax purposes. The Separate Account, through the various
funds in which it invests, intends to comply with the diversification require-
ments prescribed in Treasury Regulations, which affect how each fund's assets
may be invested. Lincoln Life does not have control over the American Variable
Insurance Series or its investments. Nonetheless, Lincoln Life believes that
the funds will be operated in compliance with the requirements prescribed by
the Treasury.
The regulations relating to diversification requirements do not provide guid-
ance concerning the extent to which policy owners may direct their investments
to the subaccounts of a Separate Account. When additional guidance is provid-
ed, the policy may need to be modified to comply with such guidance. It is not
clear what this additional guidance will provide nor whether it will be ap-
plied on a prospective basis only. For these reasons, Lincoln Life reserves
the right to modify the policy as necessary to prevent the owner from being
considered the owner of the assets of the Separate Account or otherwise to
qualify the policy for favorable tax treatment.
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable life contract will not be treated as a life insurance con-
tract for tax purposes if the owner of the contract has excessive control over
the investments underlying the contract. The issuance of such guidelines may
require the company to impose limitations on a contract owner's right to con-
trol the investment. It is not known whether any such guidelines would have a
retroactive effect.
The following discussion assumes that the policy will qualify as a life insur-
ance contract for federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
1. IN GENERAL. Lincoln Life believes that the proceeds and cash value in-
creases of a policy should be treated in a manner consistent with a fixed ben-
efit life insurance policy for federal income tax purposes. Thus, the death
benefit under the policy should be excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code.
The addition of additional insurance, a policy loan, a withdrawal, a lapse
with outstanding indebtedness, exchange of a policy, or a surrender may have
tax consequences depending upon the circumstances. In addition, federal estate
and generation skipping transfer, and state and local estate inheritance, and
other tax consequences of ownership or receipt of policy proceeds depend upon
the circumstances of each owner or beneficiary. A competent tax advisor should
be consulted for further information. Generally, the owner will not be deemed
to be in constructive receipt of the cash value, including increments thereof,
under the policy until there is a distribution. The tax consequences of dis-
tributions from, and loans taken from or secured by, a policy depend on
whether the policy is classified as a "Modified Endowment Contract" under sec-
tion 7702A of the Code.
2. MODIFIED ENDOWMENT CONTRACTS. A policy may be treated as a Modified Endow-
ment Contract depending upon the amount of premiums paid in relation to the
death benefit provided under such policy. Because of the premium level contem-
plated under the policies, all policies entered into after June 20, 1988 are
or may become modified endowment contracts. In addition, if a policy is "mate-
rially changed," it may be treated as a Modified Endowment Contract depending
upon such relationship after such change. The premium limitation and material
change rules for determining whether a policy is a Modified Endowment Contract
are extremely complex. Moreover, due to the policy's flexibility, classifica-
tion of a policy as a Modified Endowment Contract will depend upon the circum-
stances of each policy. Accordingly, a prospective owner should contact a com-
petent tax advisor before purchasing a policy to determine the circumstances
in which the policy would be a Modified Endowment Contract. In addition, an
owner should contact a competent tax advisor before paying any additional pre-
mium or making any other change to, including an exchange of, a policy to de-
termine whether such premium payment or change would cause the policy to be
treated as a Modified Endowment Contract.
Lincoln Life will monitor premiums paid into each policy after the date of
this prospectus to determine when a premium payment will exceed the 7-pay lim-
itation and cause the policy to become a Modified Endowment Contract. In sim-
plified terms, the 7-pay limitation is satisfied only if the accumulated pre-
miums paid under a
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<PAGE>
policy do not at any time during the first seven policy years exceed the sum
of the equal annual premiums that would have been paid for a similar policy
providing for fully funded benefits at the end of the seven year period. If
the owner has given Lincoln Life instructions that the policy should not be
allowed to become a Modified Endowment Contract, any premiums in excess of the
7-pay limitation will first be applied to reduce any outstanding loan on the
policy, and any further excess will be refunded to the owner within 7 days. If
the owner has not given Lincoln Life instructions to the contrary, however,
the premium will be paid into the policy and a letter of notification of Modi-
fied Endowment Contract status will be sent to the owner. The letter of noti-
fication will include the available options, if any, for remedying the Modi-
fied Endowment Contract status of the policy.
3. DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS.
Policies classified as modified endowment contracts are subject to the follow-
ing tax rules: First, all distributions, including withdrawals and distribu-
tions upon surrender, from such a policy are treated as ordinary income sub-
ject to tax up to the amount equal to the excess (if any) of the cash value
immediately before the distribution over the investment in the policy (de-
scribed below) at such time. Second, loans taken from, or secured by, such a
policy are treated as distributions from such a policy and taxed accordingly.
Third, a 10 percent additional income tax is imposed on the portion of any
distribution from, or loan taken from or secured by, such a policy that is in-
cluded in income except where the distribution or loan is made on or after the
owner attains age 59 1/2, is attributable to the owner's becoming disabled, or
is part of a series of substantially equal periodic payments for the life of
the owner or the joint lives of the owner and the owner's beneficiary.
4. DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS.
Distributions from a policy that is not classified as a Modified Endowment
Contract are generally treated as first recovering the investment in the pol-
icy (described below) and then, only after the return of all such investment
in the policy, as distributing taxable income. An exception to this general
rule occurs in the case of a decrease in the specified amount, or any other
change that reduces benefits under the policy in the first 15-years after the
policy is issued and that results in a cash distribution to the owner in order
for the policy to continue complying with the section 7702 definitional lim-
its. In that case, such distribution will be taxed in whole or in part as or-
dinary income (to the extent of any gain in the policy) under rules prescribed
in section 7702.
Loans from, or secured by, a policy that is not a Modified Endowment Contract
are not treated as distributions. Instead, such loans are treated as indebted-
ness of the owner.
Upon a complete surrender or lapse of a policy that is not a Modified Endow-
ment Contract, if the amount received plus the amount of indebtedness exceeds
the total investment in the policy, the excess will generally be treated as
ordinary income subject to tax.
Finally, neither distributions (including withdrawals and distributions upon
surrender or lapse) nor loans from, or secured by, a policy that is not a Mod-
ified Endowment Contract are subject to the 10 percent additional income tax.
5. POLICY LOAN INTEREST. Generally, interest paid on any loan under a policy
which is owned by an individual is not deductible after 1990. In addition, in-
terest on any loan under a policy owned by a taxpayer and covering the life of
any individual who is an officer of or is financially interested in the busi-
ness carried on by that taxpayer will not be tax deductible to the extent the
aggregate amount of such loans with respect to contracts covering such indi-
vidual exceeds $50,000. No amount of policy loan interest is, however, deduct-
ible if the policy was deemed for federal tax purposes to be a single premium
life insurance contract. For interest paid or accrued after October 13, 1996,
additional rules apply which may reduce or eliminate any interest deduction.
The owner should consult a competent tax advisor concerning the rules and lim-
itations.
6. INVESTMENT IN THE POLICY. Investment in the policy means (i) the aggregate
amount of any premiums or other consideration paid for a policy, minus (ii)
the aggregate amount received under the policy which is excluded from the
gross income of the owner (except that the amount of any loan from, or secured
by, a policy that is a Modified Endowment Contract, to the extent such amount
is excluded from gross income, will be disregarded), plus, (iii) the amount of
any loan from, or secured by, a policy that is a Modified Endowment Contract
to the extent that such amount is included in the gross income of the owner.
7. MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by Lin-
coln Life (or its affiliates) to the same owner during any calendar year are
treated as one Modified Endowment Contract for purposes of determining the
amount includible in gross income under section 72(e) of the Code.
8. TAXATION OF ACCELERATED BENEFIT ELECTION RIDER. Lincoln Life believes that
any benefits paid under the Accelerated Benefit Election Rider generally will
be excludable from the recipient's income.
TAXATION OF THE SEPARATE ACCOUNT
Lincoln Life does not initially expect to incur any income tax upon the earn-
ings or the realized capital gains attributable to the Separate Account. Based
upon these expectations, no charge is being made currently to the Separate Ac-
count for federal income taxes which may be attributable to the Separate Ac-
count. If, however,
16
<PAGE>
Lincoln Life determines that it may incur such taxes, it may assess a charge
for those taxes from the policy.
VOTING RIGHTS
To the extent required by law, Lincoln Life will vote shares of the funds held
in the Separate Account at regular and special shareholder meetings of the
funds in accordance with instructions received from persons having voting in-
terests in the Separate Account. If, however, the Investment Company Act of
l940 or any regulation thereunder should be amended or if the present interpre-
tation thereof should change, and as a result Lincoln Life determines that it
is permitted to vote the fund shares in its own right, it may elect to do so.
The number of votes which each policy owner has the right to instruct will be
determined as one vote for each $100 of policy value in each subaccount. Frac-
tional shares will be allocated for amounts less than $100. The number of votes
which the policy owner has the right to instruct will be determined as of the
date coincident with the date established by the various series for determining
shareholders eligible to vote at the meetings of the funds. Voting instructions
will be solicited by written communications prior to such meeting in accordance
with procedures established by the funds. Lincoln Life will vote shares of each
fund as to which no timely instructions are received in proportion to the vot-
ing instructions which are received with respect to all policies participating
in that fund. Each person having a voting interest will receive proxy material,
reports and other materials relating to the appropriate portfolio.
DISREGARD OF VOTING INSTRUCTIONS. Lincoln Life may, when required by state in-
surance regulatory authorities, disregard voting instructions if the instruc-
tions require that the shares be voted so as to cause a change in the sub-clas-
sification or investment objective of any of the series of a fund or to approve
or disapprove an investment advisory contract for a fund. In addition, Lincoln
Life itself may disregard voting instructions in favor of changes initiated by
a policy owner in the investment policy or the investment advisor of a fund if
Lincoln Life reasonably disapproves of such changes. A change would be disap-
proved only if the proposed change is contrary to state law or prohibited by
state regulatory authorities or Lincoln Life determined that the change would
have an adverse effect on its General Account in that the proposed investment
policy for any fund may result in overly speculative or unsound investments. In
the event Lincoln Life does disregard voting instructions, a summary of that
action and the reasons for such action will be included in the next semiannual
report to policy owners.
STATE REGULATION OF LINCOLN LIFE AND THE SEPARATE ACCOUNT
Lincoln Life, a stock life insurance company organized under the laws of Indi-
ana, is subject to regulation by the Insurance Department of the State of Indi-
ana. An annual statement is filed with the Indiana Department of Insurance (De-
partment) on or before March 1st of each year covering the operations and re-
porting on the financial condition of Lincoln Life as of December 31 of the
preceding year. Periodically, the Commissioner of Insurance examines the lia-
bilities and reserves of Lincoln Life and the Separate Account and certifies
their adequacy, and a full examination of Lincoln Life's operations is con-
ducted by the Department at least once every five years.
In addition, Lincoln Life is subject to the insurance laws and regulations of
other states within which it is licensed or may become licensed to operate.
Generally, the insurance department of any other state applies the laws of the
state of domicile in determining permissible investments.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
Lincoln Life holds title to the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General Account
assets. Records are maintained of all purchases and redemptions of fund shares
held by each subaccount. Additional protection is provided in the form of a
blanket fidelity bond which covers directors and employees of Lincoln Life. The
bond, which was issued by Fidelity and Deposit Company of Maryland covers up to
$25,000,000.
The funds do not issue certificates. Thus, Lincoln Life holds the Separate Ac-
count's assets in an open account in lieu of stock certificates.
LEGAL PROCEEDINGS
[TO BE UPDATED]
There are no material legal or administrative proceedings pending or known to
be contemplated, other then ordinary routine litigation incidental to the busi-
ness, to which Lincoln Life or the Separate Account are a party or to which the
assets of the Separate Account are subject. The principal underwriter, AFD, is
not engaged in any material litigation of any nature.
17
<PAGE>
EXPERTS
The financial statements of the Separate Account and the financial statements
and schedules of Lincoln Life appearing in this prospectus and registration
statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports which also appear elsewhere in this document and in the
registration statement. The financial statements and schedules audited by Ernst
& Young LLP have been included in this document in reliance on their reports
given on their authority as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Denis G.
Schwartz, FSA as stated in the opinion filed as an exhibit to the registration
statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange Com-
mission, under the Securities Act of l933, as amended, with respect to the pol-
icy offered hereby. This prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the reg-
istration statement, to all of which reference is made for further information
concerning the Separate Account, Lincoln Life and the policy offered hereby.
Statements contained in this prospectus as to the contents of the policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
[FINANCIAL STATEMENTS TO BE FILED BY AMENDMENT]
18
<PAGE>
APPENDIX A
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and position(s)
with registrant Principal occupations last five years
- -------------------------------------------------------------------------------
<C> <S>
NANCY J. ALFORD Vice President [4/96-present], (formerly
Vice President Second Vice President [1/90-4/96]), Lincoln
National Life Insurance Co.
- -------------------------------------------------------------------------------
ROLAND C. BAKER President [1/95-present], First Penn-Pacific
Vice President and Director Life Insurance Co. Formerly: Chairman and
1801 S. Meyers Road CFO [7/88-1/95], Baker, Ralish, Shipley &
Oakbrook Terrace, Ill. 60181 Politzer, Inc.
- -------------------------------------------------------------------------------
JON A. BOSCIA President and Chief Executive Officer
President, Director and [10/96-present] (formerly Chief Operating
Chief Executive Officer Officer [5/94-10/96]), Lincoln National Life
Insurance Co. Formerly: President [7/91-
5/94] Lincoln Investment Management Inc.
- -------------------------------------------------------------------------------
C. LAWRENCE EDRIS Vice President [3/94-Present] (formerly
Vice President Senior Vice President [11/87-3/94]), Lincoln
National Life Insurance Co.
- -------------------------------------------------------------------------------
MELANIE T. HALL Vice President [1/96-Present] (formerly
Vice President Second Vice President [6/95-1/96]), Lincoln
National Life Insurance Co. Formerly:
Assistant Vice President [1/95-6/95], LNC
Equity Sales Corporation, Assistant Vice
President [12/93-1/95], Lincoln Investment
Management, Inc.; Assistant Vice President
[12/92-12/93], Lincoln National Life
Insurance Co.
- -------------------------------------------------------------------------------
J. MICHAEL HEMP President [11/96-Present], Lincoln Financial
Vice President Advisors Corp.; Vice President [10/95-
Present], Lincoln National Life Insurance
Co. Formerly: Regional Chief Executive
Officer [11/79-10/95], Lincoln Dallas RMO.
- -------------------------------------------------------------------------------
JACK D. HUNTER Executive Vice President [5/86-Present] and
Executive Vice President, General General Counsel [3/75-Present], Lincoln
Counsel and Director National Corporation and Executive Vice
200 East Berry Street President [8/86-Present] and General Counsel
Fort Wayne, Ind. 46802 [3/75-Present], The Lincoln National Life
Insurance Company
- -------------------------------------------------------------------------------
STEPHEN H. LEWIS Senior Vice President, [5/94-present]
Vice President Lincoln National Life Insurance Co.
Formerly: President [2/85-5/94], First Penn-
Pacific Life Insurance Co.
- -------------------------------------------------------------------------------
H. THOMAS MCMEEKIN President [5/94-present], Lincoln Investment
Director Management, Inc. (formerly Executive Vice
200 East Berry Street President [2/92-11/92], Senior Vice
Fort Wayne, Ind. 46802 President [11/87-2/92]; Executive Vice
President [5/94-Present], Lincoln National
Corporation (formerly Senior Vice President
[11/92-5/94])
- -------------------------------------------------------------------------------
IAN M. ROLLAND Chairman [1/92-present], Chief Executive
Director Officer [5/77-present] and President [12/75-
200 East Berry Street 1/92], Lincoln National Corp. Formerly:
Fort Wayne, Ind. 46802 Chairman [1/92-5/94], Chief Executive
Officer [7/77-5/94] and President [3/83-
1/93], Lincoln National Life Insurance Co.
- -------------------------------------------------------------------------------
ARTHUR S. ROSS Vice President [8/91-present], Lincoln
Vice President National Life Insurance Co.
- -------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
APPENDIX A CONTINUED
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and position(s)
with applicant Principal occupations last five years
- -------------------------------------------------------------------------------
<C> <S>
LAWRENCE T. ROWLAND Executive Vice President [10/96-
Executive Vice President and present] (formerly Senior Vice
Director President [1/93-10/96], Vice President
One Reinsurance Place [10/91-1/93]), Lincoln National Life
1700 Magnavox Way Insurance Co.
Fort Wayne, Ind. 46804
- -------------------------------------------------------------------------------
KEITH J. RYAN Vice President, Chief Financial
Vice President, Chief Financial Officer Officer and Assistant Treasurer [1/96-
and Assistant Treasurer present]. Formerly: Controller [6/95-
12/95], Business Controls Director
[11/90-6/95], Lincoln National Life
Insurance Co.
- -------------------------------------------------------------------------------
RICHARD C. VAUGHAN Executive Vice President and Chief
Director Financial Officer [1/95-present]
200 East Berry Street (formerly Senior Vice President [6/92-
Fort Wayne, Ind. 46802 1/95]), Lincoln National Corp.
- -------------------------------------------------------------------------------
MICHAEL R. WALKER Vice President [1/96-present], Lincoln
Vice President National Life Insurance Co. Formerly:
Vice President [3/96-1/96], Employers
Health Insurance Co.; Vice President
[7/85-3/93], Baker Hughes, Inc.
- -------------------------------------------------------------------------------
ROY V. WASHINGTON Vice President [7/96-present], Lincoln
Vice President National Life Insurance Co. (formerly,
Associate Counsel [2/95-7/96]).
Formerly: Director of Compliance
[8/94-2/95], Lincoln Investment
Management, Inc.; Compliance
Consultant [8/89-8/94], Lincoln
National Corp.
- -------------------------------------------------------------------------------
MICHAEL L. WRIGHT Senior Vice President [3/95-present],
Senior Vice President Lincoln National Life Insurance Co.
Formerly: Executive Vice President and
Chief Operating Officer [11/88-3/95],
The Associate Group.
- -------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
APPENDIX B
Illustrations of policy values
The following tables have been prepared to help show how values under the pol-
icy change with investment performance. The tables show death benefits, policy
values, and net cash surrender values for each of the first 10 policy years,
and for every five year period thereafter through the thirtieth policy year,
assuming that the return on the assets invested in the account were a uniform,
gross, after tax, annual rate of 0%, 6%, and 12%. The actual death benefits and
net cash surrender values would be different from those shown if a different
classification was used or if the gross annual returns averaged 0%, 6%, and 12%
but fluctuated over and under those averages throughout the years.
The death benefits and net cash surrender values shown on pages using current
charges are approximately those likely to be provided under the policy for the
investment returns indicated, assuming that the current cost of insurance
charges are deducted. Although the contract allows for maximum cost of insur-
ance charges specified in the 1980 Commissioners Standard Ordinary Mortality
Table, Lincoln Life expects that it will continue to charge the current cost of
insurance charges for the indefinite future. The figures shown on pages using
guaranteed maximum charges show the death benefits and net cash surrender val-
ues which would result if the guaranteed maximum cost of insurance charges were
deducted. However, these are primarily of interest only to show by comparison
the benefits of the lower current cost of insurance charges.
In each of the illustrations an assumed gross annual return is indicated. The
gross annual return used in the illustrations are then reduced by the asset
management charge (current average .51%), the mortality and expense risk charge
(.60% current, .90% guaranteed maximum), 12b-1 fees (.25%), and other expenses
incurred by the funds including printing, mailing, Directors' fees, etc. (cur-
rent average .03%) so that the actual numbers in the illustrations are net of
these charges and expenses.
21
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 45, Select Tobacco
$32,890 specified amount
$10,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ----------------------------- ----------------------------- ----------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ----------------------------- ----------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $32,890 $32,890 $ 32,890 $9,568 $10,144 $ 10,719 $8,918 $ 9,494 $ 10,069
2 11,025 32,890 32,890 32,890 9,152 10,291 11,495 8,502 9,641 10,845
3 11,576 32,890 32,890 32,890 8,752 10,441 12,331 8,152 9,841 11,731
4 12,155 32,890 32,890 32,890 8,366 10,594 13,232 7,766 9,994 12,632
5 12,763 32,890 32,890 32,890 7,995 10,751 14,204 7,445 10,201 13,654
- ------------------------------------------------------------------------------------------------------------
6 13,401 32,890 32,890 32,890 7,638 10,910 15,253 7,088 10,360 14,703
7 14,071 32,890 32,890 32,890 7,294 11,073 16,388 6,794 10,573 15,888
8 14,775 32,890 32,890 32,890 6,963 11,239 17,620 6,463 10,739 17,120
9 15,513 32,890 32,890 32,890 6,645 11,408 18,963 6,195 10,958 18,513
10 16,289 32,890 32,890 32,890 6,338 11,581 20,430 5,888 11,131 19,980
- ------------------------------------------------------------------------------------------------------------
15 20,789 32,890 32,890 42,290 5,230 13,151 31,559 5,230 13,151 31,559
20 26,533 32,890 32,890 59,896 4,266 14,977 49,095 4,266 14,977 49,095
25 33,864 32,890 32,890 89,033 3,429 17,101 76,753 3,429 17,101 76,753
30 43,219 32,890 32,890 128,981 2,701 19,574 120,543 2,701 19,574 120,543
40 70,400 32,890 32,890 315,884 1,518 25,798 300,842 1,518 25,798 300,842
- ------------------------------------------------------------------------------------------------------------
50 114,674 32,890 35,278 739,808 624 34,928 732,483 624 34,928 732,483
60 186,792 32,890 53,439 1,957,571 245 53,439 1,957,571 245 53,439 1,957,571
70 304,264 32,890 83,228 5,284,216 213 83,228 5,284,216 213 83,228 5,284,216
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this pro-
spectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more
or less than those shown. The death benefits and cash value for a contract
would be different from those shown if the actual gross annual returns aver-
aged 0.00%, 6.00% and 12.00% over a period of years, but also fluctuated above
or below those averages for individual contract years. No representations can
be made by Lincoln Life or any of the funds that these hypothetical gross an-
nual returns can be achieved for any one year or sustained over any period of
time. All values are net of the following charges: asset management = .51%
(current average); 12b-1 fees = .25%; mortality and expense risk = .60%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of in-
surance charges, monthly administrative charge, and policy value charge.
22
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 45, Select Tobacco
$32,890 specified amount
$10,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ---------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ---------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $10,500 $32,890 $32,890 $ 32,890 $9,506 $10,084 $ 10,662 $8,856 $9,434 $ 10,012
2 11,025 32,890 32,890 32,890 9,010 10,158 11,374 8,360 9,508 10,724
3 11,576 32,890 32,890 32,890 8,509 10,220 12,141 7,909 9,620 11,541
4 12,155 32,890 32,890 32,890 8,002 10,268 12,966 7,402 9,668 12,366
5 12,763 32,890 32,890 32,890 7,488 10,302 13,857 6,938 9,752 13,307
- ---------------------------------------------------------------------------------------------------------
6 13,401 32,890 32,890 32,890 6,963 10,318 14,819 6,413 9,768 14,269
7 14,071 32,890 32,890 32,890 6,423 10,313 15,859 5,923 9,813 15,359
8 14,775 32,890 32,890 32,890 5,866 10,284 16,985 5,366 9,784 16,485
9 15,513 32,890 32,890 32,890 5,286 10,226 18,205 4,836 9,776 17,755
10 16,289 32,890 32,890 32,890 4,679 10,136 19,531 4,229 9,686 19,081
- ---------------------------------------------------------------------------------------------------------
15 20,789 32,890 32,890 39,732 1,258 9,617 29,651 1,258 9,617 29,651
20 26,533 0 32,890 55,407 0 7,504 45,416 0 7,504 45,416
25 33,864 0 32,890 81,043 0 1,927 69,865 0 1,927 69,865
30 43,219 0 0 115,662 0 0 108,095 0 0 108,095
40 70,400 0 0 274,915 0 0 261,824 0 0 261,824
- ---------------------------------------------------------------------------------------------------------
50 114,674 0 0 624,877 0 0 618,690 0 0 618,690
60 186,792 0 0 1,604,714 0 0 1,604,714 0 0 1,604,714
70 304,264 0 0 4,204,024 0 0 4,204,024 0 0 4,204,024
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this pro-
spectus are illustrative only and should not be deemed a representation of past
or future gross annual returns. Actual gross annual returns may be more or less
than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representa-
tions can be made by Lincoln Life or any of the funds that these hypothetical
gross annual returns can be achieved for any one year or sustained over any pe-
riod of time. All values are net of the following charges: asset manage-
ment = .51% (current average); 12b-1 fees = .25%; mortality and expense
risk = .90%; and miscellaneous expense = .03%. Values illustrated are also net
of cost of insurance charge, monthly administrative charge, and policy value
charge.
23
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 45, Non-Tobacco
$42,170 specified amount
$10,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ----------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $10,500 $42,170 $42,170 $ 42,170 $9,626 $10,205 $ 10,784 $8,976 $ 9,555 $ 10,134
2 11,025 42,170 42,170 42,170 9,264 10,416 11,634 8,614 9,766 10,984
3 11,576 42,170 42,170 42,170 8,913 10,633 12,557 8,313 10,033 11,957
4 12,155 42,170 42,170 42,170 8,573 10,855 13,557 7,973 10,255 12,957
5 12,763 42,170 42,170 42,170 8,244 11,083 14,643 7,694 10,533 14,093
- ----------------------------------------------------------------------------------------------------------
6 13,401 42,170 42,170 42,170 7,925 11,318 15,820 7,375 10,768 15,270
7 14,071 42,170 42,170 42,170 7,616 11,558 17,097 7,116 11,058 16,597
8 14,775 42,170 42,170 42,170 7,317 11,805 18,482 6,817 11,305 17,982
9 15,513 42,170 42,170 42,170 7,028 12,059 19,984 6,578 11,609 19,534
10 16,289 42,170 42,170 42,170 6,747 12,319 21,614 6,297 11,869 21,164
- ----------------------------------------------------------------------------------------------------------
15 20,789 42,170 42,170 45,372 5,760 14,441 33,860 5,760 14,441 33,860
20 26,533 42,170 42,170 65,396 4,876 16,985 53,603 4,876 16,985 53,603
25 33,864 42,170 42,170 98,754 4,084 20,036 85,132 4,084 20,036 85,132
30 43,219 42,170 42,170 144,753 3,375 23,694 135,283 3,375 23,694 135,283
40 70,400 42,170 42,170 359,365 2,170 33,339 342,252 2,170 33,339 342,252
- ----------------------------------------------------------------------------------------------------------
50 114,674 42,170 47,919 865,711 1,203 47,445 857,140 1,203 47,445 857,140
60 186,792 42,170 73,036 2,290,717 740 73,036 2,290,717 740 73,036 2,290,717
70 304,264 42,170 113,749 6,183,502 643 113,749 6,183,502 643 113,749 6,183,502
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would
be different from those shown if the actual gross annual return averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expenses risk = .60%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
24
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 45, Select Non-Tobacco
$42,170 specified amount
$10,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums --------------------------- --------------------------- --------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest --------------------------- --------------------------- --------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6%gross 12% gross
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 10,500 $ 42,170 $ 42,170 $ 42,170 $ 9,545 $ 10,123 $ 10,702 $ 8,895 $ 9,473 $ 10,052
2 11,025 42,170 42,170 42,170 9,092 10,242 11,459 8,442 9,592 10,809
3 11,576 42,170 42,170 42,170 8,641 10,355 12,277 8,041 9,755 11,677
4 12,155 42,170 42,170 42,170 8,190 10,460 13,160 7,590 9,860 12,560
5 12,763 42,170 42,170 42,170 7,738 10,558 14,113 7,188 10,008 13,563
- ------------------------------------------------------------------------------------------------------
6 13,401 42,170 42,170 42,170 7,283 10,647 15,144 6,733 10,097 14,594
7 14,071 42,170 42,170 42,170 6,823 10,723 16,259 6,323 10,223 15,759
8 14,775 42,170 42,170 42,170 6,354 10,784 17,463 5,854 10,284 16,963
9 15,513 42,170 42,170 42,170 5,874 10,829 18,767 5,424 10,379 18,317
10 16,289 42,170 42,170 42,170 5,379 10,853 20,178 4,929 10,403 19,728
- ------------------------------------------------------------------------------------------------------
15 20,789 42,170 42,170 42,170 2,779 11,164 30,871 2,779 11,164 30,871
20 26,533 0 42,170 58,632 0 10,435 48,059 0 10,435 48,059
25 33,864 0 42,170 87,170 0 7,407 75,147 0 7,407 75,147
30 43,219 0 0 125,877 0 0 117,642 0 0 117,642
40 70,400 0 0 303,048 0 0 288,617 0 0 288,617
- ------------------------------------------------------------------------------------------------------
50 114,674 0 0 692,855 0 0 685,995 0 0 685,995
60 186,792 0 0 1,779,284 0 0 1,779,284 0 0 1,779,284
70 304,264 0 0 4,661,362 0 0 4,661,362 0 0 4,661,362
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would
be different from those shown if the actual gross annual returns average 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .90%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
25
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Female issue age 55, Select tobacco
$72,400 specified amount
$25,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ---------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ---------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 26,250 $72,400 $ 72,400 $ 72,400 $24,008 $25,451 $ 26,892 $22,383 $ 23,826 $ 29,267
2 27,563 72,400 72,400 72,400 23,054 25,912 28,932 21,429 24,287 27,307
3 28,941 72,400 72,400 72,400 22,135 26,382 31,131 20,635 24,882 29,631
4 30,388 72,400 72,400 72,400 21,250 26,862 33,503 19,750 25,362 32,003
5 31,907 72,400 72,400 72,400 20,398 27,351 36,059 19,023 25,976 34,684
- ---------------------------------------------------------------------------------------------------------
6 33,502 72,400 72,400 72,400 19,578 27,851 38,823 18,203 26,476 37,448
7 35,178 72,400 72,400 72,400 18,789 28,361 41,835 17,539 27,111 40,585
8 36,936 72,400 72,400 72,400 18,029 28,881 45,131 16,779 27,631 43,881
9 38,783 72,400 72,400 72,400 17,298 29,412 48,742 16,173 28,287 47,617
10 40,722 72,400 72,400 72,400 16,593 29,954 52,753 15,468 28,829 51,628
- ---------------------------------------------------------------------------------------------------------
15 51,973 72,400 72,400 97,251 14,145 34,528 83,837 14,145 34,528 83,837
20 66,332 72,400 72,400 143,246 12,017 39,850 133,874 12,017 39,850 133,874
25 84,659 72,400 72,400 225,431 10,167 46,043 214,696 10,167 46,043 214,696
30 108,049 72,400 72,400 358,271 8,558 53,378 341,211 8,558 53,378 341,211
40 176,000 72,400 73,617 851,161 5,945 72,888 842,734 5,945 72,888 842,734
- ---------------------------------------------------------------------------------------------------------
50 286,685 72,400 112,388 2,252,217 4,558 112,388 2,252,217 4,558 112,388 2,252,217
60 466,980 72,400 175,037 6,079,576 3,962 175,037 6,079,576 3,962 175,037 6,079,576
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .60%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
26
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Female issue age 55, Select Tobacco
$72,400 specified amount
$25,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ----------------------------
accumulated aassuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 26,250 $72,400 $72,400 $ 72,400 $23,768 $25,215 $ 26,663 $22,143 $23,590 $ 25,038
2 27,563 72,400 72,400 72,400 22,528 25,409 28,460 20,903 23,784 26,835
3 28,941 72,400 72,400 72,400 21,281 25,580 30,408 19,781 24,080 28,908
4 30,388 72,400 72,400 72,400 20,027 25,731 32,525 18,527 24,231 31,025
5 31,907 72,400 72,400 72,400 18,761 25,859 34,830 17,386 24,484 33,455
- ----------------------------------------------------------------------------------------------------------
6 33,502 72,400 72,400 72,400 17,476 25,956 37,339 16,101 24,581 35,964
7 35,178 72,400 72,400 72,400 16,160 26,013 40,072 14,910 24,763 38,822
8 36,936 72,400 72,400 72,400 14,796 26,015 43,047 13,546 24,765 41,797
9 38,783 72,400 72,400 72,400 13,366 25,948 46,290 12,241 24,823 45,165
10 40,722 72,400 72,400 72,400 11,856 25,799 49,835 10,731 24,674 48,710
- ----------------------------------------------------------------------------------------------------------
15 51,973 72,400 72,400 90,197 3,249 25,052 77,756 3,249 25,052 77,756
20 66,332 0 72,400 130,883 0 20,431 122,320 0 20,431 122,320
25 84,659 0 72,400 202,916 0 5,014 193,253 0 5,014 193,253
30 108,049 0 0 317,700 0 0 302,572 0 0 302,572
40 176,000 0 0 732,524 0 0 725,271 0 0 725,271
- ----------------------------------------------------------------------------------------------------------
50 286,685 0 0 1,881,156 0 0 1,881,156 0 0 1,881,156
60 466,980 0 0 4,928,246 0 0 4,928,246 0 0 4,928,246
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges asset manage-ment = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .90%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
27
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Female issue age 55, Select Non-Tobacco
$81,375 specified amount
$25,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ----------------------------- ----------------------------- ---------------------------
Accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ----------------------------- ----------------------------- ---------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 26,250 $81,375 $ 81,375 $ 81,375 $24,153 $ 25,605 $ 27,054 $22,528 $23,980 $ 25,429
2 27,563 81,375 81,375 81,375 23,333 26,226 29,283 21,708 24,601 27,658
3 28,941 81,375 81,375 81,375 22,539 26,864 31,699 21,039 25,364 30,199
4 30,388 81,375 81,375 81,375 21,770 27,518 34,321 20,270 26,019 32,821
5 31,907 81,375 81,375 81,375 21,025 28,191 37,165 19,650 26,816 35,790
- -----------------------------------------------------------------------------------------------------------
6 33,502 81,375 81,375 81,375 20,304 28,881 40,249 18,929 27,506 38,874
7 35,178 81,375 81,375 81,375 19,605 29,589 43,595 18,355 28,339 42,345
8 36,936 81,375 81,375 81,375 18,928 30,316 47,224 17,678 29,066 45,974
9 38,783 81,375 81,375 81,375 18,273 31,063 51,175 17,148 29,938 50,050
10 40,722 81,375 81,375 81,375 17,638 31,829 55,509 16,513 30,704 54,384
- -----------------------------------------------------------------------------------------------------------
15 51,973 81,375 81,375 102,724 15,517 37,834 88,555 15,517 37,834 88,555
20 66,332 81,375 81,375 151,931 13,616 45,035 141,992 13,616 45,035 141,992
25 84,659 81,375 81,375 239,685 11,914 53,793 228,271 11,914 53,793 228,271
30 108,049 81,375 81,375 381,940 10,389 64,498 363,752 10,389 64,498 363,752
40 176,000 81,375 94,169 920,744 7,799 93,236 911,627 7,799 93,236 911,627
- -----------------------------------------------------------------------------------------------------------
50 286,685 81,375 143,764 2,436,336 6,249 143,764 2,436,336 6,249 143,764 2,436,338
60 466,980 81,375 223,902 6,576,581 5,433 223,902 6,576,581 5,433 223,902 6,576,581
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .60%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge and policy value charge.
28
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Female issue age 55, Select Non-Tobacco
$81,375 specified amount
$25,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ----------------------------- ----------------------------- ----------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ----------------------------- ----------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 26,250 $81,375 $81,375 $ 81,375 $23,870 $25,319 $ 26,767 $22,245 $23,694 $ 25,142
2 27,563 81,375 81,375 81,375 22,739 25,623 28,676 21,114 23,998 27,051
3 28,941 81,375 81,375 81,375 21,607 25,912 30,743 20,107 24,412 29,243
4 30,388 81,375 81,375 81,375 20,473 26,188 32,985 18,973 24,688 31,485
5 31,907 81,375 81,375 81,375 19,331 26,445 35,418 17,956 25,070 34,043
- ------------------------------------------------------------------------------------------------------------
6 33,502 81,375 81,375 81,375 18,177 26,678 38,058 16,802 25,303 36,683
7 35,178 81,375 81,375 81,375 16,998 26,880 40,924 15,748 25,630 39,674
8 36,936 81,375 81,375 81,375 15,784 27,038 44,034 14,534 25,788 42,784
9 38,783 81,375 81,375 81,375 14,518 27,140 47,411 13,393 26,015 46,286
10 40,722 81,375 81,375 81,375 13,189 27,176 51,100 12,064 26,051 49,975
- ------------------------------------------------------------------------------------------------------------
15 51,973 81,375 81,375 92,631 5,804 27,668 79,854 5,804 27,668 79,854
20 66,332 0 81,375 134,970 0 24,910 126,140 0 24,910 126,140
25 84,659 0 81,375 209,765 0 13,040 199,776 0 13,040 199,776
30 108,049 0 0 329,298 0 0 313,617 0 0 313,617
40 176,000 0 0 761,420 0 0 753,882 0 0 753,882
- ------------------------------------------------------------------------------------------------------------
50 286,685 0 0 1,955,364 0 0 1,955,364 0 0 1,955,364
60 466,980 0 0 5,122,656 0 0 5,122,656 0 0 5,122,656
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .90%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charges, monthly administrative charge, and policy value charge.
29
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 65, Select Tobacco
$85,100 specified amount
$50,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ----------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $85,100 $ 85,100 $ 85,100 $48,081 $ 51,024 $ 53,909 $44,831 $ 47,774 $ 50,659
2 55,125 85,100 85,100 85,100 46,228 52,070 58,124 42,978 48,820 54,874
3 57,881 85,100 85,100 85,100 44,444 53,136 62,668 41,444 50,136 59,668
4 60,775 85,100 85,100 85,100 42,727 54,225 67,568 39,727 51,225 64,568
5 63,814 85,100 85,100 85,100 41,074 55,336 72,930 38,324 52,586 70,180
- ----------------------------------------------------------------------------------------------------------
6 67,005 85,100 85,100 90,747 39,483 56,470 78,911 36,733 53,720 76,161
7 70,355 85,100 85,100 96,544 37,951 57,626 85,437 35,451 55,126 82,937
8 73,873 85,100 85,100 102,744 36,476 58,807 92,562 33,976 56,307 90,062
9 77,566 85,100 85,100 109,395 35,057 60,012 100,362 32,807 57,762 98,112
10 81,445 85,100 85,100 116,556 33,690 61,241 108,931 31,440 58,991 106,681
- ----------------------------------------------------------------------------------------------------------
15 103,946 85,100 85,100 181,638 29,008 71,257 172,989 29,008 71,257 172,989
20 132,665 85,100 87,486 285,456 24,937 83,320 271,863 24,937 83,320 271,863
25 169,318 85,100 103,018 442,530 21,399 98,113 421,457 21,399 98,113 421,457
30 216,097 85,100 118,216 668,545 18,323 117,045 661,926 18,323 117,045 661,926
40 351,999 85,100 180,476 1,769,004 14,591 180,476 1,769,004 14,591 180,476 1,769,004
- ----------------------------------------------------------------------------------------------------------
50 573,370 85,100 281,078 4,775,205 12,685 281,078 4,775,205 12,685 281,078 4,775,205
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year of sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .60%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
30
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 65, Select Tobacco
$85,100 specified amount
$50,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ---------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ---------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6%gross 12% gross
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $85,100 $85,100 $ 85,100 $47,161 $50,139 $ 53,064 $43,911 $46,889 $ 49,814
2 55,125 85,100 85,100 85,100 44,158 50,167 56,418 40,908 46,917 53,168
3 57,881 85,100 85,100 85,100 40,971 50,070 60,121 37,971 47,070 57,121
4 60,775 85,100 85,100 85,100 37,565 49,792 64,243 34,565 46,792 61,243
5 63,814 85,100 85,100 85,100 33,895 49,324 68,873 31,145 46,574 66,123
- ---------------------------------------------------------------------------------------------------------
6 67,005 85,100 85,100 85,233 29,903 48,652 74,116 27,153 45,902 71,366
7 70,355 85,100 85,100 90,391 25,513 47,729 79,992 23,013 45,229 77,492
8 73,873 85,100 85,100 95,909 20,626 46,498 86,404 18,126 43,998 83,904
9 77,566 85,100 85,100 101,812 15,126 44,886 93,406 12,876 42,636 91,156
10 81,445 85,100 85,100 108,153 8,872 42,807 101,078 6,622 40,557 98,828
- ---------------------------------------------------------------------------------------------------------
15 103,946 0 85,100 166,040 0 23,479 158,133 0 23,479 158,133
20 132,665 0 0 257,068 0 0 244,826 0 0 244,826
25 169,318 0 0 392,602 0 0 373,907 0 0 373,907
30 216,097 0 0 584,310 0 0 578,525 0 0 578,525
40 351,999 0 0 1,500,535 0 0 1,500,535 0 0 1,500,535
- ---------------------------------------------------------------------------------------------------------
50 573,370 0 0 3,931,097 0 0 3,931,097 0 0 3,931,097
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees= .25%; mortality and expense risk = .90%; and miscellaneous
expense = .03%. Values illustrated are also net of cost of insurance charge,
monthly administrative charge, and policy value charge.
31
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 65, Select Non-Tobacco
$96,100 specified amount
$50,000 initial premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums ---------------------------- ---------------------------- ----------------------------
accumulated assuming hypothetical assuaming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest ---------------------------- ---------------------------- ----------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $96,100 $ 96,100 $ 96,100 $48,371 $ 51,332 $ 54,234 $45,121 $ 48,082 $ 50,984
2 55,125 96,100 96,100 96,100 46,788 52,699 58,827 43,538 49,449 55,577
3 57,881 96,100 96,100 96,100 45,255 54,103 63,809 42,255 51,103 60,809
4 60,775 96,100 96,100 96,100 43,770 55,544 69,212 40,770 52,544 66,212
5 63,814 96,100 96,100 96,100 42,332 57,024 75,073 39,582 54,274 72,323
- ----------------------------------------------------------------------------------------------------------
6 67,005 96,100 96,100 96,100 40,939 58,543 81,431 38,189 55,793 78,681
7 70,355 96,100 96,100 99,857 39,590 60,103 88,369 37,090 57,603 85,869
8 73,873 96,100 96,100 106,524 38,284 61,704 95,968 35,784 59,204 93,468
9 77,566 96,100 96,100 113,651 37,019 63,347 104,267 34,769 61,097 102,017
10 81,445 96,100 96,100 121,289 35,793 65,035 113,354 33,543 62,785 111,104
- ----------------------------------------------------------------------------------------------------------
15 103,946 96,100 96,100 190,217 31,781 77,978 181,159 31,781 77,978 181,159
20 132,665 96,100 96,172 301,114 28,186 93,498 286,775 28,186 93,498 286,775
25 169,318 96,100 117,711 475,318 24,966 112,106 452,684 24,966 112,106 452,684
30 216,097 96,100 136,450 725,384 22,082 135,099 718,202 22,082 135,099 718,202
40 351,999 96,100 208,313 1,919,404 18,179 208,313 1,919,404 18,179 208,313 1,919,404
- ----------------------------------------------------------------------------------------------------------
50 573,370 96,100 324,433 5,181,190 15,805 324,433 5,181,190 15,805 324,433 5,181,190
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross returns averaged 0.00%, 6.00% and
12.00% over a period of years, but also fluctuated above or below those averages
for individual contract years. No representations can be made by Lincoln Life or
any of the funds that these hypothetical gross annual returns can be achieved
for any one year or sustained over any period of time. All values are net of the
following charges: asset management = .51% (current average); 12b-1 fees = .25%;
mortality and expense risk = .60%; and miscellaneous expense = .03%. Values
illustrated are also net of cost of insurance charge, monthly administrative
charge, and policy value charge.
32
<PAGE>
AMERICAN LEGACY ESTATE BUILDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 65, Select Non-Tobacco
$96,100 specified amount
$50,000 initial premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
Premiums --------------------------- --------------------------- ---------------------------
accumulated assuming hypothetical assuming hypothetical assuming hypothetical
End of at 5% gross annual return of gross annual return of gross annual return of
policy interest --------------------------- --------------------------- ---------------------------
year per year 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross 0% gross 6% gross 12% gross
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 52,500 $96,100 $96,100 $ 96,100 $47,483 $50,450 $ 53,363 $44,233 $47,200 $ 50,113
2 55,125 96,100 96,100 96,100 44,861 50,813 57,002 41,611 47,563 53,752
3 57,881 56,100 96,100 96,100 42,117 51,079 60,959 39,117 48,079 57,959
4 60,775 96,100 96,100 96,100 39,227 51,232 65,286 36,227 48,232 62,286
5 63,814 96,100 96,100 96,100 36,155 51,254 70,044 33,405 48,504 67,294
- -------------------------------------------------------------------------------------------------------
6 67,005 96,100 96,100 96,100 32,858 51,117 75,308 30,108 48,367 72,558
7 70,355 96,100 96,100 96,100 29,280 50,786 81,173 26,780 48,286 78,673
8 73,873 96,100 96,100 97,409 25,346 50,216 87,756 22,846 47,716 85,256
9 77,566 96,100 96,100 103,613 20,969 49,313 95,058 18,719 47,063 92,808
10 81,445 96,100 96,100 110,247 16,053 48,033 103,034 13,803 45,783 100,784
- -------------------------------------------------------------------------------------------------------
15 103,946 0 96,100 170,332 0 36,260 162,221 0 36,260 162,221
20 132,665 0 0 265,418 0 0 252,779 0 0 252,779
25 169,318 0 0 407,260 0 0 387,867 0 0 387,867
30 216,097 0 0 606,822 0 0 600,814 0 0 600,814
40 351,999 0 0 1,558,348 0 0 1,558,348 0 0 1,558,348
- -------------------------------------------------------------------------------------------------------
50 573,370 0 0 4,082,555 0 0 4,082,555 0 0 4,082,555
</TABLE>
The hypothetical gross annual returns shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future gross annual returns. Actual gross annual returns may be more or
less than those shown. The death benefits and cash value for a contract would be
different from those shown if the actual gross annual returns averaged 0.00%,
6.00% and 12.00% over a period of years, but also fluctuated above or below
those averages for individual contract years. No representations can be made by
Lincoln Life or any of the funds that these hypothetical gross annual returns
can be achieved for any one year or sustained over any period of time. All
values are net of the following charges: asset management = .51% (current
average); 12b-1 fees = .25%; mortality and expense risk = .90%; and
miscellaneous expense = .03%. Values illustrated are also net of cost of
insurance charge, monthly administrative charge, and policy value charge.
33
<PAGE>
APPENDIX C
Definitions for Separate Account F
Age -- The age at the insured's last birthday on the policy date.
Attained age -- The age of the insured on the policy anniversary on or next
preceding any monthly anniversary day.
Beneficiary -- The beneficiary is designated by the owner in the application.
If changed, the beneficiary is as shown in the latest change filed with Lin-
coln Life. If no beneficiary survives the insured, the owner or the owner's
estate will receive the benefit.
Free look period -- The period of time in which the owner may cancel the pol-
icy and receive a refund. The owner may cancel the policy within 10 days of
receipt, or 45 days after Part 1 of the application is signed, or within 10
days after mailing or personal delivery of the Notice of Withdrawal Right.
Fund -- Any of the funds in which the Separate Account may invest; currently,
the American Variable Insurance Series is available.
General account -- The assets of Lincoln Life other than those allocated to
the Separate Account or any other Separate Account.
Initial premium -- The premium which is paid at the issue of the policy to
place the policy in force. The initial premium must be at least equal to 80%
of the federal maximum premium limitation at issue.
Insured--The person upon whose life the policy is issued, and who is so named
on the Policy Schedule.
Investment amount -- The portion of the policy value allocated to the Separate
Account.
Lincoln Life (we, our, us)--Lincoln National Life Insurance Co.
Monthly anniversary day -- The same date in each month as the policy date.
Net cash surrender value -- The amount payable to the owner upon surrender of
the policy. It is equal to the policy value minus any surrender charge, minus
any outstanding loan and minus any unpaid loan interest.
Net investment results -- The net investment results are the changes in the
unit values of the subaccounts from the previous valuation day to the current
day. The net investment results are equal to the per unit change in the market
value of each fund's assets, reduced by the per unit share of the asset man-
agement charge, 12b-1 fee, any miscellaneous expenses incurred by the fund,
and the mortality and expense risk charge for the period, and increased by the
per unit share of any dividends credited by the fund to the subaccount during
the period.
No Lapse Benefit -- The guarantee that the policy will not lapse due to insuf-
ficient net cash surrender value before the no lapse benefit expiration date
shown on the policy schedule. The no lapse benefit period currently expires on
the 10th policy anniversary for issue ages 75 and younger, and on the 1st pol-
icy anniversary for issue ages above age 75.
Option date -- Any date the policy terminates under the termination provision.
Owner (you, your) -- The person so designated in the application or as subse-
quently changed. If a policy has been absolutely assigned, the assignee is the
owner. A collateral assignee is not the owner.
Policy -- The Flexible Premium Variable Life Insurance policy offered by Lin-
coln Life and described in this prospectus.
Policy date -- The date set forth in the policy that is used to determine pol-
icy years and policy months. Policy anniversaries are measured from the policy
date. The policy date is ordinarily the earlier of the date the full initial
premium is received from the owner or the date on which the policy is approved
for issue.
Policy value -- The sum of all amounts allocated to the Separate Account and
to the General Account at any time, plus any outstanding loan.
Proceeds -- The amount payable on surrender of the policy, or after the death
of any insured person. The proceeds will be different on each of these events.
Record date -- The date the policy is recorded on the books of Lincoln Life as
an in-force policy. Ordinarily, the policy will be recorded as in-force within
three business days after the later of the date we receive the last outstand-
ing requirement or the date of underwriting approval. The record date controls
the timing of the transfer of initial assets from the General Account to the
various subaccounts.
Separate Account -- The Lincoln Life Flexible Premium Variable Life Account F,
a Separate Account established by Lincoln Life to receive and invest net pre-
miums paid under the policy.
Series -- Any of the series in which the Separate Account may invest; current-
ly, the sole series is American Variable Insurance Series.
Specified amount -- The minimum death benefit payable under the policy so long
as the policy remains in force. The death benefit proceeds will be reduced by
any outstanding loan and any due and unpaid charges, and increased by any un-
earned loan interest.
Subaccount -- A subdivision of the Separate Account. Each subaccount invests
exclusively in the shares of a specified fund.
Surrender charge -- A charge deducted from policy value upon surrender of the
policy.
34
<PAGE>
Unit -- An accounting unit of measure used to calculate the value of an invest-
ment in a specified subaccount.
Unit value -- The dollar value of a unit in a specified subaccount on a speci-
fied valuation date.
35
<PAGE>
PART II
CONTENTS OF THIS REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
Facing Page
Cross Reference Sheet required by Rule 404(c)
A Prospectus consisting of Pages relating to the Flexible Premium
Variable Life Insurance Policies
Undertaking to File Reports
Indemnification Undertaking
Representations Relating to Rule 6e-3(T)
Representations Relating to Section 26(e)(2)A of the Investment Company
Act of 1940
Signature Page
Written Consents of the following persons:
Denis G. Schwartz, FSA
(Counsel)*
(Independent Auditors)*
Exhibits
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
INDEMNIFICATION UNDERTAKING
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant, 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 liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
- ------------
* To be filed by amendment
<PAGE>
REPRESENTATIONS RELATING TO RULE 6e-3(T)
1. This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
2. Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(B) under the
Investment Company Act of 1940.
3. Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
4. The level of the mortality and expense risk is within the range of industry
practice for comparable flexible contracts.
5. The proceeds from explicit sales loads will cover the expected costs of
distributing the flexible contracts.
The methodology used to support the representation made in paragraph 4 above
is based on an analysis of flexible premium variable life policies submitted to
the Commission and currently available for sale which contain similar guarantees
and are sold in similar markets. Registrant undertakes to keep and make
available to the Commission on request the documents used to support the
representation in paragraph 4 above.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT
COMPANY ACT OF 1940
The Lincoln National Life Insurance Company hereby represents that the fees
and charges deducted under the Policies registered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by The
Lincoln National Life Insurance Company.
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
(1) Resolution of Board of Directors of Lincoln Life
authorizing establishment of Registrant Herewith
(2) Custodian Agreement Not Applicable
(3) (a) Form of Underwriting Agreement *
(b) Form of Dealer Agreement *
(c) Schedule of Sales Commissions *
(4) Other Agreements Not Applicable
(5) Flexible Premium Policy Herewith
(6) (a) Articles of Incorporation of Lincoln Life Herewith
(b) By-Laws of Lincoln Life Herewith
(7) Contracts of Insurance Not Applicable
(8) Form of Fund Participation Agreement *
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(9) Other Material Contracts
(a) Form of Service Agreement between Delaware Management
Company and Lincoln National Life Insurance Company Herewith
(10) Application Form Herewith
(11) Consent of Independent Accountants *
(12) Opinion and Consent of Counsel *
(13) Actuarial Opinion and Consent Herewith
(14) Actuarial basis of payment and cash value adjustment
pursuant to Rule 6e-3(T)(b)(13)(v)(B) and Procedures Memorandum
pursuant to Rule 6e-3(T)(b)(12)(iii) Herewith
(15) Powers of Attorney Not Applicable
</TABLE>
*To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Lincoln Life Flexible Premium Variable Life Account F has duly
caused this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the city of Fort Wayne, State of Indiana, on the
19th day of November 1997.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY on its own
behalf and on behalf of its SEPARATE
ACCOUNT F
By: /s/ Jon A. Boscia
---------------------------------
Jon A. Boscia
President
Pursuant to the Securities Act of 1933, this registration satement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Jon A. Boscia
- ------------------------- President and Director November 19, 1997
Jon A. Boscia (Principal Executive
Officer)
/s/ Ian M. Rolland
- ------------------------- Director November 19, 1997
Ian M. Rolland
/s/ Jack D. Hunter
- ------------------------- Executive Vice President, November 19, 1997
Jack D. Hunter General Counsel and
Director
/s/ Richard C. Vaughan
- ------------------------- Director November 19, 1997
Richard C. Vaughan
/s/ Lawrence T. Rowland
- ------------------------- Executive Vice President November 19, 1997
Lawrence T. Rowland and Director
/s/ Keith J. Ryan
- ------------------------- Vice President, Chief November 19, 1997
Keith J. Ryan Financial Officer and
Assistant Treasurer
(Principal Accounting Officer
and Principal Financial Officer)
/s/ H. Thomas McMeekin
- ------------------------- Director November 19, 1997
H. Thomas McMeekin
</TABLE>
<PAGE>
EXHIBIT 1
Board Resolution
of
The Lincoln National Life Insurance Company
Adopted November 4, 1982
82-28 RESOLVED, That the resolution relating to the establishment of
segregated investment accounts, adopted by the Board of Directors on
September 12, 1968, is hereby rescinded effective this date; and
RESOLVED FURTHER, That the chief executive officers of the Company is
hereby authorized in his discretion from time to time to establish one or
more segregated investment accounts in accordance with the provisions of
the Indiana Insurance Law, for such purpose or purposes as he may determine
and as may be appropriate under the Indiana Insurance Law; and
RESOLVED FURTHER, That if in the opinion of legal counsel of the
Company it is necessary or desirable to register any of such accounts under
the Investment Company Act of 1940 or to register a security issued by any
such account under the Securities Act of 1933, or to make application for
exemption from registration, the chief executive officer or such other
officers as he may designate are hereby authorized to accomplish any such
registration or to make any such application for exemption, and to perform
all other acts as may be desirable or necessary in connection with the
conduct of business of the Company with respect to any such account.
<PAGE>
ESTABLISHMENT OF SEGREGATED INVESTMENT ACCOUNT
of
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Pursuant to the authority given me by Resolution No. 82-28 of the Board of
Directors of The Lincoln National Life Insurance Company (the "Company") dated
November 4, 1982, I establish a segregated investment account designated
"Lincoln National Flexible Premium Variable Life Account F" (the "Account").
The Account is to be used in connection with the issuance by the Company of
flexible premium variable life insurance policies (the "Policies"). The Account
will be registered as a unit investment trust with the Securities and Exchange
Commission ("SEC") and shall invest in shares of investment companies which are
registered with the SEC. The Account's investment objectives, policies, and
limitations shall be in accordance with (1) the registration statement for the
Policies filed with the SEC under the Securities Act of 1933 (Registration No.
33- ), (2) applicable provisions of Indiana Insurance Law and any
other applicable legal requirements.
Dated May 29, 1987 /s/ IAN M. ROLLAND
-------------------------------
Ian M. Rolland
Chief Executive Officer
<PAGE>
AMENDMENT TO THAT CERTAIN
MEMORANDUM EXECUTED MAY 29, 1987,
REGARDING:
ESTABLISHMENT OF SEGREGATED INVESTMENT ACCOUNT
(LINCOLN NATIONAL FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F)
of
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Pursuant to the authority given me by Resolution No. 82-28 of the Board of
Directors of The Lincoln National Life Insurance Company (the "Company") dated
November 4, 1982, I hereby amend that certain memorandum executed on May 29,
1987, by (the "Organizing Memorandum"), (copy attached) for the sole purpose of
changing the name of the Separate Account. Henceforth the name of the Separate
Account shall be: "Lincoln Life Flexible Premium Variable Life Account F."
All other terms and provisions of the Organizing Memorandum remain in
effect.
/s/ JON A. BOSCIA
-----------------------------------
Jon A. Boscia
Chief Executive Officer
Effective Date: June 18, 1997
<PAGE>
EXHIBIT 5
(LOGO TO COME)
(A STOCK COMPANY)
THE AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY BE
FIXED OR MAY VARY DEPENDING ON THE INVESTMENT EXPERIENCE OF THIS POLICY.
THE CASH SURRENDER VALUE WILL INCREASE OR DECREASE IN ACCORDANCE WITH THE
INVESTMENT EXPERIENCE OF THIS POLICY. NO MINIMUM CASH SURRENDER VALUE IS
GUARANTEED.
We agree to pay the Proceeds to the Beneficiary after receipt of due proof of
the death of the Insured while this Policy is in force.
READ THIS POLICY CAREFULLY. This is a legal contract between the Owner and The
Lincoln National Life Insurance Company.
RIGHT TO RETURN THIS POLICY. This Policy may be returned to the agent through
whom it was purchased or to Our Home Office by the latest of: (1) 10 days af-
ter its receipt; or (2) 45 days after Part 1 o the application was signed; or
(3) 10 days after We mail or deliver the Notice of Withdrawal Right. If this
right is exercised, We will refund any premium paid and this Policy will be
void from the beginning.
Signed for The Lincoln National Life Insurance Company at its Home Office in
Fort Wayne, Indiana.
/s/ Jon A. Boscia /s/ C. Suzanne Womack
- ------------------------ ----------------------------
JON A. BOSCIA, PRESIDENT C. SUZANNE WOMACK, SECRETARY
Flexible Premium Variable Life Insurance Policy
Flexible Premiums Payable Until Death
Adjustable Death Benefit
Death Benefit Payable at Death
Nonparticipating - No Dividends
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
POLICY SCHEDULE
TABLE OF GUARANTEED MAXIMUM INSURANCE RATES
The Contract............................................................... 8
Ownership, Beneficiary, and Assignment..................................... 9
Premium, Grace Period, No Lapse Benefit, Continuation of Insurance, and
Reinstatement............................................................. 9
General Account............................................................ 10
Separate Account........................................................... 10
Investment Amount and Transfers............................................ 11
Policy Values.............................................................. 11
Surrender and Withdrawals.................................................. 13
Loans...................................................................... 13
Death Benefit.............................................................. 14
Proceeds................................................................... 14
Riders and Amendments, if any
</TABLE>
As used in this Policy, the terms "We", "Us", and "Our" refer to The Lincoln
National Life Insurance Company.
"Insured," as used in this Policy, means the person so named on the Policy
Schedule.
<PAGE>
POLICY SCHEDULE
COVERAGE MAY EXPIRE IF NO PREMIUMS ARE PAID AFTER THE INITIAL PREMIUM OR IF
SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE. COVERAGE MAY ALSO BE
AFFECTED BY A CHANGE IN CURRENT VALUES.
POLICY NUMBER: 23-123456
POLICY DATE: JULY 1, 1998
INSURED: ABRAHAM LINCOLN
GUIDELINE SINGLE PREMIUM: $15,120
SPECIFIED AMOUNT: $100,000 INCLUDES THE POLICY VALUE
INITIAL PREMIUM: $14,969, WHICH IS
99% OF THE GUIDELINE SINGLE PREMIUM
MALE AGE: 35
POLICY LOAN RATE: 6% IN ARREARS
RATE CLASS: NON-TOBACCO USER SELECT
LOAN COLLATERAL RATE: 4%
MONTHLY ANNIVERSARY DAY: 01
MINIMUM SPECIFIED AMOUNT: $10,000 GENERAL ACCOUNT GUARANTEED INTEREST
RATE: .32737% PER MONTH WHICH EQUALS
4% PER YEAR
MINIMUM WITHDRAWAL AMOUNT: $1,000
MAXIMUM WITHDRAWAL PERCENT: 10%
WITHDRAWAL CHARGE: $20.00
CHARGE FOR TRANSFER: $10.00 GUARANTEED MAXIMUM DAILY MORTALITY
AND EXPENSE RISK CHARGE
RATE: .00246575% (.90% ANNUALLY)
NO LAPSE BENEFIT EXPIRATION DATE: JULY 1, 2008
POLICY VALUE CHARGE RATE:
POLICY YEARS 1-10: 1.20%
THEREAFTER UNTIL AGE 100: 0.20%
MONTHLY ADMINISTRATIVE CHARGE: $5.00
APPLIES ONLY WHEN THE POLICY VALUE
IS LESS THAN $50,000 AND BEFORE AGE
100
<PAGE>
POLICY SCHEDULE
POLICY NUMBER: 23-123456 POLICY DATE: JULY 1, 1998
INSURED: ABRAHAM LINCOLN
TABLE OF SURRENDER CHARGES
<TABLE>
<CAPTION>
Policy Surrender Policy Surrender
Year Charges Year Charges
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $973 7 $748
2 973 8 748
3 898 9 674
4 898 10 674
5 823 11 599
6 823 12 299
THEREAFTER 0
</TABLE>
SURRENDER CHARGES WILL ONLY BE DEDUCTED FROM THE POLICY VALUE IF THIS POLICY
TERMINATES DUE TO LAPSE OR SURRENDER.
<PAGE>
POLICY SCHEDULE
ACCOUNT AND SUBACCOUNTS
POLICY NUMBER: 23-123456 POLICY DATE: JULY 1, 1998
INSURED: ABRAHAM LINCOLN
ACCOUNT: LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F
SUBACCOUNTS: EACH SUBACCOUNT OF THE LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE
LIFE ACCOUNT F INVESTS IN A SPECIFIC FUND. LISTED BELOW ARE THE SUBACCOUNTS,
THE FUNDS, AND THE INITIAL ALLOCATION OF PREMIUMS.
<TABLE>
<CAPTION>
Subaccount Fund Allocation
- ------------------------------------------------------------------------------
<S> <C> <C>
[INTERNATIONAL] [AMERICAN VARIABLE INSURANCE SERIES, 0%
INTERNATIONAL FUND]
[ASSET ALLOCATION] [AMERICAN VARIABLE INSURANCE SERIES, 0%
ASSET ALLOCATION FUND]
[GROWTH] [AMERICAN VARIABLE INSURANCE SERIES, 100%
GROWTH FUND]
[GLOBAL GROWTH] [AMERICAN VARIABLE INSURANCE SERIES, 0%
GLOBAL GROWTH FUND]
[GROWTH-INCOME] [AMERICAN VARIABLE INSURANCE SERIES, 0%
GROWTH-INCOME FUND]
[HIGH-YIELD BOND] [AMERICAN VARIABLE INSURANCE SERIES, 0%
HIGH-YIELD BOND FUND]
[U.S. GOVERNMENT/ [AMERICAN VARIABLE INSURANCE SERIES, 0%
AAA-RATED SECURITIES] U.S. GOVERNMENT/AAA-RATED SECURITIES FUND]
[CASH MANAGEMENT] [AMERICAN VARIABLE INSURANCE SERIES, 0%
CASH MANAGEMENT FUND]
[BOND] [AMERICAN VARIABLE INSURANCE SERIES, 0%
BOND FUND]
</TABLE>
IN ADDITION TO THE PREMIUM ALLOCATIONS ABOVE, THE INITIAL ALLOCATION OF PREMI-
UMS TO THE GENERAL ACCOUNT IS INDICATED BELOW:
LINCOLN LIFE GENERAL ACCOUNT 0%
<PAGE>
TABLE OF GUARANTEED MAXIMUM INSURANCE RATES
Monthly Rates per $1000
Non-Tobacco User Select Rate Class
<TABLE>
<CAPTION>
Monthly Cost of Monthly cost of
Attained Insurance Rate Attained Insurance Rate
Age Male Female Age Male Female
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0 .21833 .15667 50 .42750 .36167
1 .08583 .07000 51 .46667 .38917
2 .08167 .06667 52 .51167 .42083
3 .08000 .06500 53 .56333 .45583
4 .07667 .06333 54 .62083 .49167
5 .07333 .06167 55 .68500 .53000
6 .06917 .06000 56 .75500 .56833
7 .06500 .05917 57 .82917 .60583
8 .06250 .05750 58 .91167 .64333
9 .06083 .05667 59 1.00500 .68583
10 .06250 .05667 60 1.10833 .73583
11 .06750 .05833 61 1.22333 .79750
12 .07583 .06083 62 1.35667 .87417
13 .08917 .06417 63 1.50667 .96917
14 .10333 .06833 64 1.67417 1.07500
15 .11833 .07250 65 1.85750 1.18917
16 .12333 .07500 66 2.05583 1.30833
17 .13083 .07750 67 2.26833 1.42917
18 .13583 .08000 68 2.49917 1.55417
19 .13917 .08250 69 2.75583 1.69417
20 .14000 .08417 70 3.04583 1.85833
21 .13833 .08583 71 3.37667 2.05833
22 .13583 .08667 72 3.75917 2.30333
23 .13250 .08833 73 4.19333 2.59750
24 .12917 .09000 74 4.67000 2.93583
25 .12500 .09167 75 5.18000 3.31417
26 .12250 .09417 76 5.71917 3.72333
27 .12083 .09583 77 6.28333 4.16250
28 .12000 .09833 78 6.87583 4.63833
29 .12000 .10167 79 7.51583 5.16583
30 .12083 .10417 80 8.22333 5.76667
31 .12333 .10750 81 9.01750 6.45833
32 .12667 .11083 82 9.91500 7.25667
33 .13167 .11500 83 10.91250 8.15917
34 .13750 .12000 84 11.99000 9.15500
35 .14417 .12583 85 13.12417 10.23500
36 .15167 .13417 86 14.29917 11.39083
37 .16167 .14417 87 15.49917 12.62250
38 .17250 .15500 88 16.71833 13.90383
39 .18417 .16667 89 17.97417 15.32667
40 .19833 .18083 90 19.28500 16.82167
41 .21333 .19583 91 20.68167 18.45250
42 .22917 .21083 92 22.21750 20.28000
43 .24667 .22583 93 24.04333 22.43750
44 .26583 .24083 94 26.50333 25.22250
45 .28750 .25750 95 30.20667 29.24917
46 .31083 .27500 96 36.35750 35.72167
47 .33583 .29417 97 47.21167 46.86750
48 .36333 .31417 98 66.20667 66.90417
49 .39333 .33667 99 90.90909 90.90909
Thereafter 00.00000 00.00000
</TABLE>
The rates shown are for a non-tobacco user select rate class. If a rate class
(other than non-tobacco user select) is shown on the Policy Schedule, the
guaranteed maximum cost of insurance rate will be determined by multiplying
the rates for a non-tobacco user select rate class shown above by the rated
class factor shown in the table below. If the rate class includes an extra
amount, as shown on the Policy Schedule, the guaranteed maximum insurance
rates will be increase by one-twelfth of the extra amount multiplied by the
ratio of the death benefit to the death benefit minus the policy value. The
rates shown above are based on the 1980 Commissioners Standard Ordinary Mor-
tality Table, Age Last Birthday for attained ages under 16 and 1980 Commis-
sioners Standard Ordinary Nonsmoker Mortality Table, Age Last Birthday for at-
tained ages 16 and over.
Rated Class Factors
A = 1.25 F = 2.50
B = 1.50 H = 3.00
C = 1.75 J = 3.50
D = 2.00 L = 4.00
E = 2.25 P = 5.00
<PAGE>
TABLE OF GUARANTEED MAXIMUM INSURANCE RATES
Monthly rates per $1,000
Tobacco User Select Rate Class
<TABLE>
<CAPTION>
Monthly Cost of Monthly Cost of
Attained Insurance Rate Attained Insurance Rate
Age Male Female Age Male Female
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
16 .16333 .08417 58 1.71167 .96333
17 .17500 .08833 59 1.85833 1.01583
18 .18417 .09250 60 2.02083 1.07833
19 .19000 .09500 61 2.20500 1.15667
20 .19333 .09750 62 2.41250 1.25750
21 .19333 .09917 63 2.64500 1.38083
22 .19000 .10167 64 2.89917 1.51750
23 .18667 .10417 65 3.16833 1.66250
24 .18167 .10667 66 3.45000 1.80917
25 .17583 .10917 67 3.74167 1.95167
26 .17250 .11333 68 4.04833 2.09583
27 .17083 .11667 69 4.38083 2.25250
28 .17083 .12083 70 4.74833 2.43750
29 .17333 .12583 71 5.16167 2.67167
30 .17750 .13167 72 5.62917 2.95917
31 .18333 .13667 73 6.14833 3.30167
32 .19083 .14250 74 6.71667 3.69167
33 .20083 .15000 75 7.32500 4.11833
34 .21250 .15833 76 7.94833 4.57167
35 .22667 .16750 77 8.57417 5.04667
36 .24333 .18167 78 9.20750 5.54833
37 .26417 .19833 79 9.87083 6.09583
38 .28750 .21750 80 10.58667 6.70917
39 .31417 .23833 81 11.37417 7.40667
40 .34500 .26333 82 12.24833 8.20083
41 .37833 .29000 83 13.19583 9.11833
42 .41500 .31667 84 14.18417 10.11583
43 .45500 .34333 85 15.18000 11.17750
44 .49917 .37000 86 16.16000 12.29500
45 .54583 .39833 87 17.16750 13.45750
46 .59417 .42750 88 18.22000 14.67167
47 .64667 .45750 89 19.26833 15.93750
48 .70333 .49000 90 20.32833 17.34333
49 .76500 .52583 91 21.43250 18.86250
50 .83333 .56417 92 22.71667 20.55167
51 .91083 .60500 93 24.36833 22.54333
52 .99917 .65167 94 26.62917 25.22250
53 1.09833 .70333 95 30.20667 29.24917
54 1.20667 .75583 96 36.35750 35.72167
55 1.32333 .81000 97 47.21167 46.86750
56 1.44583 .86333 98 66.20667 66.09417
57 1.57500 .91417 99 90.90909 90.90909
Thereafter 00.00000 00.00000
</TABLE>
The rates shown are for a tobacco user select rate class. If a rate class
(other than tobacco user select) is shown on the Policy Schedule, the guaran-
teed maximum cost of insurance rates will be determined by multiplying the
rates for a tobacco user select rate class shown above by the rated class fac-
tor shown in the table below. If the rate class includes an extra amount, as
shown on the Policy Schedule, the guaranteed maximum insurance rates will be
increased by one-twelfth of the extra amount multiplied by the ratio of the
death benefit to the death benefit minus the policy value. The rates shown
above are based on the 1980 Commissioners Standard Ordinary Smoker Mortality
Table, Age Last Birthday.
Rated Class Factors
A = 1.25 F = 2.50
B = 1.50 H = 3.00
C = 1.75 J = 3.50
D = 2.00 L = 4.00
E = 2.25 P = 5.00
<PAGE>
THE CONTRACT
THE CONTRACT. The entire contract consists of this Policy, plus:
a. the application and any supplemental application;
b. any riders; and
c. any amendments;
attached to this Policy.
This Policy is issued in consideration of the application and payment of the
Initial Premium.
A change in this Policy will be binding on Us only if the change is made in
writing and the change is made by Our President, Vice President, Secretary, or
Assistant Secretary.
NONPARTICIPATING. This Policy is nonparticipating. It will not share in Our
profits or surplus earnings.
REPRESENTATIONS AND CONTESTABILITY. All statements made in an application or
supplemental application by, or on behalf of, the insured will, in the absence
of fraud, be deemed representations and not warranties. Statements may be used
to contest a claim or the validity of this Policy only if:
a. the statements are contained in the application for issue, reissue, or rein-
statement, or in any supplemental application; and
b. a copy of that application or supplemental application is attached to this
Policy.
This Policy will not be contestable after it has been in force for 2 years from
the Policy Date during the lifetime of the Insured.
Any reinstatement will not be contestable after that reinstatement has been in
force 2 years from its effective date during the lifetime of the Insured. Any
contest will be based only on the application for the reinstatement and will be
subject to "a" and "b" above.
SUICIDE. If the Insured commits suicide, while sane or insane, within 2 years
from the Policy Date, Our total liability under this Policy will be the premi-
ums paid, minus any policy loan plus loan interest thereon, minus any withdraw-
als, and minus the cost of any riders.
If the Insured commits suicide, while sane or insane, within 2 years from the
effective date of any reinstatement, Our total liability under this Policy with
respect to such reinstatement will be the premiums paid, minus any withdrawals
and minus the cost of any riders, since the effective date of the reinstate-
ment, minus any policy loan plus loan interest thereon.
POLICY DATE. The Policy Date is shown on the Policy Schedule. Policy anniversa-
ries occur annually on the same month and day as the Policy Date.
RECORD DATE. The Record Date is the date We record this Policy on Our books as
an in-force policy.
EFFECTIVE DATE OF COVERAGE. The effective dates of coverage under this Policy
will be as follows:
a. For all coverage provided in the original application, the effective date of
coverage will be the Policy Date, provided this Policy has been delivered
and the Initial Premium has been paid prior to death of the Insured and
prior to any change in health or any other factor affecting the insurability
of the Insured as shown in the application.
b. For any insurance that has been reinstated, the effective date of coverage
will be the first Monthly Anniversary Day concurrent with or next following
the day We approve the application for reinstatement.
TERMINATION. All coverage under this Policy will terminate at the earliest of
any of the following:
a. The grace period ends as provided for in the Grace Period provision without
payment of the required premium.
b. This Policy is surrendered.
c. The Insured dies.
AGE. Age means the Insured's age last birthday on the Policy Date. Attained age
means last age birthday on the policy anniversary concurrent with or next pre-
ceding any Monthly Anniversary Day.
INCORRECT AGE OR SEX. If there is an error in the age or sex of the Insured,
the excess of the Death Benefit over the Policy Value will be adjusted to that
which would be purchased by the most recent Cost of Insurance at the correct
age and sex. The resulting Death Benefit will not be less than the percentage
of the Policy Value required by the Death Benefit provision at the Insured's
correct age.
ANNUAL REPORT. We will send a report, without charge, to the Owner at least
once each year. It will show:
a. the current Policy Value;
b. the current Net Cash Surrender Value;
c. the current Death Benefit;
d. any current policy loans; and
e. activity since the last report:
1) premium paid;
2) all charges; and,
3) any withdrawals.
The report will also include any other data that may be required where this
contract is delivered.
<PAGE>
PROJECTION OF BENEFITS AND VALUES. Upon request, We will provide a report to
the Owner which shows projected future results. The request must be in writing
on a form acceptable to Us. The report will be based on the then current Death
Benefit and such other assumptions as are necessary and specified by Us and/or
the Owner. A reasonable fee may be charged for this report.
DEFERMENT OF PAYMENT. We reserve the right to defer payment of Death Benefits
which are in excess of any minimum death benefit, any Policy Values, any pol-
icy loans or withdrawals (except when used to pay premiums), or any surren-
ders:
a. for up to six (6) months from the date of request, if these payments are
based on Policy Values which do not depend on the investment performance of
a Subaccount; or
b. otherwise, for any period during which the New York Stock Exchange is
closed for trading (except for a normal holiday closing) or when the Secu-
rities and Exchange Commission has determined that a state of emergency ex-
ists which may make the payment impractical.
OWNERSHIP, BENEFICIARY, AND ASSIGNMENT
OWNER. Owner means the Owner Identified in the application or a successor if
later changed as described in the Change of Owner provision. All rights under
this Policy belong to the Owner while the Insured is alive. At the death of
the Owner during the Insured's lifetime, the contingent owner, if one has been
designated, becomes the Owner. If no contingent owner has been designated, or
if no contingent owner is then living, the rights of the Owner pass to the es-
tate of the Owner.
CHANGE OF OWNER. The Owner may transfer all ownership rights and privileges to
a new owner. The request must be in writing on a form acceptable to Us. The
change in ownership will be effective when We receive it. We will not be re-
sponsible for any payment We have made or any other action We have taken be-
fore having recorded the transfer. A change of ownership will not, in and of
itself, affect the interest of any Beneficiary.
BENEFICIARY. The Beneficiary:
a. will receive the Proceeds when the Insured dies;
b. is named in the application for this Policy; and
c. may be changed by the Owner. The change is subject to the terms shown below
in the Change of Beneficiary provision.
If not otherwise provided:
a. The interest of any Beneficiary who dies before the Insured will pass to
any other Beneficiaries according to their interests.
b. If no Beneficiary survives the Insured, the Proceeds will be paid in one
sum to the Owner, if living. If the Owner is not living, the Proceeds will
be paid to the Owner's estate.
CHANGE OF BENEFICIARY. The Owner may change the Beneficiary designation:
a. while the Insured is alive; and
b. if the prior designation does not prohibit such a change.
The request to change the Beneficiary designation must be in writing on a form
acceptable to Us. We reserve the right to require this Policy for endorsement
of a change of Beneficiary. A change of Beneficiary will revoke any prior Ben-
eficiary designation.
ASSIGNMENT. An assignment of this Policy will not be binding on Us unless:
a. it is in writing on a form acceptable to Us; and
b. it is received by Us at Our Home Office.
We will not be responsible for the validity of any assignment. We reserve the
right to require this Policy for endorsement of any assignment.
PREMIUM, GRACE PERIOD, NO LAPSE BENEFIT, CONTINUATION OF INSURANCE, AND
REINSTATEMENT
PAYMENT OF PREMIUMS. The Initial Premium is due on the Policy Date. The Ini-
tial Premium will be credited to the Policy on the later of the Policy Date or
the date We receive the premium. Any other premiums will be credited on the
date We receive them. All premiums credited to this Policy prior to the Record
Date will be allocated to the General Account. When the value of the assets is
next determined after the Record Date, the Policy Value in the General Account
will be reallocated to the various Subaccounts and the General Account in ac-
cord with the initial allocation.
Additional premium payments may be made at any time prior to the death of the
insured. We reserve the right to limit the number and amount of additional
premium payments and to require evidence of insurability if the payment of any
premium will increase the Death Benefit by more than the amount of premium
paid.
The Initial Premium is payable at Our Home Office or may be delivered to any
authorized agent of the Company. Any additional premiums are payable at Our
<PAGE>
Home Office. Premium checks should be made payable to Lincoln National Life
Insurance Company. Receipts will be furnished upon request.
Total premiums will be limited so that this Policy will continuously satisfy
the premium limitations under Section 7702 of the Internal Revenue Code of
1986, as amended. If any portion of a premium payment is in excess of the lim-
itation, a refund of the excess premium, with current interest credited there-
on, will be made to the Owner. The refund will be made within 60 days after
the end of the policy year in which We receive the excess premium. If a refund
of the excess premium is not made for any reason within 60 days after the end
of the policy year, the Specified Amount will automatically increase so that
this Policy will continuously satisfy the premium limitations of Section 7702.
GRACE PERIOD. If the Net Cash Surrender Value on a Monthly Anniversary Day is
not sufficient to cover the Cost of Insurance, the Monthly Administrative
Charge and the Policy Value Charge for the month following such Monthly Anni-
versary Day, a grace period will be allowed for the payment of a premium suf-
ficient to keep this Policy in force until the end of the grace period. Notice
of such premium will be mailed to the last known address of the Owner and any
assignee of record. The grace period will end 61 days after the notice is
mailed. If such premium is not paid within the grace period, all coverage un-
der this Policy will terminate with no value at the end of the 61 day grace
period. If a claim by death during the grace period becomes payable under this
Policy, any overdue Cost of Insurance, Monthly Administrative Charge and Pol-
icy Value Charge will be deducted from the Proceeds. The Cost of Insurance,
Monthly Administrative Charge, Policy Value Charge and Net Cash Surrender
Value are described in the Policy Values section.
NO LAPSE BENEFIT. Provided there is no outstanding loan on this Policy, this
Policy will not terminate due to insufficient Net Cash Surrender Value (as
otherwise provided for in the Grace Period provision) prior to the No Lapse
Benefit Expiration Date shown on the Policy Schedule.
CONTINUATION OF INSURANCE. Insurance coverage under this Policy and any bene-
fits provided by rider will be continued in force until the Net Cash Surrender
Value is insufficient to cover the Cost of Insurance, the Monthly Administra-
tive Charge and the Policy Value Charge. The No Lapse Benefit provision de-
scribed above may provide for the continuation of coverage until a later date.
This provision will not continue any rider beyond the date for its termina-
tion, as provided for in that rider.
REINSTATEMENT. If this Policy terminates, as provided for in the Grace Period
provision, it may be reinstated at any time within 5 years after the date of
termination. The reinstatement is subject to:
a. receipt of evidence of insurability satisfactory to Us; and
b. payment of a premium sufficient to keep this Policy in force for a minimum
of 2 months.
Reinstatement will become effective on the date described in the Effective
Date of Coverage provision.
GENERAL ACCOUNT
GENERAL ACCOUNT. The General Account consists of all assets owned by Us other
than those assets held in any separate accounts.
SEPARATE ACCOUNT
SEPARATE ACCOUNT. Separate Account, where used without qualification, refers
to the Separate Account shown on the Policy Schedule. This Separate Account is
a unit investment trust registered with the SEC under the Investment Company
Act of 1940. It was established under and is subject to the insurance laws of
the state of Indiana. The assets of the Separate Account are owned by Us, but
are kept separate from the assets of Our General Account.
SUBACCOUNTS. The Separate Account has several Subaccounts. They are listed on
the Policy Schedule. Premium amounts designated for investment in the Separate
Account will be allocated among the Sub-accounts according to the percentages
listed on the Policy Schedule. No allocation may be less than 10%, nor may any
allocation be any fractional percent.
The allocation of future premium amounts may be changed at any time while this
Policy is in force. The request for change must be in writing on a form ac-
ceptable to Us. The change will take effect on the date the request is re-
ceived at Our Home Office.
FUNDS. The Subaccounts invest in various underlying Funds, as shown on the
Policy Schedule. Each of these Funds is registered with the SEC under the In-
vestment Company Act of 1940 and has its own investment objectives. The in-
vestment objectives of each Fund are explained in the prospectus for the Sepa-
rate Account.
The assets of the Separate Account will be valued once daily at the close of
trading on each day the New York Stock Exchange is open. If the value of an
asset is needed on a day that it has not been valued, the value of that asset
when it was most recently valued will be used.
The assets in the Separate Account are used to support the Investment Amounts
under policies like this one. To the extent those assets do not exceed this
amount, they are used to support those policies; those assets are not used to
support any other business conducted. The excess over this amount may be used
in any other way.
<PAGE>
A Fund might, in Our judgment, become unsuitable for investment by a
Subaccount. This might happen because of a change in investment policy, or a
change in the laws or regulations, or because the shares are no longer avail-
able for investment, or for some other reason. If that occurs, We have the
right to invest in a different fund.
Any change in investment policy or change of Fund will follow approval by the
SEC and will be filed with and approved by the Insurance Commissioner of the
state of Indiana. If required, approval of such change will also be filed with
the Insurance Department of the state in which this Policy was delivered.
INVESTMENT AMOUNT AND TRANSFERS
INVESTMENT AMOUNT. The Investment Amount for this Policy is the amount of the
Policy Value allocated to the Subaccounts. It is equal to the Police Value mi-
nus any outstanding loan and minus any amounts allocated to the General Ac-
count. The amount of the Investment Amount and its allocation to the
Subaccounts depends on:
a. how the Owner chooses to allocate premiums;
b. whether or not amounts are transferred among Subaccounts;
c. the investment performance of the Subaccounts to which amounts are allocated
or transferred;
d. the amount and timing of premium payments made;
e. the amount and timing of policy charges;
f. the existence of any loan; and
g. the existence of any partial withdrawals.
The Investment Amount exists only while this Policy is in force.
TRANSFERS. If this Policy is in force, amounts may be transferred as follows:
a. Among Subaccounts, amounts may be transferred as often as twelve times dur-
ing a policy year.
b. To the General Account from any of the Subaccounts, amounts may be trans-
ferred twelve times during a policy year.
c. From the General Account to any of the Subaccounts, amounts may be trans-
ferred only one time during any period of twelve consecutive months. The
amount of any such transfer may not exceed 20% of the unloaned amount
allocated to the General Account on the date of transfer.
The request to transfer amounts must be in writing on a form acceptable to Us
unless the Owner has made arrangements with Us to allow telephone transfers.
The transfer will take effect on the date it is received at Our Home Office.
The Charge for Transfer is shown on the Policy Schedule and will be deducted
from the amount transferred.
POLICY VALUES
POLICY VALUE.
On the Policy Date, the Policy Value will be the Initial Premium minus the sum
of the following:
a. the Cost of Insurance for the first month;
b. the Monthly Administrative Charge, if any, for the first month;
c. the Policy Value Charge for the first month; and
d. any charges for extra benefits.
On each Monthly Anniversary Day, the Policy Value is equal to the sum of the
following:
a. the Policy Value on the preceding day;
b. any increase due to Net Investment Results in the value of the Subaccounts
to which the Investment Amount is allocated;
c. interest at not less than the General Account Guaranteed Interest Rate shown
on the Policy Schedule on amounts allocated to the General Account;
d. interest at not less than the Loan Collateral Rate shown on the Policy
Schedule on any outstanding loan; and
e. any premiums received;
minus the sum of the following:
f. any decrease due to Net Investment Results in the value of the Subaccounts
to which the Investment Amount is allocated;
g. any withdrawals;
h. any amount charged against the Investment Amount for federal or other gov-
ernmental income taxes;
i. the Cost of Insurance for the following month;
j. the Monthly Administrative Charge, if any, for the following month;
k. the Policy Value Charge for the following month; and
l. any charges for extra benefits.
On any day other than a Monthly Anniversary Day, the Policy Value is equal to
the sum of the following:
<PAGE>
a. the Policy Value on the preceding day;
b. any increase due to Net Investment Results in the value of the Subaccounts
to which the Investment Amount is allocated;
c. interest at not less than the General Account Guaranteed Interest Rate
shown on the Policy Schedule on amounts allocated to the General Account;
d. interest at not less than the Loan Collateral Rate shown on the Policy
Schedule on any outstanding loan; and
e. any premiums received;
minus the sum of the following:
f. any decrease due to Net Investment Results in the value of the Subaccounts
to which the Investment Amount is allocated;
g. any withdrawals; and
h. any amount charged against the Investment Amount for federal or other gov-
ernmental income taxes.
When the Cost of Insurance, the Monthly Administrative Charge, the Policy
Value Charge, and any charges for extra benefits are deducted, they will be
deducted in proportion to the values of the General Account and each of the
Subaccounts, or by any other method requested by the Owner and acceptable to
Us.
COST OF INSURANCE. The Cost of Insurance is determined on a monthly basis. It
is the cost for this Policy plus the cost for any riders. The maximum Cost of
Insurance for this Policy is equal to:
a. the Death Benefit on the Monthly Anniversary Day; minus
b. the Policy Value on the Monthly Anniversary Day without regard to the Cost
of Insurance; divided by
c. 1,000; the result multiplied by
d. the maximum cost of insurance rate per $1,000 as described below in the
Cost of Insurance Rates provision.
COST OF INSURANCE RATES. The maximum monthly cost of insurance rate is based
on the attained age, sex, and rate class of the person insured. We may charge
less than the maximum cost of insurance rates. Current cost of insurance rates
may be changed by Us from time to time. A change in the current cost of insur-
ance rates will apply to all persons of the same attained age, sex, and rate
class and whose policies have been in effect for the same length of time. The
current cost of insurance rates will not exceed those described in the Table
of Guaranteed Maximum Insurance Rates.
MONTHLY ADMINISTRATIVE CHARGE. A Monthly Administrative Charge, if applicable,
will be deducted each month from the Policy Value. The Monthly Administrative
Charge and the conditions under which it will be deducted are shown on the
Policy Schedule.
POLICY VALUE CHARGE. The Policy Value Charge will be deducted each month from
the Policy Value in an amount not to exceed one-twelfth of the Policy Value
Charge Rate multiplied times the Policy Value. The Policy Value Charge Rate is
shown on the Policy Schedule.
MORTALITY AND EXPENSE RISK CHARGE. The Mortality and Expense Risk Charge will
be deducted from the Gross Investment Results at a daily rate not to exceed
the Guaranteed Maximum Daily Mortality and Expense Risk Charge Rate shown on
the Policy Schedule.
GROSS INVESTMENT RESULTS. The Gross Investment Results are equal to the change
in the market value of the assets of the Separate Account from the previous
valuation day to the current day, plus the investment income on those assets
during the same period.
NET INVESTMENT RESULTS. The Net Investment Results are the Gross Investment
Results minus asset management charges, minus miscellaneous expenses incurred
by the Fund, and minus the Mortality and Expense Risk Charge.
UNIT AND UNIT VALUES. The value of Policy monies invested in each Subaccount
is accounted for through the use of Units and Unit Values. A Unit is an ac-
counting unit of measure used to calculate the value of an investment in a
specified Subaccount. A Unit Value is the dollar value of a Unit is a speci-
fied Subaccount on a specified valuation date.
Whenever an amount is invested in a Subaccount (due to premium payments, loan
payments, or transfers of values into a Subaccount), that amount purchases
Units in that Subaccount. The number of Units purchased is determined by di-
viding the dollar amount of the transaction by the Unit Value on the day the
transaction is made. Similarly, whenever an amount is redeemed from a
Subaccount (due to loans and loan interest charges, withdrawals and Withdrawal
Charges, surrender and Surrender Charges, transfers of values out of a
Subaccount and Charges for Transfer, income tax deductions (if any), Cost of
Insurance charges, Monthly Administrative Charges, or Policy Value Charges),
Units are redeemed from that Subaccount. The number of Units redeemed is de-
termined by dividing the dollar amount of the transaction by the Unit Value on
the day the transaction is made.
The Unit Value is also used to measure the Net Investment Results in a
Subaccount. The Policy Value on any valuation day is the sum of the values in
each Subaccount in which Policy Values are allocated plus any Policy Value al-
located to the General Account. The value of each Subaccount on each valuation
day is
<PAGE>
determined by multiplying the number of Units held by a policy in each
Subaccount by the Unit Value for that Subaccount as determined for that valua-
tion day.
The Unit Value for a Subaccount on a specified valuation date is determined by
dividing the value of all assets owned by that Subaccount, net of the
Subaccount's liabilities (including any accrued but unpaid daily Mortality and
Expense Risk Charges), by the total number of Units held by Policies in that
Subaccount. Net Investment Results do not increase or decrease the number of
Units held by the Subaccount.
CASH SURRENDER VALUE. The Cash Surrender Value as of any date is equal to:
a. the Policy Value; minus
b. any applicable Surrender Charges.
SURRENDER CHARGE. The Table of Surrender Charges is shown on the Policy Sched-
ule.
NET CASH SURRENDER VALUE. The Net Cash Surrender Value as of any date is equal
to:
a. the Cash Surrender Value; minus
b. any outstanding policy loan plus interest thereon.
BASIS OF COMPUTATIONS. Guaranteed values are at least equal to those required
by law. Where required, a detailed statement of the method of computation of
values has been filed with the Insurance Department of the state in which this
Policy was delivered.
The maximum cost of insurance rates are based on:
a. the 1980 Commissioners Standard Ordinary Mortality Table, Age Last Birthday,
at attained ages 15 and below, and using the 1980 Commissioners Standard Or-
dinary Nonsmoker Mortality Table, Age Last Birthday, for nonsmokers at at-
tained ages 16 and above; and
b. the 1980 Commissioners Standard Ordinary Smoker Mortality Table, Age Last
Birthday, for smokers at attained ages 16 and above.
SURRENDER AND WITHDRAWALS
SURRENDER. The Owner may surrender this Policy for the Net Cash Surrender Val-
ue. The request must be in writing on a form acceptable to Us. It may be sur-
rendered at any time prior to termination of the Policy as provided for in the
Termination provision.
Ordinarily, the surrender will be processed within 7 days from the date the re-
quest for surrender is received at Our Home Office.
WITHDRAWALS. Cash withdrawals may be made at any time during the lifetime of
the Insured. Only one withdrawal is allowed during a policy year. During the
first ten policy years, the amount of any withdrawal may not be more than the
Maximum Withdrawal Percent of the Net Cash Surrender Value.
The Maximum Withdrawal Percent is shown on the Policy Schedule. After the tenth
policy year, the amount of the withdrawal may not be more than the Net Cash
Surrender Value. Any partial withdrawal is subject to a Minimum Withdrawal
Amount as shown on the Policy Schedule. The request for a withdrawal must be
from the Owner and in writing on a form acceptable to Us.
An amount equal to the Withdrawal Charge shown on the Policy Schedule will be
deducted from each withdrawal amount and the balance paid to the Owner.
When a withdrawal is made, the Policy Value will be reduced by the amount of
the withdrawal. The reduction will be made in proportion to the values in the
General Account and each of the Subaccounts, or by any other method requested
by the Owner and acceptable to Us. We reserve the right, however, to require
any withdrawal to first reduce the values in the Subaccounts before reducing
the value in the General Account.
A withdrawal will also reduce the Specified Amount. The reduction in the Speci-
fied Amount will be effective the date of the withdrawal. The Specified Amount
will be reduced by the amount of the withdrawal multiplied by A divided by B,
where;
a. is the Specified Amount.
b. is the Policy Value.
No withdrawal will be allowed if the resulting Specified Amount would be less
than the Minimum Specified Amount shown on the Policy Schedule.
Ordinarily, withdrawals will be processed within 7 days from the date the re-
quest for a withdrawal is received at Our Home Office.
LOANS
CASH LOANS. While this Policy is in force, We will grant a loan against this
Policy provided;
a. a written loan agreement is executed; and
b. this Policy is assigned to Us.
This Policy will be the sole security for the loan. The amount of outstanding
loans plus interest thereon may not exceed the Cash Surrender Value as of the
date of the policy loan.
The loan will be made in proportion to the values of the General Account and
each of the Subaccounts, or by any other method requested by the Owner and
<PAGE>
acceptable to Us. We reserve the right, however, to require any loan to first
reduce the values in the Subaccounts before reducing the value in the General
Account. The amount of the loan made against the Subaccounts will be deducted
from the Investment Amount, but will remain part of the Policy Value. The loan
amount will earn interest at not less than the Loan Collateral Rate shown on
the Policy Schedule.
If at any time the total of all policy loans plus loan interest equals or ex-
ceeds the Cash Surrender Value, this Policy will terminate, but not until 81
days after notice has been mailed to the last known address of the Owner and
any assignee of record.
Ordinarily, loans will be processed with 7 days from the date the request for a
loan is received at Our Home Office.
INTEREST ON POLICY LOANS. Interest on any loan will be at the Policy Loan Rate
shown on the Policy Schedule. Interest is payable annually in arrears. Interest
which is not paid when due will be added to the loan and will bear interest at
the same rate as the loan.
LOAN REPAYMENTS. Loan repayments will be allocated to the General Account and
the subaccounts in accord with the most recent premium allocation or by any
other method requested by the Owner and acceptable to Us.
DEATH BENEFIT
DEATH BENEFIT. The Death Benefit at any time is equal to the Specified Amount.
The Death Benefit, however, will never be less than the following percent of
the Policy Value:
<TABLE>
<CAPTION>
Percent of Percent of
Attained Policy Attained Policy
Age* Value Age* Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
40 OR LESS 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75-90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 THEREAFTER 100
60 130
</TABLE>
* As of the beginning of the policy year
PROCEEDS
PROCEEDS. Proceeds mean the amount payable on;
a. the surrender of this Policy; or
b. the death of the Insured.
The Proceeds to be paid on the death of the Insured will be:
a. the Death Benefit; minus
b. any outstanding policy loan plus interest thereon.
The Proceeds to be paid on the surrender of this Policy will be the Net Cash
Surrender Value.
PAYMENT OF PROCEEDS. Any amount to be paid at the death of the Insured or on
any other termination of this Policy will be paid in one sum unless otherwise
provided. Interest will be paid on this amount from date of death of the date
of payment at a specified rate not less than that required by law. All or part
of the sum of this amount and such interest credited thereon to the date of
payment may be applied under any other payment option, as described below in
the Payment Options provision.
PAYMENT OPTIONS. Upon written request, We will apply all or part of the Pro-
ceeds payable under this Policy in accordance with any payment option We offer
on the Option Date. The Option Date is any date this Policy terminates under
the Termination provision. When Proceeds become payable under a payment option,
a payment contract will be issued to the payee in exchange for this Policy.
CLAIMS OF CREDITORS. To the extent allowed by law, the Proceeds will not be
subject to any claims of a Beneficiary's creditors.
<PAGE>
Flexible Premium Variable Life Insurance Policy
Flexible Premiums Payable Until Death
Adjustable Death Benefit
Death Benefit Payable at Death
Nonparticipating - No Dividends
If you have any questions concerning this Policy or if
anyone suggests that you change or replace this Policy,
please contact your Lincoln National Life agent or the
Home Office of the Company.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 SOUTH CLINTON STREET
P.O. BOX 1110
FORT WAYNE, INDIANA 46801
(LOGO)
<PAGE>
EXHIBIT 6(a)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
COMPOSITE ARTICLES OF INCORPORATION
Organized June 12, 1905
Under
Act of Indiana Legislature entitled
"An act for the incorporation of life insurance
companies on either the stock or mutual plan, defining
their powers and prescribing their duties and the
duties of certain officers in connection therewith,
providing penalties for the violation of this act and
declaring an emergency"
approved February 10, 1899
[Compiled by Paul J. Sauerteig, 30 March 1973
as approved by
Samuel P. Adams, Vice President and Secretary
Thomas G. Thornbury, Vice President and General Counsel]
<PAGE>
ARTICLES OF INCORPORATION
OF
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
The undersigned, citizens of the State of Indiana, hereby associate
themselves together in accordance with the provisions of an Act of the General
Assembly of the State of Indiana, entitled, "An Act for the incorporation of
life insurance companies on either the stock or the mutual plan, defining their
powers and prescribing their duties and the duties of certain officers in
connection therewith, providing penalties for the violation of this Act, and
declaring an emergency." Approved February 10th, 1899, for the purpose of
forming an incorporated Life Insurance Company under the following Articles of
Incorporation:
ARTICLE I.
The name of this corporation shall be The Lincoln National Life
Insurance Company.
ARTICLE II.
Said Company shall be a stock Company, and shall be established and
located in the City of Fort Wayne, Allen County, Indiana, but may extend its
business to all parts of said State of Indiana, and into the other States and
Territories of the United States and into foreign countries.
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ARTICLE III.
The common capital stock of said corporation shall be $25,000,000,
divided into shares of $2.50 each.
ARTICLE IV.
The general objects of said Corporation shall be and are (a) to insure
the lives of persons and to make every insurance appertaining thereto or
connected therewith, including insurance against permanent mental or physical
disability resulting from accident or disease, or against accidental death,
combined with a policy for life insurance, and to grant, purchase or dispose of
annuities; and (b) to insure against bodily injury, disease or death by accident
and against disablement resulting form sickness and every insurance appertaining
thereto; and for such purposes said Corporation shall have the right to exercise
and enjoy all and singular the powers and privileges granted or prescribed by
said Act of the General Assembly of the State of Indiana and by the laws of said
State.
The said Corporation shall have the power to issue participating and
nonparticipating policies covering life insurance and annuities. All policies
issued directly by said Corporation on a participating basis shall be subject to
the following:
(a) In determining the gross profits from said participating business
the losses/1/ and expenses chargeable thereto shall be only the
losses and expenses incurred in conducting such business.
(b) The amount that may be taken in any year from said participating
business
- --------------------------
/1/ Sic
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for the benefit of stockholders or for credit to their
account shall be limited to ten percent (10%) of the
gross profits for such year on said participating
business.
The foregoing limitation shall not apply to reinsurance in any form or
to the participating life insurance and annuities issued by any other company or
association which may be reinsured by this Corporation or acquired by it through
purchase, merger or consolidation.
ARTICLE V.
The duration of said corporation hereby incorporated shall be
perpetual.
IN WITNESS WHEREOF, we have hereunto subscribed our names this 29th
day of May 1905.
Sam'l M. Foster W. J. Vesey
Simon J. Straus Gustave A. Rabus
E. W. Cook Ben Lehman
Robert S. Taylor Henry Beadell
H. C. Rockhill Frank K. Safford
F. L. Smock M. J. Blitz
R. B. Hanna Perry A. Randall
Hubert Berghoff Wm. B. Paul
Paul Mossman W. E. Doud
Jacob Funk F. L. Jones
Robt. Millard E. W. Dodez
M. F. Moellering Aaron Rothchild
Geo. W. Beers J. W. White
J. M. McKay Calvin H. English
Charles F. Pfeiffer B. D. Angell
Newton W. Gilbert Arthur F. Hall
Daniel B. Ninde
State of Indiana )
) SS:
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Allen County )
Personally appeared before me, H. W. Ninde, a Notary Public in and for
said County and State, Sam'l. M. Foster, Simon J. Straus, E. W. Cook, Robert S.
Taylor, H. C. Rockhill, F. L. Smock, R. B. Hanna, Hubert Berghoff, Paul Mossman,
Jacob Funk, Rob't. Millard, M. F. Moellering, Geo W. Beers, J. M. McKay, Charles
F. Pfeiffer, Newton W. Gilbert, W. J. Vesey, Gustave A. Rabus, Ben Lehman, Henry
Beadell, Frank K. Safford, M. J. Blitz, Perry A. Randall, Wm. B. Paul, W. E.
Doud, F. L. Jones, E. W. Dodez, Aaron Rothchild, J. W. White, Calvin H. English,
B. D. Angell, and acknowledged the execution of the foregoing to be their
voluntary act and deed.
WITNESS my hand and notarial seal this 29th day of May 1905.
H. W. Ninde, Notary Public
(SEAL) My Commission expires Jan. 12, 1909.
State of Indiana )
) SS.
Marion County )
Personally appeared before me, Minnie C. Morgan, a Notary Public in
and for said County and State, Arthur F. Hall and Daniel B. Ninde, and
acknowledged the execution of the foregoing to be their voluntary act and deed.
Witness my hand and notarial seal, this 1st. day of June, 1905.
Minnie C. Morgan
Notary Public
(SEAL)
My commission expires
January 14, 1907.
FILED
June 12, 1905
Daniel E. Storms, Sec'y. of State
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Exhibit 6(b)
BYLAWS
of
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
as last amended February 9, 1996
ARTICLE I
STOCKHOLDERS
Section 1.--Annual Meetings.
An annual meeting of the stockholders shall be held on the fourth Wednesday
of May, or such earlier date as the board of directors may select, in each
year for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for an
annual meeting shall be a legal holiday in the State of Indiana, such
meeting shall be held on the next succeeding full business day.
Section 2.--Special Meetings.
Special meetings of the stockholders may be called by the chairman of the
board, by the president, by the board of directors, or by stockholders
holding not less than one-fourth of all of the outstanding shares.
Section 3.--Place of Meetings.
All meetings of stockholders shall be held at the principal office of the
company in Fort Wayne, Indiana or at such other place as may be designated
by the board of directors in accordance with the Articles of Incorporation.
Section 4.--Notice of Meetings.
A written or printed notice, stating the place, day and hour of the
meeting, and in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered or mailed by the secretary,
or by the officer calling the meeting, at least thirty days before the date
of the meeting, to each stockholder of record at such address as appears
upon the stock records of the company.
Section 5.--Quorum.
Except as hereinafter provided and as otherwise provided by law, at any
meeting of the stockholders a majority of all the capital stock issued and
outstanding represented by stockholders of record in person or proxy, shall
constitute a quorum; but a lesser interest may adjourn any meeting, and the
meeting may be held as adjourned without further notice. When a quorum is
present at any meeting, a majority of the stock represented
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thereat shall decide any question brought before such meeting, unless the
question is one upon which by express provision of law or of the Articles
of Incorporation or of these bylaws a larger or different vote is required,
in which case such express provision shall govern and control the decision
of such question.
Section 6.--Proxies.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or a duly authorized attorney in fact. No
proxy shall be valid which shall have been granted more than forty days
before the meeting named therein, and such proxy shall not be valid after
the final adjournment of such meeting.
Section 7.--Voting of Shares.
Every stockholder shall have the right, at every stockholders' meeting, to
one vote for each share of stock standing in his name on the books of the
company on the date established by the board of directors as the record
date for determination of stockholders entitled to vote at such meeting. No
share shall be voted at any meeting which shall have been transferred on
the books of the company subsequent to such record date, and no share which
belongs to the company shall be voted at any meeting.
Section 8.--Order of Business.
The order of business at each annual stockholders' meeting and, as far as
possible, at all other meetings of stockholders, shall be as follows:
1. Reading minutes of preceding meeting.
2. Reports of officers and committees.
3. Report of attendance at directors' meetings.
4. Election of directors.
5. Unfinished business.
6. New business.
7. Adjournment.
The order of business may be changed by vote of a majority of stockholders
present.
Section 9.--Secretary of Meeting.
The secretary of the company shall act as secretary of meetings of
stockholders and in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
ARTICLE II
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BOARD OF DIRECTORS
Section 1.--General Powers, Number, Tenure and Qualifications.
The property and business of the company shall be managed by a board of
directors, not less than seven nor more than sixteen in number, which board
shall be constituted in conformity with the laws of the State of Indiana.
The number of directors to serve for each year shall be determined by a
resolution at the annual stockholders' meeting; but if such number be less
than sixteen, the board of directors may, in its discretion, at any regular
or special meeting, increase the number of directors to a number not
exceeding sixteen to serve until the next annual meeting of stockholders.
Except in the case of vacancies, each director shall be elected for a term
of one year and shall hold office until a successor is elected and has
qualified.
Section 2.--Regular Meetings.
The annual meeting of the board of directors shall be the first meeting
following its election and shall be held, without notice, immediately after
the adjournment of the annual stockholders' meeting, or within ten days
thereafter upon notice in the manner provided by these bylaws for calling
special meetings of the board. Additional regular meetings may be held at
such times as the board may designate.
Section 3.--Special Meetings.
Special meetings of the board of directors may be called by the chairman of
the board, or in his absence or incapacity, or if such office be vacant, by
the president. The secretary shall call special meetings of the board of
directors when requested in writing to do so by any five members thereof.
Section 4.--Notice of Meetings.
Notice of any meeting of the board of directors other than the annual
meeting held immediately after the adjournment of the annual stockholders'
meeting, shall be served not less than three days before the date fixed for
such meeting, by oral, telegraphic, telephonic, electronic or written
communication stating the time and place thereof and, if by mail or
telegraph, addressed to each member of the board of directors at his or her
address as it appears on the books of the company. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except when a director
attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or convened.
Section 5.--Quorum.
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A majority of the whole board of directors shall be necessary to constitute
a quorum for the transaction of any business, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 6.--Manner of Acting.
The act of a majority of the directors present at any meeting at which a
quorum is present shall be the act of the board of directors, unless a
greater number is required by law, or by the Articles of Incorporation or
these bylaws. Unless otherwise provided in the Articles of Incorporation,
an action required or permitted to be taken at a meeting of the board of
directors may be taken without a meeting, if before the action is taken, a
written consent to the action is signed by all members of the board of
directors and the written consent is filed with the minutes of proceedings
of the board of directors. Unless otherwise provided by the Articles of
Incorporation, a member of the board of directors may participate in a
meeting of the board of directors by means of a conference telephone or
similar communications equipment by which all persons participating in the
meeting can communicate with each other, and participation by these means
constitutes presence in person at the meeting.
Section 7.--Vacancies.
Vacancies in the board may be filled by the remaining directors in the
manner provided by law.
Section 8.--Oath.
Every director, when elected, shall take and subscribe an oath that he
will, insofar as the duty devolves upon him, faithfully, honestly and
diligently administer the affairs of the company and that he will not
knowingly violate or willingly permit to be violated any law applicable to
the company.
ARTICLE III
OFFICERS
Section 1.--Elected Officers.
The elected officers of the company shall be a president, a secretary, and
a treasurer, and may also include a chairman of the board, a chief
operating officer, a chief financial officer, one or more vice presidents
of a class or classes as the board of directors may determine, and such
other officers as the board of directors may determine. The chairman of the
board and the president shall be chosen from among the directors. Any two
or more offices may be held by the same person.
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(Amended 2-9-96.)
Section 2.--Appointed Officers.
The appointed officers of the company shall be one or more second vice
presidents, assistant vice presidents, assistant treasurers, and assistant
secretaries.
Section 3.--Election or Appointment and Term of Office.
The elected officers of the company shall be elected annually by the board
of directors at the first meeting of the board of directors held after each
annual meeting of the shareholders. The appointed officers of the company
shall be appointed annually by the chief executive officer immediately
following the first meeting of the board of directors held after each
annual meeting of the shareholders. Additional elected officers may be
elected at any regular or special meeting of the board of directors, to
serve until the regular meeting of the board held after the next annual
meeting of shareholders, and additional appointed officers may be appointed
by the chief executive officer at any time to serve until the next annual
appointment of officers. Each officer shall hold office until he shall
resign or retire or shall have been removed.
Section 4.--Removal.
Any officer may be removed by the board of directors and any appointed
officer may be removed by the chief executive officer, whenever in their
judgment the best interests of the company will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 5.--Vacancies.
A vacancy in the office of president or treasurer or secretary because of
death, resignation, removal or otherwise, shall be filled by the board of
directors, and a vacancy in any other elected office may be filled by the
board of directors.
Section 6.--Chief Executive Officer.
If the elected officers of the company include both a chairman of the board
and a president, the board of directors shall designate one of such
officers to be the chief executive officer of the company. If the office of
chairman of the board be vacant, the president shall be the chief executive
officer of the company. The chief executive officer of the company shall
be, subject to the board of directors, in general charge of the affairs of
the company.
Section 7.--Chairman of the Board.
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The chairman of the board shall preside at all meetings of the stockholders
and of the board of directors at which he may be present and shall have
such other powers and duties as may be determined by the board of
directors.
Section 8.--President.
The president shall have such powers and duties as may be determined by the
board of directors. In the absence of the chairman of the board, or if such
office be vacant, the president shall have all the powers of the chairman
of the board and shall perform all his duties.
Section 9.--Chief Operating Officer.
The chief operating officer shall be, subject to the chief executive
officer, in general charge of the business operations of the company and
shall have those powers and duties as are incident to the office and as may
be determined by the board of directors or the president. (Added 2-9-96)
Section 10.--Chief Financial Officer.
The chief financial officer shall be in general charge of the financial
affairs of the company and shall have those powers and duties as are
incident to the office and as may be determined by the board of directors
or the president. (Added 2-9-96)
Section 11.--Vice Presidents.
A vice president shall perform such duties as may be assigned by the
chairman of the board, the president or the board of directors, and, in the
absence of the president, he may perform the duties and exercise the
authority of the president.
Section 12.--Secretary.
The secretary shall: (a) keep the minutes of the stockholders' and board of
directors' meetings in one or more books provided for the purpose; (b) see
that all notices are duly given in accordance with the provisions of these
bylaws or as required by law; (c) be custodian of the seal of the company
and see that the seal of the company is affixed to all documents the
execution of which on behalf of the company under its seal is duly
authorized; and (d) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him
by the chairman of the board, the president or the board of directors.
Section 13.--Treasurer.
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The treasurer shall: (a) have the custody of the corporate funds and
securities; (b) deposit all moneys that may come into his hands to the
credit of the company in such depositories as are authorized or approved by
the board of directors; (c) see that all expenditures are duly authorized
and evidenced by proper receipts and vouchers; (b) give such bonds as may
be required by the board of directors, subject to the approval of the
board; and (e) in general perform all duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him
by the chairman of the board, the president or the board of directors.
Section 14.--Assistant Secretaries.
One or more assistant secretaries may be elected by the board of directors
or appointed by the chief executive officer. In the absence of the
secretary, an assistant secretary shall have the power to perform his
duties including the certification, execution and attestation of
corporation records and corporate instruments. Assistant secretaries shall
perform such other duties as may be assigned to them by the chief executive
officer or the board of directors.
Section 15.--Assistant Treasurers.
One or more assistant treasurers may be elected by the board of directors
or appointed by the chief executive officer. In the absence of the
treasurer, an assistant treasurer shall have the power to perform his
duties. Assistant treasurers shall perform such other duties as may be
assigned to them by the chief executive officer or the board of directors.
Section 16.--Positions and Titles.
The chief executive officer may establish such positions and appoint
persons to them with such titles as he may deem necessary. He may also fix
the duties of such positions and may discharge person from them.
ARTICLE IV
COMMITTEES
Section 1.--Board Committees.
In addition to committees specifically authorized by this Article, the
board of directors may, by resolution adopted by a majority of the whole
board of directors, from time to time designate (i) from among its members
one or more other committees each of which, to the extent provided in such
resolution and except as otherwise provided by law, shall have and exercise
all the authority of the board of directors, and (ii) one or more advisory
committees, a majority of whose members shall be directors. Each such
committee shall have one or more members who serve at the pleasure of the
board of directors. The
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designation of any such committee and the delegation thereto of authority
shall not operate to relieve the board of directors, or any member thereof,
of any responsibility imposed by law. Each such committee shall keep a
record of its proceedings and shall adopt its own rules of procedure. It
shall make such reports to the board of directors of its actions as may be
required by the board.
Section 2.--Executive Committee.
The board of directors, by resolution adopted by a majority of the whole
board, may elect from among its members an executive committee which shall
consist of the chief executive officer and such other member or members of
the board, not less than one, as may be designated in such resolution. The
term of office of the members of the executive committee shall be
established in such resolution.
Subsection 1.--General Powers. The executive committee shall have and may
exercise all of the authority of the board of directors in the management
of the property and business of the company during the interval between the
meetings of the board, except that the executive committee shall not have
authority to:
(1) Declare dividends of distributions.
(2) Approve on behalf of this company an agreement of merger or
consolidation, or a plan of exchange of the stock of this company.
(3) Recommend to shareholders the amendment of the articles of
incorporation, the voluntary dissolution of the company, or the sale,
lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the property and assets of the company.
(4) Fill vacancies in the board of directors or the executive committee, or
remove members of the board or executive committee.
(5) Fix compensation for members of the executive committee.
(6) Exercise any of the power delegated to the investment committee
pursuant to Section 3 of this Article.
(7) Amend, alter or repeal these bylaws.
(8) Amend, alter or repeal any resolution of the whole board of directors
which by its terms provides that it shall not be amended, altered or
repealed by the executive committee.
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No member of the board of directors shall be liable for any action taken by
the executive committee if he or she is not a member of the committee and
has acted in good faith and in a manner he or she reasonably believes to be
in or not opposed to the best interests of the company; provided, that the
establishment of the executive committee and the delegation thereto of the
authority described in this subsection shall not operate to relieve the
board of directors or any member thereof of any responsibility imposed on
it, him or her by law.
Subsection 2.--Meetings. Meetings of the executive committee may be called
at any time by the chief executive officer or by any two members of the
executive committee. Meetings may be held at such time and at such place,
either within or without the state of Indiana, as may be designated in the
notice of the meeting.
Subsection 3.--Notice of Meetings. Notice of any meeting of the executive
committee shall be served, not less than one hour prior to the time fixed
for the meeting, by oral telegraphic, telephonic, electronic or written
communication stating the time and place thereof and, if by mail or
telegraph, addressed to each member of the executive committee at his or
her address as it appears on the books of the company. Any member of the
executive committee may waive notice of any meeting. Attendance at a
meeting of the executive committee shall constitute a waiver of notice of
such meeting.
Subsection 4.--Quorum. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business, and the vote of
a majority of the members present at any meeting at which a quorum is
present shall be the act of the executive committee.
Subsection 5.--Manner of Acting. The executive committee may adopt rules
for the regulation of its proceedings. Minutes shall be kept of the
proceedings of the executive committee and shall be read and approved at
the next succeeding regular or special meeting of the whole board of
directors. Unless otherwise provided in the Articles of Incorporation, an
action required or permitted to be taken at a meeting of the executive
committee may be taken without a meeting, if before the action is taken, a
written consent to the action is signed by all members of the executive
committee and the written consent is filed with the minutes of proceedings
of the executive committee. Unless otherwise provided by the Articles of
Incorporation, a member of the executive committee may participate in a
meeting of the executive committee by means of a conference telephone or
similar communications equipment by which all persons participating in the
meeting can communicate with each other, and participation by these means
constitutes presence in person at the meeting.
Subsection 6.--Vacancies. If any member of the executive committee shall
cease to be a director of the company prior to the expiration of his or her
term of service on the executive committee, then his or her membership on
the executive committee shall be
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deemed to have terminated and vacancy deemed to have existed as of the date
of termination of membership on the board of directors. Any vacancy
occurring in the executive committee may be filled by the board of
directors at any regular or special meeting by resolution adopted by a
majority of the whole board.
Subsection 7.--Removal of Executive Committee Members. Any member of the
executive committee may be removed, with or without cause, by the board of
directors at any regular or special meeting by resolution adopted by a
majority of the whole board.
Section 3.--Investment Committee.
The board of directors, by resolution adopted a majority of the whole
board, may elect from among its members an investment committee. In
addition to the chairman of the board and the president, who, by virtue of
their offices, shall each be a member, the investment committee shall
consist of such other members as shall be designated in the resolution, to
serve until the next meeting of the board of directors held after each
annual meeting of the shareholders.
The investment committee shall have and possess all the rights and powers
of the board of directors to make, supervise and direct the investments of
the company, to sell, assign, exchange, lease, or otherwise dispose of such
investments, and to do and perform all things deemed necessary and proper
in relation to such investments. The investment committee shall have the
further right and power to delegate its powers and duties to such officers,
employees and agents, including investment advisers, of the company as it
may select and appoint in its discretion, subject to such policies, plans,
standards, limitations and objectives as the investment committee may
prescribe from time to time.
The investment committee shall keep a record of its proceedings, shall make
reports to the board of directors of its actions as may be required by law
or by the board, shall adopt its own rules of procedure, and shall take
such other actions as may be required from time to time by Indiana Code
Section 27-1-12-2 or any other law of the State of Indiana relating to
investments by life insurance companies. (Amended 3-11-93)
ARTICLE V
STOCK CERTIFICATES, TRANSFER OF
SHARES, STOCK RECORDS
Section 1.--Certificates for Shares.
Certificates representing shares of the company shall be in such form, not
inconsistent with the laws of the State of Indiana, as shall be determined
by the board of directors. Such certificates shall be signed by the
president or a vice president and by the secretary or an assistant
secretary. Where such certificate is also signed by a transfer agent or
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registrar, or both, the signatures of the president, vice president and the
secretary or assistant secretary may be in facsimile form. All certificates
for shares shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on
the stock transfer records of the company. All certificates surrendered to
the company for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have
been surrendered and cancelled.
Section 2.--Transfer of Shares.
Transfer of shares of the company shall be made only on the stock transfer
records of the company by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to transfer,
or by his attorney thereunto authorized by power of attorney duly executed
and filed with the company, and on surrender for cancellation of the
certificate for such shares.
Section 3.--Lost Certificates.
Any person claiming a certificate of stock to have been lost, stolen or
destroyed and desiring a new certificate in lieu thereof shall make an
affidavit of such fact, reciting the circumstances attending such loss or
destruction and shall give the company an open penalty bond of indemnity,
with a surety company as surety thereon, satisfactory to the president or
treasurer of the company (excepting that the board of directors may, by
resolution, authorize the acceptance of a bond of different amount, or a
bond with personal surety thereon) whereupon in the discretion of the
president or the treasurer a new certificate may be issued of the same
tenor and for the same number of shares as the one alleged to have been
lost, stolen or destroyed.
Section 4.--Transfer Agents and Registrar.
The board of directors may appoint a transfer agent or agents and/or a
registrar of transfer, and may require all certificates to bear the
signatures of such transfer agent or agents, or any one of such agents,
and/or of such registrar. The board of directors may select the treasurer
of the company and one or more assistant treasurers to serve as transfer
agent or agents.
Section 5.--Regulations.
The board of directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning issues, transfer
and registration of certificates for shares of the capital stock of the
company.
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Section 6.--Record Date.
The board of directors shall fix in advance a date, not exceeding thirty
days preceding the date of any meeting of stockholders, or the date of the
payment of any dividend, or the date of the allotment of rights, or the
date when any change or conversion or exchange of stock shall go into
effect, as a record date for the determination of the stockholders entitled
to notice of, and to vote at, any such meeting, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange
of stock, and in such case only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to such notice of and to
vote at such meeting, or to receive payment of such dividend, or to receive
such allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer to any stock on the books of the company after
any such record date fixed as aforesaid.
ARTICLE VI
LIABILITY
Section 1.--Liability.
No person or his personal representatives shall be liable to the company
for any loss or damage suffered by it on account of any action taken or
omitted to be taken by such person in good faith as an officer or employee
of the company, or as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic company, partnership, joint venture,
trust, employee benefit plan, or other enterprise, whether for profit or
not, which he serves or served at the request of the company, if such
person (a) exercised and used the same degree of care and skill as a
prudent man would have exercised and used under like circumstances, charged
with a like duty, or (b) took or omitted to take such action in reliance
upon advise of counsel for the company or such enterprise or upon
statements made or information furnished by persons employed or retained by
the company or such enterprise upon which he had reasonable grounds to
rely. The foregoing shall not be exclusive of other rights and defenses to
which such person or his personal representatives may be entitled under
law.
ARTICLE VII
INDEMNIFICATION
Section 1.--Actions by a Third Party.
The company shall indemnify any person who is or was a party, or is
threatened to be made a defendant or respondent, to a proceeding, including
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than actions by or
in the right of the company), and whether formal or
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informal, who is or was a director, officer, or employee of the company or
who, while a director, officer, or employee of the company, is or was
serving at the company's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic company, partnership,
joint venture, trust, employee benefit plan, or other enterprise, whether
for profit or not, against:
(a) any reasonable expenses (including attorneys' fees) incurred with
respect to a proceeding, if such person is wholly successful on the merits
or otherwise in the defense of such proceeding, or
(b) judgments, settlements, penalties, fines (including excise taxes
assessed with respect to employee benefit plans) and reasonable expenses
(including attorneys' fees) incurred with respect to a proceeding where
such person is not wholly successful on the merits or otherwise in the
defense of the proceeding if:
(i) the individual's conduct was in good faith; and
(ii) the individual reasonably believed:
(A) in the case of conduct in the individual's capacity as a
director, officer or employee of the company, that the
individual's conduct was in the company's best interests; and
(B) in all other cases, that the individual's conduct was at
least not opposed to the company's best interests; and
(iii) in the case of any criminal proceeding, the individual either:
(A) had reasonable cause to believe the individual's conduct
was lawful; or
(B) had no reasonable cause to believe the individual's
conduct was unlawful.
The termination of a proceeding by a judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director, officer, or employee did not meet
the standard of conduct described in this section.
Section 2.--Actions by or in the Right of the Company.
The company shall indemnify any person who is or was a party or is
threatened to be made a defendant or respondent, to a proceeding, including
any threatened, pending or completed action, suit or proceeding, by or in
the right of the company to procure a
13
<PAGE>
judgment in its favor, by reason of the fact that such person is or was a
director, officer, or employee of the company or is or was serving at the
request of the company as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic company, partnership, joint
venture, trust, employee benefit plan, or other enterprise, whether for
profit or not, against any reasonable expenses (including attorneys' fees):
(a) if such person is wholly successful on the merits or otherwise in the
defense of such proceeding, or
(b) if not wholly successful:
(i) the individual's conduct was in good faith; and
(ii) the individual reasonably believed:
(A) in the case of conduct in the individual's capacity as a
director, officer or employee of the company, that the
individual's conduct was in the company's best interests; and
(B) in all other cases, that the individual's conduct was at
least not opposed to the company's best interests,
except that no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be
liable to the company unless and only to the extent that the court in which
such action or suit was brought shall determine upon application, that
despite the adjudication of liability but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnification
for such expenses which such court shall deem proper.
Section 3.--Methods of Determining Whether Standards for Indemnification Have
Been Met.
Any indemnification under Sections 1 or 2 of this Article (unless ordered
by a court) shall be made by the company only as authorized in the specific
case upon a determination that indemnification of the director, officer, or
employee is proper in the circumstances because he has met the applicable
standards of conduct set forth in Section 1 or 2. In the case of directors
of the company, such determination shall be made by any one of the
following procedures:
(a) by the board of directors by a majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
14
<PAGE>
(b) if a quorum cannot be obtained under (a), by majority vote of a
committee duly designated by the board of directors (in which designation
directors who are parties may participate), consisting solely of two or
more directors not at the time parties to the proceeding;
(c) by special legal counsel:
(i) selected by the board of directors or a committee thereof in the
manner prescribed in (a) or (b); or
(ii) if a quorum of the board of directors cannot be obtained under
(a) and a committee cannot be designated under (b), selected by a majority
vote of the full board of directors (in which selection directors who are
parties may participate).
In the case of persons who are not directors of the company, such
determination shall be made (a) by the chief executive officer of the
company or (b) if the chief executive officer so directs or in his absence,
in the manner such determination would be made if the person were a
director of the company.
Section 4.--Advancement of Defense Expenses.
The company may pay for or reimburse the reasonable expenses incurred by a
director, officer, or employee who is a party to a proceeding described in
Section 1 or 2 of this Article in advance of the final disposition of said
proceeding if:
(a) the director, officer, or employee furnishes the company a written
affirmation of his good faith belief that he has met the standard of
conduct described in Section 1 or 2; and
(b) the director, officer, or employee furnishes the company a written
undertaking, executed personally or on his behalf, to repay the advance if
it is ultimately determined that the director, officer, or employee did not
meet the standard of conduct; and
(c) a determination is made that the facts then known to those making the
determination would not preclude indemnification under Section 1 or 2.
The undertaking required by this Section must be unlimited general
obligation of the director, officer, or employee but need not be secured
and may be accepted by the company without reference to the financial
ability of such person to make repayment.
Section 5.--Non-Exclusiveness of Indemnification.
15
<PAGE>
The indemnification and advancement of expenses provided for or authorized
by this Article does not exclude any other rights to indemnification or
advancement of expenses that a person may have under:
(a) the company's articles of incorporation or bylaws;
(b) any resolution of the board of directors or the shareholders of the
company;
(c) any other authorization adopted by the shareholders; or
(d) otherwise as provided by law, both as to such person's actions in his
capacity as a director, officer, or employee of the company and as to
actions in another capacity while holding such office.
Such indemnification shall continue as to a person who has ceased to be a
director, officer, or employee, and shall inure to the benefit of the heirs
and personal representatives of such person.
ARTICLE VIII
AMENDMENTS
Section 1.-- These bylaws may be amended at any annual stockholders' meeting, or
at any special stockholders' meeting, provided that if amended at a special
stockholders' meeting, notice specifying the amendments proposed to be made
shall be mailed each stockholder at least thirty days before such special
meeting. Also, these bylaws may be amended at any regular or special meeting of
the board of directors by the vote of the majority of the total number of
directors.
16
<PAGE>
EXHIBIT 9
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made as of August 15, 1996, by
and among Delaware Management Holdings, Inc., a Delaware corporation
("Holdings"), Delaware Service Company, Inc., a Delaware corporation and a
wholly owned subsidiary of Holdings ("Delaware"), Lincoln National Life
Insurance Company, an Indiana insurance corporation ("Lincoln Life"), and each
of the investment companies listed in Exhibit A hereto, each a Maryland
---------
corporation (together with any other investment company designated in accordance
with Section 5.1, the "Funds," or individually, a "Fund").
The parties hereto, in consideration of the mutual covenants hereinafter
expressed, agree as follows:
ARTICLE 1
DEFINITIONS
-----------
Section 1.1 Definitions. The following terms shall have the respective
-----------
meanings set forth in this Section 1.1 for all purposes of this Agreement except
where the application of such definitions is limited by reference in this
Section 1.1 to a specific Article of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Acceptance Test" means a test, reasonably acceptable to Lincoln Life,
Delaware and the Funds, of the performance of the Value Calculation Services for
the Accounts included in the respective Phases, to be conducted in accordance
with Article 4.
"Accounting Services" means the services listed in the Cutover Schedule
with respect to the Accounts.
"Accounts" means the Funds and the Separate Accounts, collectively.
"Affiliate" means, with respect to any entity, any other entity
controlling, controlled by or under common control with such entity.
"Business Day" means a day on which the New York Stock Exchange is open for
trading.
<PAGE>
"Calculation Losses" means any losses suffered by a Contract owner, Third
Party Administrator, Fund or Separate Account directly caused by an error in a
Net Asset Value or Unit Value, or by the delivery to Lincoln Life or any Fund of
a Net Asset Value or Unit Value after the applicable deadline provided for in
Section 2.1; provided, however, that such losses shall not include any
consequential damages.
"Contractowner" means the present or former owner of an insurance or
annuity contract supported by a Separate Account, or any beneficiary or
annuitant thereof.
"Cutover Date," with respect to any Phase, means the date, which shall be a
Business Day, on which Delaware actually commences providing the Accounting
Services with respect to such Phase in accordance with Section 4.2. The planned
Cutover Date for each Phase is set forth in the Cutover Schedule.
"Cutover Schedule" means Schedule 1.1(a) hereto, which sets forth the
---------------
accounting services to be rendered pursuant to this Agreement and the planned
Cutover Dates, as such Schedule may be amended from time to time pursuant to
Section 16.1.
"Delaware" has the meaning set forth in the preamble to this Agreement.
"Delaware Affiliate" means Holdings and any entity that is directly or
indirectly controlled by Holdings.
"Fee Schedule" means Schedule 6.1 hereto, as such Schedule may be amended
------------
from time to time pursuant to Section 16.1.
"Fund" has the meaning set forth in the preamble to this Agreement.
"Holdings" has the meaning set forth in the preamble to this Agreement.
"Lincoln Affiliate" means any Affiliate of Lincoln Life other than a
Delaware Affiliate.
"Lincoln Life" has the meaning set forth in the preamble to this Agreement.
"Net Asset Value" means the daily net asset value per share
<PAGE>
of the respective Funds for each Business Day, all determined in accordance with
the terms of the Cutover Schedule and with any applicable prospectus or
regulatory requirement.
"Phase" means a set of Accounts comprising the Phase I Accounts, the Phase
II Accounts or the Phase III Accounts.
"Phase I Account" means an Account designated as such on the Cutover
Schedule.
"Phase II Account" means an Account designated as such on the Cutover
Schedule.
"Phase III Account" means an Account designated as such on the Cutover
Schedule.
"Renewal Term" means each successive one-year term occurring after the
expiration of the initial term of this Agreement as described in Section 11.1.
"Separate Account" means a separate account of Lincoln Life identified as
such on the Cutover Schedule, and any additional separate account or sub-account
of Lincoln Life or any Lincoln Affiliate (or of any other person if Lincoln Life
or any Lincoln Affiliate has administrative responsibilities with respect to
such separate account or sub-account pursuant to any reinsurance agreement or
otherwise) designated in accordance with Section 5.1.
"Test Period" means, with respect to each Phase, a period of time prior to
the Cutover Date for such Phase, commencing on the date specified by Delaware
pursuant to Section 4.1 and having a duration of three weeks or such longer
period as may be determined pursuant to Section 4.1.
"Third Party Administrator" means an administrator of insurance or annuity
contracts acting on behalf of Contractowners.
"Unit Value" means the daily unit value per unit of the respective Separate
Accounts or sub-accounts thereof for each Business Day, all determined in
accordance with the terms of the Cutover Schedule and with any applicable
prospectus or regulatory requirement.
<PAGE>
"Value Calculation Services" means those Accounting Services consisting of
or incidental to the calculation and communication of Unit Values and Net Asset
Values in accordance with the terms of this Agreement.
ARTICLE 2
SCOPE OF SERVICES; CUTOVER
--------------------------
Section 2.1 Scope of Services. Delaware shall provide the Accounting
-----------------
Services to each of the Funds and to Lincoln Life with respect to each of the
Separate Accounts, all in accordance with the terms of this Agreement. Without
limiting the generality of the foregoing, from and after the Cutover Date for
each respective Phase, Delaware, no later than 6:00 p.m. (New York City time) on
each Business Day, shall in accordance with the terms of this Agreement provide
to Lincoln Life and to the Funds the Value Calculation Services for each of the
Accounts included in such Phase. In the event of any error in the Value
Calculation Services, the parties hereto will follow the procedures set forth in
Schedule 2.1, without prejudice to any other rights described in this Agreement.
- ------------
Section 2.2 Cutover Schedule. Delaware, Lincoln Life and the Funds shall
----------------
use their respective best efforts to cause the Cutover Date to occur no later
than (a) August 15, 1996, with respect to the Phase I Accounts, (b) October 31,
1996, with respect to the Phase II Accounts and (c) January 1, 1997 with respect
to the Phase III Accounts.
ARTICLE 3
LINCOLN LIFE'S SUPPORT OBLIGATIONS
----------------------------------
Section 3.1 Provision of Data. Lincoln Life shall use its best efforts to
-----------------
provide or cause to be provided to Delaware the data identified in Schedule 3.1
------------
during the periods and in accordance with the procedures identified in such
Schedule, it being understood that Delaware shall not be responsible for any
Calculation Losses or other claims, suits, hearings, actions, damages,
liabilities, fines, penalties, costs, losses or expenses, including reasonable
attorney's fees, which any party may sustain or incur, directly or indirectly,
in each case to the extent caused by or arising from Lincoln Life's failure to
provide such data in accordance with such Schedule 3.1.
------------
Section 3.2 Data to Be Provided by Third Parties. With
------------------------------------
<PAGE>
respect to each of the mutual funds identified in Schedule 3.2 as an available
------------
investment of one or more of the Separate Accounts (other than mutual funds
managed by Lincoln Life or Delaware or their respective Affiliates) and each
third party service pro provider identified in such Schedule, Lincoln Life shall
direct each of the managers of such funds or such service provider, as the case
may be, to provide or cause to be provided to Delaware the data identified in
Schedule 3.2 in accordance with the procedures and time deadlines identified in
- ------------
such Schedule.
Section 3.3 Information for Periods Prior to Cutover Date. Lincoln Life
---------------------------------------------
will provide appropriate financial and other information with respect to
the Accounts to Delaware, and will cooperate with Delaware, in connection with
the preparation of data for 1996 annual reports to Contractowner and other
elements of the Accounting Services that relate to periods prior to the Cutover
Dates for the respective Accounts. In addition, Lincoln Life will provide to
Delaware appropriate financial and other information regarding the Accounts for
periods prior to 1996 to the extent relevant to the performance of the
Accounting Services for 1996 and subsequent periods.
ARTICLE 4
ACCEPTANCE TEST; CUTOVER DATE
-----------------------------
Section 4.1 Acceptance Testing. Delaware shall notify Lincoln Life of the
------------------
date, which shall be a Business Day, on which the Value Calculation Services for
each respective Phase will be ready for the commencement of the Acceptance Test
for such Phase. During the Test Period for each Phase, Delaware, Lincoln Life
and the Funds shall cooperate in performing the Acceptance Test for such Phase,
and Delaware and Lincoln Life, respectively, shall use its best efforts to
remedy any failure in the performance of the Value Calculation Services caused
by such party. In the event that, during the Test Period with respect to any
Phase, performance of the Value Calculation Services is suspended for such Phase
in order to effect such remedy or for any other reason, the Test Period for such
Phase shall be extended by the number of days of such suspension. Further, if
at the date that would otherwise be the end of the Test Period for any Phase
Delaware is not performing the Value Calculation Services with respect to such
Phase to the reasonable satisfaction of Lincoln Life, and Lincoln Life shall so
notify Delaware, the Test Period shall be extended until the date on which
Lincoln Life notifies Delaware that the Value Calculation Services are being
performed
<PAGE>
to the reasonable satisfaction of Lincoln Life. All references in this Section
4.1 to the performance of the Value Calculation Services shall refer to the
performance thereof in a test mode.
Section 4.2 Cutover Date. With respect to each Phase, upon the
------------
termination of the Test Period, Lincoln Life, the Funds and Delaware shall
execute a written acknowledgment in the form of Exhibit B hereto confirming such
---------
termination and specifying the Cutover Date, which shall be the Business Day
immediately following the date of such termination unless Lincoln Life, the
Funds and Delaware shall agree upon a different date.
ARTICLE 5
NEW ACCOUNTS; NEW INVESTMENT MANAGERS
-------------------------------------
Section 5.1 Additional Accounts. Lincoln Life may from time to time
-------------------
designate (i) one or more additional investment companies or separate accounts
to constitute Funds or Separate Accounts, as the case may be, for all purposes
of this Agreement, or (ii) one or more newly established sub-accounts of any
Separate Account. Such designation shall be:
(a) subject to Delaware's consent, which shall not be unreasonably
withheld; provided, that such consent shall be considered to be
unreasonably withheld if Delaware does not make reasonable efforts
to accept such new investment companies, separate accounts and
sub-accounts, which efforts shall include, but not be limited to,
reasonable consideration of the expansion of Delaware's
infrastructure to handle such new investment companies, separate
accounts and sub-accounts; and
(b) evidenced by a writing executed by Lincoln Life, Delaware and, if
applicable, each such investment company, setting forth the name
of such investment company, separate account or new sub-account,
the applicable rate under the Fee Schedule that shall apply to the
Accounting Services for such investment company, separate account
or new sub-account, the effective date of the designation thereof
as a Fund, Separate Account or new sub-account, and any other
matters the parties wish to include.
Notwithstanding clause (b) of the preceding sentence, if
<PAGE>
Delaware's performance of the Accounting Services for such additional Funds,
Separate Accounts, or sub-accounts of such Separate Accounts would, in
Delaware's reasonable opinion, result in higher costs than the costs Delaware
incurs for providing the Accounting Services to the current Accounts, then the
affected parties hereto shall negotiate in good faith an addendum to the Fee
Schedule for such additional Funds, Separate Accounts and sub-accounts and
Delaware shall not be deemed to have unreasonably withheld its consent under
clause (b) of this Section 5.1 until such addendum has been agreed to. Except as
otherwise specified in such writing, from and after such effective date,
Delaware shall provide to such Fund, or to Lincoln Life with respect to a
Separate Account or new sub-account, the same Accounting Services as are
specified in the Cutover Schedule with respect to the other Funds, Separate
Accounts or sub-account of a Separate Account, as the case may be.
Section 5.2 New Investment Managers. If new investment managers are added
-----------------------
to provide investment advisory services to any of the Accounts, and Delaware's
performance of the Accounting Services is, as a result thereof, significantly
more costly to Delaware, the affected parties shall negotiate in good faith an
addendum to the Fee Schedule for such Accounts.
ARTICLE 6
FEES
----
Section 6.1 Accrual of Fees. From and after the Cutover Date with respect
---------------
to each Phase, Lincoln Life shall pay fees for the Accounting Services for each
of the Separate Accounts included in such Phase, and each Fund included in such
Phase shall pay fees for the Accounting Services for such Fund, in each case at
the respective rates per annum determined in accordance with the Fee Schedule.
Fees accrued pursuant to this Section 6.1 shall be payable in arrears on a
monthly basis.
Section 6.2 Payment of Fees by Lincoln Life. Delaware shall submit to
-------------------------------
Lincoln Life an invoice for each month for all of the fees payable pursuant to
Section 6.1 with respect to each of the Separate Accounts, which invoice shall
be itemized to show the portion of such fees allocable to each of the Separate
Accounts in accordance with the Fee Schedule. Subject to the terms of this
Agreement, invoices for such fees shall be payable within 30 days of receipt.
<PAGE>
Section 6.3 Payment of Fees by the Funds. Delaware shall submit to each
----------------------------
Fund, with a copy to Lincoln Life, an invoice for each month for all of the fees
payable pursuant to Section 6.1 with respect to such Fund. Subject to the terms
of this Agreement, invoices for such fees shall be payable within 30 days of
receipt.
ARTICLE 7
STANDARD OF CARE; INDEMNIFICATION
---------------------------------
Section 7.1 Standard of Care. Delaware shall provide the Accounting
----------------
Services with a level of care equal to or greater than the level of care at
which it performs similar functions for mutual funds that are sponsored or
managed by any Delaware Affiliate, and in any event, Delaware shall always
exercise reasonable care in performing the Accounting Services.
Section 7.2 Indemnification
---------------
(a) Indemnification by Lincoln Life. Lincoln Life shall indemnify, defend
-------------------------------
and hold harmless Delaware and any Delaware Affiliate, and the directors,
officers and employees of the foregoing (each individually, a "Delaware
Indemnified Party"), against any and all claims, suits, hearings, actions,
damages, liabilities, fines, penalties, costs, losses or expenses, including
reasonable attorney's fees, which any Delaware Indemnified Party may sustain or
incur, directly or indirectly, in each case to the extent caused by or arising
from (i) the negligence, recklessness or intentional misconduct of Lincoln Life
or any Lincoln Affiliate, or any director, officer or employee thereof, in the
performance of this Agreement; or (ii) the failure of Lincoln Life to comply
with the terms of this Agreement.
(b) Indemnification by Delaware. Subject to Section 3.1, Delaware shall
---------------------------
indemnify, defend and hold harmless Lincoln Life, the Lincoln Affiliates and the
Funds, and the directors, officers and employees of the foregoing (each
individually, a "Lincoln Indemnified Party") against any and all claims, suits,
hearings, actions, damages, liabilities, fines, penalties, costs, losses
(including but not limited to (a) Calculation Losses reimbursed by Lincoln Life
and (b) any market fluctuation losses incurred by Lincoln Life in effecting such
reimbursement) or expenses, including reasonable attorney's fees, which any
Lincoln Indemnified Party may sustain or incur, directly or indirectly,
<PAGE>
in each case to the extent caused by or arising from (i) the negligence,
recklessness or intentional misconduct of Delaware or any Delaware Affiliate, or
any director, officer or employee thereof, in the performance of this Agreement;
or (ii) the failure of Delaware to comply with the terms of this Agreement.
(c) Procedures. Subject to the provisions of Section 7.2(d), promptly
----------
after receipt by a Delaware Indemnified Party or a Lincoln Indemnified Party
(each, an "Indemnified Party") of notice of the commencement of any action,
proceeding, investigation or claim by any Contractowner or other third party
(a "Proceeding"), the Indemnified Party shall, if a claim in respect thereof is
to be made pursuant to this Section 7.2 against another party to this Agreement
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the
commencement thereof; but the failure so to notify the Indemnifying Party shall
not relieve the Indemnifying Party from any liability under this Section 7.2,
except to the extent that such failure to notify actually prejudices the
Indemnifying Party. In case any such Proceeding shall be brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate in
and to assume the defense thereof, with counsel satisfactory to the Indemnified
Party, and after notice from the Indemnifying Party to the Indemnified Party of
the Indemnifying Party's election to assume the defense thereof, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, that (i) if, in the reasonable judgment of the Indemnified Party, it is
advisable for the Indemnified Party to be represented by separate counsel other
than counsel for the Indemnifying Party, the Indemnified Party shall have the
right to employ a single counsel to represent the Indemnified Party, in which
event the reasonable fees and expenses of such separate single counsel shall be
borne by the Indemnifying Party, and (ii) in the case of any Proceeding brought
by any governmental authority, the Indemnifying Party shall have the right to
participate in, but not to assume the defense of, such Proceeding. The
Indemnifying Party shall not be obligated under any settlement agreement
relating to any Proceeding under this Section 7.2 to which it has not consented
in writing, which consent shall not be unreasonably withheld.
(d) Preserving Rights with Respect to Calculation Losses. Notwithstanding
----------------------------------------------------
Section 7.2(c), Lincoln Life may in its sole
<PAGE>
discretion elect to reimburse a Contractowner, Third Party Administrator,
Separate Account or Fund for Calculation Losses out of Lincoln Life's own funds
and such reimbursement shall have no effect on the respective indemnification
obligations of the parties pursuant to Section 7.2(a) and (b).
(e) Overpayments. The parties agree that there may be circumstances in
------------
which it would not be commercially reasonable for Lincoln Life and the Funds to
seek reimbursement from one or more Contractowners of overpayments made them,
taking into account relevant factors such as industry practice; the amount of
such overpayments; the number of Contractowners overpaid; the cost of seeking
reimbursement; and the implications for customer relations of seeking
reimbursement. In the event of any overpayment to a Contractowner for which
Lincoln Life or any Fund intends to seek indemnification from Delaware pursuant
to Section 7.2(b) without seeking reimbursement from the Contractowner, the
parties shall negotiate in good faith as to what effect, if any, the
determination not to seek such reimbursement should have under the circumstances
on the rights of Lincoln Life or the Funds to indemnification for the amounts
overpaid.
ARTICLE 8
INSURANCE COVERAGE
------------------
Section 8.1 Insurance. Delaware and Holdings shall maintain insurance
---------
coverage at a level at least equal to the insurance coverage held by each of
them at the time this Agreement becomes effective.
ARTICLE 9
FORCE MAJEURE AND DISASTER RECOVERY PLAN
----------------------------------------
Section 9.1 Force Majeure; Disaster Recovery Plan. No party shall be
-------------------------------------
liable to any other party for any damages caused by delays beyond its reasonable
control, including, without limitation, those delays occasioned by fire, strike,
labor dispute, acts of the other party, acts of any common carrier, pricing
service, corporate action service, or telephone network, acts of the power
supply company or its networks, restrictions by civil or military authorities,
acts of nature, or unforeseen transportation failures. In the event of any such
delay, the hindered party shall promptly notify the other parties and, upon the
giving of such notice, the period of time for performance of obligations
hereunder affected by such delays will be extended by
<PAGE>
the same number of days as the delay. Notwithstanding the foregoing, Delaware
shall maintain and implement a customary disaster recovery plan and such plan
shall be reasonably acceptable to Lincoln Life and the Funds. This Article 9
shall not excuse any failure to perform, or extend the time for performance of,
any obligation of Delaware under this Agreement to the extent that such failure
or delay would have been avoided by compliance with such disaster recovery plan,
or by the use of reasonable, readily available alternatives.
ARTICLE 10
EFFECTIVENESS
-------------
Section 10.1 Effectiveness.
-------------
(a) This Agreement shall become effective upon the later of:
(i) the date first set forth above; or
(ii) the date as of which Lincoln Life has complied with the
requirements of the Indiana insurance holding company laws at
Section 27-1-23-4 of the Indiana Code.
(b) Lincoln Life shall diligently and reasonably pursue the
satisfaction of the requirements of the Indiana insurance holding
company laws at Section 27-1-23-4 of the Indiana Code.
ARTICLE 11
TERM AND TERMINATION
--------------------
Section 11.1 Term. The initial term of this Agreement shall end on the
----
fourth anniversary of the Cutover Date of Phase III, and this Agreement shall be
automatically renewed for subsequent Renewal Terms thereafter unless sooner
terminated under Section 11.2.
Section 11.2 Termination. Subject to the procedures set forth in Article
-----------
12 and to Section 11.3, this Agreement may be terminated as follows:
(a) by Lincoln Life, Delaware, or any Fund, in each case upon notice
to each of the other parties at
<PAGE>
least 180 days prior to the expiration of the initial term or any
Renewal Term, with such termination to become effective upon such
expiration; and
(b) by Lincoln Life, Delaware or any Fund upon 30 days notice to each
of the other parties, for any material breach of this Agreement
unless such breach is cured within such notice period.
For the purpose of this Section 11.2(b) only, a "material breach" shall include,
but not be limited to, the failure by Delaware to provide Accounting Services
hereunder of a quality reasonably determined by Lincoln Life or any Fund to be
consistent with a superior level of service in the industry.
Section 11.3 Effect of Termination by a Fund. In the event one or more
-------------------------------
Funds shall terminate this Agreement, this Agreement shall nonetheless continue
in full force and effect between and among those parties who have not terminated
this Agreement.
ARTICLE 12
PROCEDURES UPON TERMINATION
---------------------------
Section 12.1 Obligations Upon Termination. Upon termination of this
----------------------------
Agreement by any party under Article 11, each party shall be obligated to
cooperate with each other party to provide for the transfer of all
responsibilities, duties and obligations of this Agreement as may be necessary
to ensure the orderly, undisrupted business of each party. Such cooperation
shall include, but not be limited to, returning all papers, documents, materials
or equipment to the party owning such materials. In the event that this
Agreement is terminated by Lincoln Life or any Fund under Section 11.2(b),
Lincoln Life and the Funds shall have the right to require Delaware to continue
performing all or any part of its responsibilities, duties and obligations under
this Agreement until the earlier of (a) 210 days following the date notice of
such termination was given, or (b) the date that is 30 days after notice from
Lincoln Life or the Funds that Delaware shall cease such performance. For this
purpose, (a) the terms of this Agreement (including without limitation the
obligation of Lincoln Life and the Funds to pay Delaware's fees under Article
6, and the obligation of Delaware to continue to exercise the standard of care
required under Section 7.1 shall remain in effect with respect to the period in
which Delaware is obligated
<PAGE>
to continue such performance, and (b) if any portion of Delaware's
responsibilities, duties and obligations during such period are not so extended
as required by Lincoln Life, the parties shall mutually agree in good faith on a
reduction of fees which reflects the termination of such responsibilities,
duties and obligations.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES
------------------------------
Each party represents and warrants to the other parties as follows:
Section 13.1 Organization and Authority. Such party is duly organized,
--------------------------
validly existing and in good standing as a corporation under the laws of the
state indicated on the first page of this Agreement, with the requisite
authority and power, in conformity with applicable laws, rules and regulations,
to execute and deliver this Agreement and to perform its obligations hereunder.
Such party has taken all necessary action to authorize such execution, delivery
and performance.
Section 13.2 No Conflict with Laws. The execution, delivery and
---------------------
performance of this Agreement by such party do not conflict with or violate any
laws applicable to such party, any provision of its constituent documents, any
order or judgment of any court or governmental agency applicable to it or any of
its assets or any contractual restriction binding on it or its assets.
Section 13.3 Obligation. This Agreement constitutes a legal, valid and
----------
binding obligation of such party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to the enforcement of creditors' rights generally and
subject to principles of equity.
ARTICLE 14
PARENT GUARANTY
---------------
Section 14.1 Parent Guaranty. Holdings hereby unconditionally guarantees
---------------
the full and punctual performance of the covenants, agreements and obligations
of Delaware under this Agreement, including but not limited to the payment when
due of all amounts that may from time to time be payable by Delaware
<PAGE>
pursuant to Section 7.2(b) (the "Guaranteed Obligations").
Section 14.2 Guaranty Unconditional. The obligations of Holdings
----------------------
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released or discharged by:
(a) any extension, settlement, compromise, waiver or release in
respect of any obligation of Delaware under this Agreement;
(b) any modification or amendment of or supplement to this
Agreement;
(c) any change in the corporate existence, structure or ownership
of Delaware, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Delaware or its assets; or
(d) any other act or omission to act or delay of any kind by
Delaware, Lincoln Life, any Fund or any other person which would, but for
the provisions of this paragraph (d), constitute a legal or equitable
discharge of Holding's obligations hereunder;
provided, however, that in the event of any extension, settlement, compromise,
waiver or release of any obligation of Delaware under this Agreement, or any
modification or amendment of or supplement to this Agreement, the guaranty
provided for in this Article 14 shall apply to the obligations of Delaware as so
extended, settled, compromised, waived, released, modified, amended or
supplemented.
Section 14.3 Discharge Only Upon Payment or Performance in Full;
---------------------------------------------------
Reinstatement in Certain Circumstances. Holding's obligations hereunder shall
- --------------------------------------
remain in full force and effect until the Guaranteed Obligations shall have been
paid or performed in full. If at any time any payment of Guaranteed Obligations
by Delaware under this Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of Delaware or
otherwise, Holding's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
Section 14.4 Waiver by Holdings. Holdings irrevocably
------------------
<PAGE>
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any person against Delaware or any other person.
Section 14.5 Subrogation. Upon making any payment with respect to
-----------
Delaware hereunder, Holdings shall be subrogated to the rights of the payee
against Delaware with respect to such payment; provided that Holdings shall not
enforce payment by way of subrogation until all Guaranteed Obligations have been
paid or performed in full.
ARTICLE 15
DISPUTE RESOLUTION
------------------
Before commencing litigation of any dispute arising out of or relating to
this Agreement, the parties shall attempt in good faith to resolve the dispute
by the following means:
Section 15.1 Negotiation. The parties shall in good faith attempt to
-----------
resolve any dispute arising out of or relating to this Agreement promptly by
negotiations between executives who have authority to settle the controversy. A
party may give the other parties written notice of any dispute not resolved in
the normal course of business. Within 20 days after delivery of that notice,
executives of the affected parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to exchange
relevant information and to attempt to resolve the dispute. If the matter has
not been resolved within 60 days of the disputing party's notice, or if the
parties fail to meet within 20 days, either party may initiate mediation of the
controversy or claim as provided in Section 15.2. If a negotiator intends to be
accompanied at a meeting by an attorney, the other negotiator shall be given at
least 3 Business Days' notice of that intention and may also be accompanied by
an attorney.
Section 15.2 Mediation. If the dispute has not been resolved by
---------
negotiation as provided in Section 15.1, the parties shall endeavor for an
additional period of 60 days to settle the dispute by mediation under the then-
current Center for Public Resources (CPR) Model Procedure for Mediation of
Business Disputes. The neutral third party will be selected from the CPR Panel
of Neutrals. If the parties encounter difficulty in agreeing on a neutral, they
will seek the assistance of CPR in
<PAGE>
the selection process.
Section 15.3 Confidentiality. All activities under this Article 15 are
---------------
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of evidence.
ARTICLE 16
MISCELLANEOUS
-------------
Section 16.1 Amendment. This Agreement, including any Exhibits or
---------
Schedules, may be amended, modified or supplemented only in writing signed by
Delaware, Lincoln Life and any Fund affected thereby. This Agreement shall be
binding upon all successors, assigns or transferees of the parties to this
Agreement.
Section 16.2 Assignment. This Agreement and the rights, duties and
----------
obligations of the parties hereto shall not be assignable by any party, except
assignment to successors in the case of mergers, sales of all or substantially
all of the assets of such party or transfer of ownership by reorganization or
similar restructuring to a successor in interest to the business of such party,
without the prior written consent of the other parties, and any purported
assignment in the absence of such consent shall be void.
Section 16.3 Notices. All notices given or submitted pursuant to this
-------
Agreement shall be made in writing and shall be deemed given when (a) deposited
with the United States Postal Service, postage prepaid, registered or certified
mail, return receipt requested; (b) deposited with a nationally recognized
overnight mail delivery service; (c) sent by facsimile with electronic
confirmation of delivery or with a copy sent by mail as described in (a) or (b)
above; or (d) delivered in person; all to the last address of record of each
party being notified.
<PAGE>
Any notice under this Agreement to Lincoln Life shall be given to:
ATTN: O. Douglas Worthington
Vice President and Controller
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46801
Phone: (219) 455-3669
Facsimile: (219) 455-1939
Any notice under this Agreement to Delaware or Holdings shall be given to:
ATTN: Michael J. Bishof
Vice President and Treasurer
Delaware Management Company
1818 Market Street; 7th Floor
Philadelphia, PA 19103
Phone: (215) 255-2852
Facsimile: (215) 255-1645
With a copy to:
Richard J. Flannery
Managing Director, Corporate
& Tax Affairs
Delaware Management Company
2005 Market Street
Philadelphia, PA 19103
Phone: (215) 255-1244
Facsimile: (215) 255-2822
Any notice under this Agreement to any Fund shall be given to:
ATTN: Kelly D. Clevenger
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46801
Phone: (219) 455-5119
<PAGE>
Facsimile: (219) 455-1773
Any party may, by means of written notice in compliance with this Section
16.3, change the address or the identity of the person to whom any notice, or
copy thereof, is to be sent.
Section 16.4 Severability. If any provision of this Agreement, as applied
------------
to any party or to any circumstances, shall be found by a court of competent
jurisdiction to be void, invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the application of any such provi-
sion in any other circumstances, or the validity or enforceability of this
Agreement; provided, however, that nothing in this Section 16.4 shall adversely
affect the fundamental benefits received by the parties under this Agreement.
Section 16.5 Waiver. A waiver by any party of any of the terms and
------
conditions of this Agreement in any one instance shall not be deemed or
construed to be waiver of any such term or condition for the future, or of any
subsequent breach thereof, nor shall it be deemed a waiver of performance of any
other obligation hereunder. No waiver of any provision of this Agreement shall
be valid unless agreed to in writing by the party or parties against whom such
waiver is sought to be enforced.
Section 16.6 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties hereto relating to the subject matter of this
Agreement and supersedes all prior and collateral agreements, understandings,
statements and negotiations of the parties.
Section 16.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Indiana, without giving
effect to the conflict of law provisions thereof.
Section 16.8 Section and Paragraph Headings. The titles of the sections
------------------------------
and paragraphs of this Agreement are for convenience only and shall not in any
way affect the interpretation of any provision or condition of this Agreement.
Section 16.9 Counterparts. This Agreement may be executed in counterparts
------------
which, taken together, shall constitute the whole of the Agreement as between
the parties.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
LINCOLN LIFE:
LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: /s/ O. Douglas Worthington
--------------------------
O. Douglas Worthington
Title: Vice President and
Controller
Date:
__________________________
HOLDINGS:
DELAWARE MANAGEMENT HOLDINGS, INC.
By: /s/ David K. Downes
--------------------
Title: Executive Vice President &
Chief Operating Officer
Date: August 15, 1996
DELAWARE:
DELAWARE SERVICE COMPANY, INC.
By: /s/ Michael P. Bishof
----------------------
Title: Vice President & Treasurer
<PAGE>
Date: August 15, 1996
<PAGE>
FUNDS:
LINCOLN NATIONAL AGGRESSIVE GROWTH
FUND, INC.
LINCOLN NATIONAL BOND FUND, INC.
LINCOLN NATIONAL CAPITAL
APPRECIATION FUND, INC.
LINCOLN NATIONAL EQUITY-INCOME
FUND, INC.
LINCOLN NATIONAL GLOBAL ASSET
ALLOCATION FUND, INC.
LINCOLN NATIONAL GROWTH AND INCOME
FUND, INC.
LINCOLN NATIONAL INTERNATIONAL FUND, INC.
LINCOLN NATIONAL MANAGED FUND, INC.
LINCOLN NATIONAL MONEY MARKET FUND,
INC.
LINCOLN NATIONAL SOCIAL AWARENESS
FUND, INC.
LINCOLN NATIONAL SPECIAL
OPPORTUNITIES FUND, INC.
By: /s/ Kelly D. Clevenger
-----------------------
Kelly D. Clevenger
In his capacity as President of
each of the above-named Funds.
<PAGE>
EXHIBIT A
---------
INVESTMENT COMPANIES
<PAGE>
EXHIBIT A
---------
INVESTMENT COMPANIES
Lincoln National Aggressive Growth Fund, Inc.
Lincoln National Bond Fund, Inc.
Lincoln National Capital Appreciation Fund, Inc.
Lincoln National Equity-Income Fund, Inc.
Lincoln National Global Asset Allocation Fund, Inc.
Lincoln National Growth and Income Fund, Inc.
Lincoln National International Fund, Inc.
Lincoln National Managed Fund, Inc.
Lincoln National Money Market Fund, Inc.
Lincoln National Social Awareness Fund, Inc.
Lincoln National Special Opportunities Fund, Inc.
<PAGE>
EXHIBIT B
---------
FORM OF WRITTEN ACKNOWLEDGEMENT OF CUTOVER DATE
<PAGE>
EXHIBIT B
---------
Form of Acknowledgment of Cutover Date
--------------------------------------
This acknowledgement is executed pursuant Section 4.2 of that certain
Services Agreement (the "Agreement") dated as of July __, 1996 by and among
Delaware Management Holdings, Inc., Delaware Service Company, Inc., Lincoln
National Life Insurance Company, Lincoln National Aggressive Growth Fund, Inc.,
Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation Fund,
Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National Global Asset
Allocation Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln
National International Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln
National Money Market Fund, Inc., Lincoln National Social Awareness Fund, Inc.,
and Lincoln National Special Opportunities Fund, Inc. Capitalized terms used
herein have the same meaning as in the Agreement.
Each of the parties signing this acknowledgment below hereby agrees
that the Test Period for Phase __ terminated on ________________ __, 1996. The
Cutover Date for providing the Accounting Service for Phase __ is
_________________ __, 1996.
LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
----------------------------------------
Title:
-----------------------------------
Date:
-----------------------------------
DELAWARE SERVICE COMPANY, INC.
By:
----------------------------------------
Title:
-----------------------------------
Date:
-----------------------------------
<PAGE>
[Each Fund]
By:
----------------------------------------
Title:
-----------------------------------
Date:
-----------------------------------
<PAGE>
SCHEDULE 1.1 (a)
----------------
CUTOVER SCHEDULE
<PAGE>
CUTOVER SCHEDULE
PHASE I (8/15/96 SCHEDULED CUTOVER DATE):
The following services will begin at the Cutover Date for Phase I and will
subsequently be provided by Delaware for the duration of the Service Agreement.
The Funds for which these services will be provided are as follows:
. Lincoln National Growth and Income Fund, Inc.
. Lincoln National Bond Fund, Inc.
. Lincoln National Money Market Fund, Inc.
. Lincoln National Managed Fund, Inc.
. Lincoln National Social Awareness Fund, Inc.
. Lincoln National Special Opportunities Fund, Inc.
Daily Net Asset Value Calculation Services:
o Maintain Portfolio History
. Record portfolio purchases and sales
. Record corporate actions and capital changes
. Accrue interest, dividends and expenses
. Maintain income history for securities
o Determine distributions to shareholders
o Record and reconcile shareholder activity
. Book subscription, liquidations and dividend reinvestments
. Record settlements of shareholder activity
. Reconcile fund shares outstanding to transfer agent
o Value portfolios (Calculate the NAV for each fund portfolio)
. Verify Delaware's internal controls - pricing securities and
portfolios
o Disseminate NAVs and dividends to interested parties (Lincoln Life,
ICI, Morningstar, Lipper, etc.) as mutually agreed upon by
Lincoln Life & Delaware
o Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
o Commencing 12/31/96 prepare the following information for use in the
semi-annual and annual reports for shareholders:
. Prepare Statement of Net Assets, Statement of Operations and
Changes in Net Assets
. Work with external auditors on footnotes to the financial
statements,
. Workpapers for annual audit,
. Cooperate with external auditors, Lincoln Life Marketing &
printer
o Required ICI reporting as mutually agreed upon by Lincoln Life and
Delaware
o Prepare Statistical reports as necessary (daily, monthly,
1
<PAGE>
quarterly and annual reports for Lipper, Morningstar, and other third
party reporting agencies and survey companies) as mutually agreed upon
by Lincoln Life and Delaware
2
<PAGE>
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
o Commencing 1/1/97, provide financial information for use in SEC
reporting (ie. NSAR, Prospectus, SAI, 24F2s, etc. . .)
o Provide financial information to support schedule "D"
Other Services:
o Calculate monthly SEC yields & fund level performance
o Prepare information for tax returns and ancillary schedules and submit
to Lincoln Corporate Tax Department:
. 1120 RIC and any other required forms
. Year-end excise tax distributions
. Calculate and provide information for Subchapter M & Section 4982
of Internal Revenue Code compliance
o Provide tax return workpapers to Lincoln Life for review purposes
o Perform the following special tax reporting functions
. Prepare income by state, exempt income and qualified
distributions
o Prepare financial information for expense & budget functions
. Maintain detailed records pertaining to expense accruals and
payments
. Adjust fund records to reflect accrual adjustments
o Prepare reports which are mutually agreed upon by Lincoln Life and
Delaware for Board of Director meetings & Senior Management (as
they pertain to these 6 Funds)
o Cooperate with custodians in all custody relationships
o Facilitate security settlements
o Perform required foreign security accounting functions
o Perform daily cash reconciliations for each Fund provided that the
bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Perform weekly asset reconciliations for each fund providing the
bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third party administrators, etc.)
. Provide portfolio holdings and security valuation reports
. Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
. Assist in security settlements
. Resolve cash discrepancies
. Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
o Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
o Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
3
<PAGE>
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
Compliance Testing Services:
o Perform the following Registered Investment Company tests as required
to maintain the tax qualified status of the Funds and provide
schedules of the results. These tests are to be performed
regularly as mutually agreed upon by Lincoln Life and Delaware:
. Monthly 30% Gross Income Test (according to IRS regulations)
. Annual 90% Gross Income Test (according to IRS regulations)
. Monthly, prepare the IRS Industry Diversification Test (50% &
25%)
. Annual 90% Distribution Test
o Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is
mutually agreed upon by Lincoln Life and Delaware
The following services will begin at the Cutover Date for Phase I and will
subsequently be provided by Delaware for the duration of the Services Agreement,
The Separate Account Sub-Accounts for which these services will be provided are
as follows:
. Separate Account C LN Growth & Income Fund
. Separate Account C LN Bond Fund
. Separate Account C LN Social Awareness Fund
. Separate Account C LN Special Opportunities Fund
. Separate Account C LN Managed Fund
. Separate Account C LN Money Market Fund
. Separate Account C LN Global Asset Allocation Fund
. Separate Account C LN International Fund
. Separate Account C LN Aggressive Growth Fund
. Separate Account C LN Capital Appreciation Fund
. Separate Account C LN Equity Income Fund
. Separate Account C LN Delaware Equity Income Fund
. Separate Account C LN Delaware Emerging Growth Fund
. Separate Account C LN Delaware Global Bond Fund
. Separate Account K LN Growth & Income Fund
. Separate Account K LN Bond Fund
. Separate Account K LN Social Awareness Fund
. Separate Account K LN Special Opportunities Fund
. Separate Account K LN Managed Fund
. Separate Account K LN Money Market Fund
. Separate Account K LN Global Asset Allocation Fund
. Separate Account K LN International Fund
. Separate Account K LN Aggressive Growth Fund
. Separate Account K LN Capital Appreciation Fund
4
<PAGE>
. Separate Account K LN Equity Income Fund
. Separate Account K LN Delaware Equity Income Fund
. Separate Account K LN Delaware Emerging Growth Fund
. Separate Account K LN Delaware Global Bond Fund
5
<PAGE>
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
. Separate Account D LN Growth & Income Fund
. Separate Account D LN Bond Fund
. Separate Account D LN Special Opportunities Fund
. Separate Account D LN Managed Fund
. Separate Account D LN Money Market Fund
.
. Separate Account G LN Growth & Income Fund
. Separate Account G LN Special Opportunities Fund
. Separate Account 60 Global Bond Fund Net 1 UV
. Separate Account 60 Global Bond Fund Net 2 UV
. Separate Account 60 Global Bond Fund Net 3 UV
. Separate Account 60 Global Bond Fund Gross 1 UV
. Separate Account 60 Global Bond Fund Gross 2 UV
. Separate Account 61 Decatur Total Return Fund Net 1 UV
. Separate Account 61 Decatur Total Return Fund Net 2 UV
. Separate Account 61 Decatur Total Return Fund Net 3 UV
. Separate Account 61 Decatur Total Return Fund Gross 1 UV
. Separate Account 61 Decatur Total Return Fund Gross 2 UV
Daily Unit Value calculations:
o Maintain Portfolio History
. Accrue dividends and expenses to each Sub-Account
. Maintain gain/loss history for each Sub-Account
. Maintain record of holdings for each Sub-Account
o Record and reconcile shareholder activity
. Book subscription, liquidations and dividend reinvestments to
each Sub-Account
. Record settlements of shareholder activity
. Reconcile Sub-Account units outstanding to Lincoln Life
administrative systems
. Establish controls for daily pricing of units outstanding of each
Sub-Account
o Calculate the Unit Value for each Lincoln Life Separate Account
Sub-Account.
o Disseminate daily Unit Values to interested parties (ie. Lipper,
Morningstar, etc. . .) as mutually agreed upon by Lincoln Life
and Delaware
o Resolve daily pricing and/or custody discrepancies
o Accept NAVs from State Street Bank for purposes of calculating unit
values of pertinent Separate Account Sub-Accounts
Financial Reporting:
6
<PAGE>
o Provide Lincoln Life with an automated transmission of Separate
Account Sub-Account financial data into the Lincoln Life General
Ledger.
o Provide other ancillary schedules as mutually agreed upon by Lincoln
Life and Delaware
7
<PAGE>
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
Other Services:
o Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, Third Party Administrators, etc...)
. Provide portfolio holdings and security valuation reports
. Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
. Assist in security settlements
. Resolve cash discrepancies
. Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
o Provide financial information to support schedule "D"
o Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
o Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
o Perform daily cash reconciliations for each Separate Account (provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations)
o Perform weekly asset reconciliations for each Separate Account
provided that the bank(s) &/or third party mutual fund complex(s)
send the necessary information to perform such reconciliations
PHASE II (10/31/96 SCHEDULED CUTOVER DATE):
The following services will begin in this Cutover Date for Phase II and will
subsequently be provided by Delaware for the duration of the Services Agreement.
The Separate Accounts for which these services will be provided are A, 3, 11,
12, 14, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 30, 32:
Daily Unit Value Calculation Services:
o Maintain Portfolio History
. Record portfolio purchases and sales
. Record corporate actions and capital changes
. Accrue interest, dividends and expenses
. Maintain income history for securities
o Record and reconcile shareholder activity
. Book subscription, liquidations and dividend reinvestments
. Record settlements of shareholder activity
. Reconcile fund shares outstanding to transfer agent
o Value portfolios (Calculate the Unit Value for each Separate Account
portfolio)
8
<PAGE>
. Verify Delaware's internal controls - pricing securities and
portfolios
9
<PAGE>
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
o Disseminate Unit Values to interested parties (Lincoln Life, etc. . .)
as mutually agreed upon by Lincoln Life and Delaware
o Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
o Coordinate audit activities with external auditors
o Prepare statistical reports as mutually agreed upon by Lincoln Life
and Delaware
o Provide Lincoln with additional financial data as mutually agreed upon
by Lincoln Life and Delaware
o Provide Lincoln Life with an automated general ledger feed of
pertinent financial information (ie. revenue, cash flow, etc...)
Other Services:
o Cooperate with custodians in all custody relationships
o Facilitate security settlements
o Perform required foreign security accounting functions
o Perform daily cash reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Perform weekly cash reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third party administrators, etc...)
. Provide portfolio holdings and security valuation reports
. Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
. Assist in security settlements
. Resolve cash discrepancies
. Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
o Provide financial information to support schedule "D"
o Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
o Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
10
<PAGE>
Compliance Testing Services:
o Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is
mutually agreed upon by Lincoln Life and Delaware
11
<PAGE>
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
The following services will begin at the Cutover Date for Phase II and will
subsequently be provided by Delaware for the duration of the Services Agreement.
The Separate Account Sub-Accounts for which these services will be provided are
as follows:
. Separate Account A Traditional Annuities Gross 1 UV
. Separate Account A Traditional Annuities Terminal Funding UV
. Separate Account 3 Core Equity Fund Gross 1 UV
. Separate Account 11 Core Equity Account Net 1 UV
. Separate Account 11 Core Equity Account Net 2 UV
. Separate Account 11 Core Equity Account Net 3 UV
. Separate Account 11 Core Equity Account Gross 1 UV
. Separate Account 11 Core Equity Account Gross 2 UV
. Separate Account 11 Core Equity Account Balanced UV
. Separate Account 12 Govt. Corp Bond Account Net 1 UV
. Separate Account 12 Govt. Corp Bond Account Net 2 UV
. Separate Account 12 Govt. Corp Bond Account Net 3 UV
. Separate Account 12 Govt. Corp Bond Account Gross 1 UV
. Separate Account 12 Govt. Corp Bond Account Gross 2 UV
. Separate Account 12 Govt. Corp Bond Account Balanced UV
. Separate Account 14 Short Term Account Net 1 UV
. Separate Account 14 Short Term Account Net 2 UV
. Separate Account 14 Short Term Account Net 3 UV
. Separate Account 14 Short Term Account Gross 1 UV
. Separate Account 14 Short Term Account Gross 2 UV
. Separate Account 14 Short Term Account Balanced UV
. Separate Account 17 Medium Cap. Equity Account Net 1 UV
. Separate Account 17 Medium Cap. Equity Account Net 2 UV
. Separate Account 17 Medium Cap. Equity Account Net 3 UV
. Separate Account 17 Medium Cap. Equity Account Gross 1 UV
. Separate Account 17 Medium Cap. Equity Account Gross 2 UV
. Separate Account 17 Medium Cap. Equity Account Balanced UV
. Separate Account 20 High Yield Bond Account Net 1 UV
. Separate Account 20 High Yield Bond Account Net 2 UV
. Separate Account 20 High Yield Bond Account Net 3 UV
. Separate Account 20 High Yield Bond Account Gross 1 UV
. Separate Account 20 High Yield Bond Account Gross 2 UV
. Separate Account 20 High Yield Bond Account Balanced UV
. Separate Account 21 Balanced Account Net 1 UV
. Separate Account 21 Balanced Account Net 2 UV
. Separate Account 21 Balanced Account Net 3 UV
. Separate Account 21 Balanced Account Gross 1 UV
. Separate Account 21 Balanced Account Gross 2 UV
12
<PAGE>
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
. Separate Account 22 International Account Net 1 UV
. Separate Account 22 International Account Net 2 UV
. Separate Account 22 International Account Net 3 UV
. Separate Account 22 International Account Gross 1 UV
. Separate Account 22 International Account Gross 2 UV
. Separate Account 22 International Account Balanced UV
. Separate Account 23 Large Cap. Equity Account Net 1 UV
. Separate Account 23 Large Cap. Equity Account Net 2 UV
. Separate Account 23 Large Cap. Equity Account Net 3 UV
. Separate Account 23 Large Cap. Equity Account Gross 1 UV
. Separate Account 23 Large Cap. Equity Account Gross 2 UV
. Separate Account 23 Large Cap. Equity Account Balanced UV
. Separate Account 24 Small Cap. Equity Account Net 1 UV
. Separate Account 24 Small Cap. Equity Account Net 2 UV
. Separate Account 24 Small Cap. Equity Account Net 3 UV
. Separate Account 24 Small Cap. Equity Account Gross 1 UV
. Separate Account 24 Small Cap. Equity Account Gross 2 UV
. Separate Account 24 Small Cap. Equity Account Balanced UV
. Separate Account 25 Long Term Bond Gross 1G UV
. Separate Account 26 Govt. Bond Account Net 1 UV
. Separate Account 26 Govt. Bond Account Net 2 UV
. Separate Account 26 Govt. Bond Account Net 3 UV
. Separate Account 26 Govt. Bond Account Gross 1 UV
. Separate Account 26 Govt. Bond Account Gross 2 UV
. Separate Account 27 Stable Value Account Net 2 UV
. Separate Account 27 Stable Value Account Net 3 UV
. Separate Account 27 Stable Value Account Gross 2 UV
. Separate Account 28 Value Equity Account Net 1 UV
. Separate Account 28 Value Equity Account Net 2 UV
. Separate Account 28 Value Equity Account Net 3 UV
. Separate Account 28 Value Equity Account Gross 1 UV
. Separate Account 28 Value Equity Account Gross 2 UV
. Separate Account 28 Value Equity Account Balanced UV
. Separate Account 30 Conservative Balanced Account Net 1 UV
. Separate Account 30 Conservative Balanced Account Net 2 UV
. Separate Account 30 Conservative Balanced Account Net 3 UV
. Separate Account 30 Conservative Balanced Account Gross 1 UV
. Separate Account 30 Conservative Balanced Account Gross 2 UV
. Separate Account 32 Aggressive Balanced Account Net 1 UV
. Separate Account 32 Aggressive Balanced Account Net 2 UV
. Separate Account 32 Aggressive Balanced Account Net 3 UV
. Separate Account 32 Aggressive Balanced Account Gross 1 UV
. Separate Account 32 Aggressive Balanced Account Gross 2 UV
13
<PAGE>
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
. Separate Account 41 Fidelity Asset Manager Net 2 UV
. Separate Account 41 Fidelity Asset Manager Net 3 UV
. Separate Account 41 Fidelity Asset Manager Gross 2 UV
. Separate Account 42 Janus Capital Appreciation Net 2 UV
. Separate Account 42 Janus Capital Appreciation Net 3 UV
. Separate Account 42 Janus Capital Appreciation Gross 2 UV
. Separate Account 43 Fidelity Contra Net 2 UV
. Separate Account 43 Fidelity Contra Net 3 UV
. Separate Account 43 Fidelity Contra Gross 2 UV
. Separate Account 44 Strong Discovery Net 2 UV
. Separate Account 44 Strong Discovery Net 3 UV
. Separate Account 44 Strong Discovery Gross 2 UV
. Separate Account 45 T-Rowe Price International Net 2 UV
. Separate Account 45 T-Rowe Price International Net 3 UV
. Separate Account 45 T-Rowe Price International Gross 2 UV
. Separate Account F AVIS Cash Management Fund
. Separate Account F AVIS Growth Series Fund
. Separate Account F AVIS Growth Income Fund
. Separate Account F AVIS High Yield Bond Fund
. Separate Account F AVIS Govt. AAA Securities Fund
. Separate Account F AVIS International Fund
. Separate Account F AVIS Asset Allocation Fund
. Separate Account F AVIS Bond Fund
. Separate Account J AVIS Cash Management Fund
. Separate Account J AVIS Growth Series Fund
. Separate Account J AVIS Growth Income Fund
. Separate Account J AVIS High Yield Bond Fund
. Separate Account J AVIS Govt. AAA Securities Fund
. Separate Account J AVIS International Fund
. Separate Account J AVIS Asset Allocation Fund
. Separate Account J AVIS Bond Fund
. Separate Account G AVIS Cash Management Fund
. Separate Account G AVIS Growth Series Fund
. Separate Account G AVIS Growth Income Fund
. Separate Account G AVIS High Yield Bond Fund
. Separate Account G AVIS Govt. AAA Securities Fund
. Separate Account G AVIS International Fund
. Separate Account G AVIS Asset Allocation Fund
. Separate Account G AVIS Bond Fund
14
<PAGE>
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
. Separate Account E AVIS Cash Management Fund
. Separate Account E AVIS Growth Series Fund
. Separate Account E AVIS Growth Income Fund
. Separate Account E AVIS High Yield Bond Fund
. Separate Account E AVIS Govt. AAA Securities Fund
. Separate Account E AVIS International Fund
. Separate Account E AVIS Asset Allocation Fund
. Separate Account E AVIS Bond Fund
. Separate Account H AVIS Cash Management Fund
. Separate Account H AVIS Growth Series Fund
. Separate Account H AVIS Growth Income Fund
. Separate Account H AVIS High Yield Bond Fund
. Separate Account H AVIS Govt. AAA Securities Fund
. Separate Account H AVIS International Fund
. Separate Account H AVIS Asset Allocation Fund
. Separate Account H AVIS Bond Fund
. Separate Account 50 AVIS Cash Management Fund
. Separate Account 50 AVIS Growth Series Fund
. Separate Account 50 AVIS Growth Income Fund
. Separate Account 50 AVIS High Yield Bond Fund
. Separate Account 50 AVIS Govt. AAA Securities Fund
. Separate Account 50 AVIS International Fund
. Separate Account 50 AVIS Asset Allocation Fund
. Separate Account 50 AVIS Bond Fund
. Separate Account 51 AVIS Cash Management Fund
. Separate Account 51 AVIS Growth Series Fund
. Separate Account 51 AVIS Growth Income Fund
. Separate Account 51 AVIS High Yield Bond Fund
. Separate Account 51 AVIS Govt. AAA Securities Fund
. Separate Account 51 AVIS International Fund
. Separate Account 51 AVIS Asset Allocation Fund
. Separate Account 51 AVIS Bond Fund
. Separate Account 52 AVIS Cash Management Fund
. Separate Account 52 AVIS Growth Series Fund
. Separate Account 52 AVIS Growth Income Fund
. Separate Account 52 AVIS High Yield Bond Fund
. Separate Account 52 AVIS Govt. AAA Securities Fund
. Separate Account 52 AVIS International Fund
. Separate Account 52 AVIS Asset Allocation Fund
. Separate Account 52 AVIS Bond Fund
Daily Unit Value calculations:
o Maintain Portfolio History
. Accrue dividends and expenses to each Sub-Account
. Maintain gain/loss history for each Sub-Account
. Maintain record of holdings for each Sub-Account
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
15
<PAGE>
o Record and reconcile shareholder activity
. Book subscription, liquidations and dividend reinvestments to
each Sub-Account
. Record settlements of shareholder activity
. Reconcile Sub-Account units outstanding to Lincoln Life
administrative systems
. Establish controls for daily pricing of units outstanding of each
Sub-Account
o Calculate the Unit Value for each Lincoln National Separate Account
Sub-Account.
o Disseminate daily Unit Values to interested parties (ie. Lipper,
Morningstar, etc. . .) as mutually agreed upon by Lincoln Life
and Delaware
o Resolve daily pricing and/or custody discrepancies
o Accept NAVs from applicable managers, advisors and subadvisors for
purposes of calculating Unit Values of pertinent Separate Account
Sub-Accounts
Financial Reporting:
o Provide Lincoln with an automated transmission of Separate Account
Sub-Account financial data into the Lincoln Life General Ledger.
o Provide other ancillary schedules as mutually agreed upon by Lincoln
Life and Delaware
Other Services:
o Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third party administrators, etc...)
. Provide portfolio holdings and security valuation reports
. Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
. Assist in security settlements
. Resolve cash discrepancies
. Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
o Provide financial information to support schedule "D"
o Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
o Provide process control data as a mutually agreed upon by Lincoln
Life and Delaware
o Perform daily cash reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Perform weekly asset reconciliations for each Separate Account
provided that the bank(s) &/or mutual fund complex(s) send the
necessary information to perform such reconciliations
16
<PAGE>
PHASE III (1/1/97 SCHEDULED CUTOVER DATE):
The following services will begin at this Cutover Date for Phase III and will
subsequently be provided by Delaware for the duration of the Services Agreement.
The Funds for which these services will be provided are as follows:
. Lincoln National Global Asset Allocation Fund Inc.,
. Lincoln National International Fund Inc.,
. Lincoln National Capital Appreciation Fund Inc.,
. Lincoln National Equity Income Fund Inc.,
. Lincoln National Aggressive Growth Fund Inc.
Daily Net Asset Value Calculation Services:
o Maintain Portfolio History
. Record portfolio purchases and sales
. Record corporate actions and capital changes
. Accrue interest, dividends and expenses
. Maintain income history for securities
o Determine distributions to shareholders
o Record and reconcile shareholder activity
. Book subscription, liquidations and dividend reinvestments
. Record settlements of shareholder activity
. Reconcile fund shares outstanding to transfer agent
o Value portfolios (Calculate the NAV for each Fund portfolio)
. Verify Delaware's internal controls - pricing securities and
portfolios
o Disseminate NAVs and dividends to interested parties (Lincoln Life,
ICI, Morningstar, Lipper, etc.) as mutually agreed upon by
Lincoln Life & Delaware
o Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
o Commencing 6/30/97, prepare the following information for use in the
semi-annual and annual reports for shareholders:
. Prepare Statement of Net Assets, Statement of Operations and
Changes in Net Assets
. Work with external auditors on footnotes to the financial
statements,
. Workpapers for annual audit,
. Cooperate with external auditors, Lincoln Life Marketing &
printer
o Required ICI reporting as mutually agreed upon by Lincoln Life and
Delaware
o Prepare Statistical reports as necessary (daily, monthly, quarterly
and annual reports for Lipper, Morningstar, and other third party
reporting agencies and survey companies) as mutually agreed upon
by Lincoln Life and Delaware
o Commencing 1/1/97, provide financial information for use in SEC
reporting (ie. NSAR, Prospectus, SAI, 24F2s, etc. . .)
o Provide financial information to support schedule "D"
17
<PAGE>
PHASE III (1/1/97 SCHEDULED CUTOVER DATE CONTINUED):
Other Services:
o Calculate monthly SEC yields & fund level performance
o Prepare information for tax returns and ancillary schedules and
submit to Corporate Tax Department:
. 1120 RIC and any other required forms
. Year-end excise tax distributions
. Calculate and provide information for Subchapter M & Section 4982
of Internal Revenue Code compliance
o Provide tax return workpapers to Lincoln Life for review purposes
o Perform the following special tax reporting functions
. Prepare income by state, exempt income and qualified
distributions
o Prepare financial information for expense & budget functions
. Maintain detailed records pertaining to expense accruals and
payments
. Adjust fund records to reflect accrual adjustment
o Prepare reports which are mutually agreed upon by Lincoln Life and
Delaware for Board of Director meetings & Senior Management (as
they pertain to these 5 Funds)
o Cooperate with custodians in all custody relationships
o Facilitate security settlements
o Perform required foreign security accounting functions
o Perform daily cash reconciliations for each Fund provided that the
bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Perform weekly asset reconciliations for each fund providing the
bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
o Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third part administrators, etc. .)
. Provide portfolio holdings and security valuation reports
. Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
. Assist in security settlements
. Resolve cash discrepancies
. Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
o Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
o Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
18
<PAGE>
PHASE III (1/1/97 SCHEDULED CUTOVER DATE CONTINUED):
Compliance Testing Services:
o Perform the following Registered Investment Company tests as required
to maintain the tax qualified status of the funds and provide
schedules of the results. These test will be performed regularly
as mutually agreed upon by Lincoln Life and Delaware.
. Monthly 30% Gross Income Test (according to IRS regulations)
. Annual 90% Gross Income Test (according to IRS regulations)
. Monthly, prepare the IRS Industry Diversification Test (50% &
25%)
. Annual 90% Distribution Test
o Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is
mutually agreed upon by Lincoln Life and Delaware
Note: Delaware will not provide legal assistance, compliance monitoring or tax
work other than what is specified above. Delaware will not sign the tax
returns.
19
<PAGE>
Schedule 2.1
------------
PROCEDURES FOR CORRECTING ERRORS
The following charts set forth certain procedures to be followed in
the event of errors in the calculation of the Net Asset Values and Unit Values.
There are two separate charts: Chart I outlines the procedures to be followed
in the event that the error is greater than, or equal to, .5% of the Fund's Net
Asset Value or Separate Account's Unit Value; Chart II outlines the procedure in
the event that the error is less than .5%. Each of the Charts assumes that the
error in the Unit Value or Net Asset Value is at least $.01. If the error is
less than $.01, no action will be taken.
The procedures set forth in these Charts are designed to be consistent
with informal positions taken by the Securities and Exchange Commission (the
"SEC") with respect to errors in the calculation of net asset values or unit
values. The parties to the Services Agreement shall negotiate in good faith to
amend this Schedule 2.1 as appropriate in the event that (a) the SEC modifies,
amends or supplements such positions, or issues any other regulatory guidance
with respect to net asset values, unit values, or both, or (b) a Unit Value
changes to a degree that alternative error correction procedures should be
considered.
CHART I
Error Greater Than or Equal to .5%
<TABLE>
<CAPTION>
================================================================================
Net Asset Value Net Asset Value
or or
Type of Transaction Unit Value Understated Unit Value Overstated
- --------------------------------------------------------------------------------
<S> <C> <C>
Make Fund or Separate
Subscription Account Whole/1/ Reprocess/2/
Make Fund or Separate
Redemption Reprocess/3/ Account Whole/1/
================================================================================
</TABLE>
- -------------------
/1/ Alternatively, at Lincoln Life's or the relevant Fund's discretion, all
shareholder transactions can be reprocessed. At the Fund level, the shareholder
would be the Lincoln Life Separate Account. At the Separate Account level, the
shareholder would be the Contractowner.
/2/ Reprocessing would occur for all transactions where the shareholder
effect is greater than $10.00.
/3/ Reprocessing would occur for all transactions where the shareholder
effect is greater than $10.00. Lincoln Life or the relevant Fund, at its
respective discretion, would reimburse the shareholder.
<PAGE>
CHART II
Error Less Than .5%
<TABLE>
<CAPTION>
================================================================================
Net Asset Value Net Asset Value
or or
Type of Transaction Unit Value Understated Unit Value Overstated
- --------------------------------------------------------------------------------
<S> <C> <C>
Make Fund or Separate
Subscription Account Whole/1/ No Action/3/
Make Fund or Separate
Redemption No Action/3/ Account Whole/1/
================================================================================
</TABLE>
- --------------------
/1/ Alternatively, at Lincoln Life's or the relevant Fund's discretion, the
shareholder transactions can be reprocessed. At the Fund level, the shareholder
would be the Lincoln Life Separate Account. At the Separate Account level, the
shareholder would be the Contractowner.
/2/ Alternatively, Lincoln Life or the relevant Fund could determine to
reprocess the transactions.
/3/ Alternatively, Lincoln Life or the relevant Fund could determine to
reprocess transactions and reimburse the shareholders.
- 22 -
<PAGE>
SCHEDULE 3.1
------------
DATA PROVIDED BY LINCOLN LIFE
- 23 -
<PAGE>
DATA PROVIDED BY LINCOLN LIFE
The following information represents data which will be provided by Lincoln Life
to Delaware for the purpose of enableing Delaware to perform the accounting
services pursuant to the Serivces Agreement.
1) By 9:00 am New York time each Business Day, Lincoln Life will provide
Delaware with trade activity (by Sub-Account - e.g. Separate Account
C Growth Fund trades) for the purpose of adding this information to
the outstanding assets of each Sub-Account. This daily trade activity
will include a net purchase or redemption amount by Sub-Account, the
net number of units purchased by Sub-Account by Lincoln Life clients
the preceding Business Day or days and Fund share purchases and sales
in dollars and share amounts.
2. By 9:00 am New York time each Business Day, Lincoln Life will provide
Delaware with the number of outstanding units within each Sub-Account
for purposes of balancing to the number of units used in the daily
Unit Value calculation and the number of outstanding shares within
each Fund.
Note: In the event that Lincoln Life identifies erroneous data in their daily
transmission of trade activity while performing their balancing routine
subsequent to the transmission, Lincoln Life will inform Delaware of the
erroneous information via telephone.
- 24 -
<PAGE>
SCHEDULE 3.2
------------
UNAFFILIATED MUTUAL FUNDS
AND
SERVICE PROVIDERS
- 25 -
<PAGE>
DATA PROVIDED BY UNAFFILIATED MUTUAL FUNDS AND SERVICE PROVIDERS
The following information represents data which will be provided by third
parties to Delaware pursuant to section 3.2 of the Services Agreement.
1) Each evening of a business day, all applicable Fund managers, advisors
and subadvisors will provide to Delaware (via fax), the daily net
asset values of such funds no later than 6:00 pm New York Time. (See
note below)
2) Each evening of a business day, Delaware will obtain the daily New Asset
Values of such of its own funds as are underlying investments in
Lincoln Life's Separate Accounts in a timely fashion to meet Lincoln
Life's delivery timeliness specified in this Services Agreement.
3) Delaware will accept data from and work with Lincoln Life business
partners in relationship accepted in the industry as a normal working
relationship. These types of relationships would include cooperating
with custodians, portfolio managers, etc. for the purpose of
conducting daily business transactions.
Note: In the event that Delaware does not receive timely NAVs or trade
information from Fund managers, advisors or subadvisors which causes
Delaware to be incapable of calculating a Unit Value using mutually
agreed upon processing procedures, or causes Delaware to estimate a Unit
Value, then Delaware and Lincoln Life must mutually agree upon the
processing activities to take place on that particular valuation date.
- 26 -
<PAGE>
SCHEDULE 6.1
------------
FEE SCHEDULE
- 27 -
<PAGE>
SERVICES FEE SCHEDULE
The following schedule outlines the fees charged to the various Funds and
Separate Accounts for services rendered by Delaware pursuant to the Services
Agreement and the accompanying Cutover Schedule. Following the fee schedule at
the top of each of the following pages there will be an illustration of how the
fees are to be applied to each of the funds and Separate Accounts. The Account
Asset base to which the fees are applied will change from day to day, thus the
asset fees will be calculated using daily average net assets and prorated
monthly (the foregoing does not apply, however, to "fund of funds" fees, which
are not asset-based).
- 28 -
<PAGE>
Lincoln Life Multi-Funds Mutual Funds
<TABLE>
<CAPTION>
GREATER GREATER
THAN THAN
FIRST CLASS OF 500MM & 750 MM & GREATER
Mutual Fund Schedule SHARE MINIMUM EACH ADD 100MM TO LESS THAN LESS THAN THAN
SH CLASS 500 MM 750MM 1 BILLION 1 BILLION
<S> <C> <C> <C> <C> <C> <C> <C>
(EF) EQUITY FUND 65,000.00 2,200.00 0.0375% 0.035% 0.030% 0.020%
(FX) FIXED INCOME FUND 65,000.00 2,200.00 0.0375% 0.035% 0.030% 0.020%
(IF) INTERNATIONAL FUND 87,000.00 2,200.00 0.0600% 0.060% 0.060% 0.050%
(MM) MONEY MARKET FUND 65,000.00 2,200.00 0.0375% 0.035% 0.030% 0.020%
</TABLE>
<TABLE>
<CAPTION>
Fund Asset Based Per Class Total Basis Point
Assets Fee Fee Fee Effect
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(EQ) - ss Aggressive Growth $ 154,616,934 85,481 0 $ 85,481 0.0553%
(FX) Bond Fund $ 266,680,575 127,505 0 127,505 0.0478%
(EQ) - ss Capital Appreciation $ 151,716,031 84,394 0 84,394 0.0556%
(EQ) - ss Equity Income $ 281,782,031 133,168 0 133,168 0.0473%
(EQ) Growth Fund $2,021,137,764 581,728 0 581,728 0.0288%
(IF) - ss International Fund $ 374,321,155 251,593 0 251,593 0.0672%
(EQ) Managed Fund $ 627,188,004 259,516 0 259,516 0.0414%
(MM) Money Market $ 80,389,568 65,000 0 65,000 0.0809%
(IF) - ss Global Asset Allocation $ 265,441,845 186,265 0 186,265 0.0702%
(EQ) Social Awareness Fund $ 345,607,966 157,103 0 157,103 0.0455%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 29 -
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(EQ) Special Opportunities $ 542,260,936 229,791 0 229,791 0.0424%
-----------------------------------------------------
Total Funds $5,111,142,809 $2,161,544 $ 0 $2,161,544 0.0423%
</TABLE>
- 30 -
<PAGE>
Lincoln Life Numbered Separate Account Schedule
<TABLE>
<CAPTION>
GREATER GREATER
THAN THAN
500 MM & 750 MM & GREATER
Separate Account FIRST CLASS OF EACH ADD 100MM TO LESS THAN LESS THAN THAN
Schedule SHARE MINIMUM SH CLASS 500 MM 750MM 1 BILLION 1 BILLION
<S> <C> <C> <C> <C> <C> <C> <C>
(EF) EQUITY FUND 33,000.00 2,200.00 0.0175% 0.0150% 0.0125% 0.0100%
(FX) FIXED INCOME FUND 33,000.00 2,200.00 0.0175% 0.0150% 0.0125% 0.0100%
(IF) INTERNATIONAL FUND 33,000.00 2,200.00 0.0475% 0.0450% 0.0400% 0.0350%
(MM) MONEY MARKET FUND 33,000.00 2,200.00 0.0125% 0.0125% 0.0125% 0.0100%
(FOF) FUND OF FUNDS 6,750.00 0.00 0.0000% 0.0000% 0.0000% 0.0100%
</TABLE>
<TABLE>
<CAPTION>
Asset Class Total Average
Account Name Account Assets Fees Fees Fees BP Charge
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(EF) S/A 3 $ 389,025 33,000 0 $ 33,000 8.4827%
(EF) S/A 11 $ 474,450,174 98,529 11,000 109,528 0.0231%
(FX) S/A 12 $ 416,068,954 88,312 11,000 99,312 0.0239%
(MM) S/A 14 $ 156,276,681 40,035 11,000 51,035 0.0327%
(EF) S/A 17 $ 364,026,813 79,205 11,000 90,205 0.0248%
(FX) S/A 20 $ 46,993,349 33,000 11,000 44,000 0.0936%
(IF) S/A 22 $ 173,298,316 91,649 11,000 102,649 0.0592%
(EF) S/A 23 $ 433,690,920 91,396 11,000 102,396 0.0236%
(EF) S/A 24 $ 113,151,449 35,302 11,000 46,302 0.0409%
(EF) S/A 25 $ 16,793,121 33,000 2,200 35,200 0.2096%
(FX) S/A/26 $ 29,937,204 33,000 11,000 44,000 0.1470%
(FX) S/A 27 $ 10,050,477 33,000 4,400 37,400 0.3721%
(EF) S/A 28 $ 55,899,985 33,000 11,000 44,000 0.0787%
(EF) V/A Fund A $ 107,782,578 34,362 2,200 36,562 0.0339%
------------------------------------------------------------------
Total Separate
Account Fees $2,398,810,045 $ 756,798 $118,800 $875,589 0.0365%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 31 -
<PAGE>
- ---------
Fund of
Funds
- ---------
- 32 -
<PAGE>
<TABLE>
<CAPTION>
- ---------------
# of Accts Per Account
Account Name Needed Charge Total
----------------------------- --------------------------------------------------
<S> <C> <C> <C> <C>
(FOF) S/A 21 5 $6,750 $33,750
(FOF) S/A 30 5 $6,750 $33,750
(FOF) S/A 32 5 $6,750 $33,750
(FOF) Fund of Funds S/A C 14 $6,750 $94,500
(FOF) Fund of Funds S/A D 5 $6,750 $33,750
(FOF) Fund of Funds S/A E 8 $6,750 $54,000
(FOF) Fund of Funds S/A F 8 $6,750 $54,000
(FOF) Fund of Funds S/A G 10 $6,750 $67,500
(FOF) Fund of Funds S/A H 8 $6,750 $54,000
(FOF) Fund of Funds S/A J 8 $6,750 $54,000
(FOF) Fund of Funds S/A K 14 $6,750 $94,500
(FOF) Fund of Funds S/A 41 3 $6,750 $20,250
(FOF) Fund of Funds S/A 42 3 $6,750 $20,250
(FOF) Fund of Funds S/A 43 3 $6,750 $20,250
(FOF) Fund of Funds S/A 44 3 $6,750 $20,250
(FOF) Fund of Funds S/A 45 3 $6,750 $20,250
(FOF) Fund of Funds S/A 60 8 $6,750 $54,000
(FOF) Fund of Funds S/A 61 8 $6,750 $54,000
(FOF) Fund of Funds S/A 62 8 $6,750 $54,000
(FOF) Fund of Funds S/A 60 6 $6,750 $40,500
(FOF) Fund of Funds S/A 61 6 $6,750 $40,500
--------------------------------------------------
141 $141,750 $951,750
</TABLE>
- 33 -
<PAGE>
Exhibit 10
[LOGO OF LINCOLN LIFE AMERICAN LEGACY(R) APPEARS HERE]
Application for Variable Life Insurance
Lincoln National Life Insurance Co.
PO Box 2348
Fort Wayne IN 46801-2348
Tel. (800) 443-8137
Lincoln National Life Insurance Co. is a part of Lincoln National Corp.
<PAGE>
================================================================================
6. Premium
(a) Premium $ (b) [_] Single [_] Annual [_] Semi- [_] Quarterly
------------ Annual
[_] Monthly EFT
(c) Should the policy be allowed to become a Modified Endowment Contract?
[_] Yes [_] No
(d) Premium allocation - American Variable Insurance Series (Use whole % only.
Each elected subaccount must be at least 10%. Total of all subaccounts must
equal 100%)
<TABLE>
<CAPTION>
Allocation Subaccount Allocation Subaccount Allocation Subaccount
<C> <S> <C> <C> <C> <C>
% General Account (LNL) % U.S. Govt/AAA-rated securities % International
- ---------- ---------- ----------
% Growth % Global Growth % Bond
- ---------- ---------- ----------
% Growth-Income % Cash Management %
- ---------- ---------- ---------- -----------------
% High Yield Bond % Asset allocation %
- ---------- ---------- ---------- -----------------
</TABLE>
================================================================================
7. Underwriting Information
(a) In the past 2 years have you: flown as a pilot or student pilot;
participated in vehicle racing, sky or scuba diving, or hang gliding; or had
any violations or had your license suspended? [_] Yes [_] No
If "Yes," circle all that apply
(b) In the next 2 years do you plan to travel or reside outside the USA or
Canada? [_] Yes [_] No
If "yes," where, why, and for how long?
(c) In the past 10 years have you been declined or charged an extra premium for
life or health insurance?
If "Yes," give details [_] Yes [_] No
(d) Have you ever been diagnosed as having or been treated for Acquired Immune
Deficiency Syndrome (AIDS) by a member of the medical profession, or tested
positive for antibodies to the Human Immunodeficiency Virus (HIV)?
[_] Yes [_] No
(e) Have you ever used any form of tobacco or other nicotine-based product?
[_] Yes [_] No
If "Yes," Date last used (month & year)
-----------
Type of product Quantity per day
-------------------------------- -------
(f) Height ft. in. (g) Weight lbs.
------- ------- ---------
================================================================================
Answer questions (h) through (l) only if no insurance physical or blood profile
is required.
(h) Are you currently taking any medications? If "Yes," give name of medication
being taken. [_] Yes [_] No
(i) In the past 10 years have you had: high blood pressure or heart disease; a
stroke; cancer; diabetes; nervous or respiratory disorder; or kidney
disease? If "Yes," circle the applicable item and give details, including
dates, condition, names and addresses of doctors and hospital and current
status. [_] Yes [_] No
(j) In the past 10 years have you; used alcohol to excess; received or been
advised to receive treatment for alcohol or drug abuse; or used or been
convicted for the use or possession of drugs? [_] Yes [_] No
(k) In the past 10 years have you: had or been treated for any condition not
listed above; or been hospitalized or had surgery for any reason not given
above? If "Yes," circle, the applicable item and give details, including
dates, condition, names and addresses of doctors and hospital, and current
status. [_] Yes [_] No
(l) Do you have a regular physician? If "Yes," complete (1), (2) & (3) below.
[_] Yes [_] No
(1) Physician's name
----------------------------------------------------------
Address
----------------------------------------------------------
(2) Date last consulted
--------------------
(3) Reason & results:
<PAGE>
Agreement continued
6. If money was collected with this application, I have received and read the
Conditional Receipt and agree to its terms, conditions, and limits. They have
been fully explained to me by the agent or broker.
7. Applies only if telephone transfers are authorized in section 9
I agree that Lincoln Life is not liable for any loss arising from any
telephone transfers or change in allocation of future premium payments which
are made upon the telephone instructions of any person who can furnish proper
identification.
8. Applies only if application is made for the accelerated benefit rider in
section 10
I acknowledge that I have received the terminal illness accelerated benefit
election disclosure information form from my agent/broker.
- --------------------------------------------------------------------------------
Authorization
I, the proposed insured, authorize:
1. The disclosure of medical and other relevant information about me, or any of
my children to be insured, for the purpose of determining eligibility for
insurance.
2. The following to disclose such information to Lincoln Life, its reinsurers,
and any agents, attorneys, or insurance support organizations acting on its
behalf, and to testify as to such information, all to the extent permitted by
law: any physician, medical professional, hospital, clinic, or other medical
or any medically related facility; any insurance or reinsurance company; any
consumer reporting agency; any insurance support organization; any employer;
the Medical Information Bureau, Inc. (MIB); or any other person,
organization, or institution that has any records or knowledge of me, or of
my children to be insured, or of our health.
I under that Lincoln Life may release this information to its reinsuring
companies, and may make a brief report to the MIB, Inc. I agree that this
Authorization will be valid for two years and six months from the date shown
below, and that a photocopy of it will be as valid as the original. I know that
I may receive a copy of this Authorization upon request.
I acknowledge that I have received the Investigative Consumer Reports notice,
the Privacy Notice, and the Important Notice attached to this application.
- --------------------------------------------------------------------------------
Signatures
The signatures below indicate acceptance of the "Agreement", "Authorization",
and "Acceptance of Home Office Changes to Application" sections above.
Signature of proposed insured (if a minor, signature of legal guardian) X
- --------------------------------------------------------------------------------
Signature of applicant (if other than proposed insured) X
- --------------------------------------------------------------------------------
Date of birth of applicant
-------------------------------------------------------------------------
Relationship of applicant to proposed insured
-------------------------------------------------------------------------
Signature of owner (if other than proposed insured or applicant) X
- --------------------------------------------------------------------------------
CITY STATE DATE
Signed at On
- --------------------------------------------------------------------------------
I certify that I have truly and accurately recorded on this application the
information supplied by the proposed insured and/or applicant.
Signature of agent/broker X Date
- --------------------------------------------------------------------------------
<PAGE>
[LETTERHEAD OF LINCOLN LIFE AMERICAN LEGACY APPEARS HERE]
================================================================================
Conditional Receipt
NO COVERAGE WILL BECOME EFFECTIVE PRIOR TO DELIVERY OF THE POLICY APPLIED FOR
UNLESS AND UNTIL ALL THE CONDITIONS OF THIS RECEIPT ARE MET. NO AGENT OR BROKER
HAS THE AUTHORITY TO ALTER OR WAIVE ANY OF ITS TERMS OR CONDITIONS.
NO AGENT OR BROKER IS AUTHORIZED TO TAKE A DEPOSIT OR ISSUE THIS RECEIPT, AND NO
INSURANCE IS PROVIDED, IF THE PROPOSED INSURED HAS WITHIN THE PAST 12 MONTHS
BEEN TREATED FOR OR HAD HEART DISEASE, STROKE, CANCER, OR DIABETES.
CONDITIONS WHICH MUST BE MET BEFORE INSURANCE MAY BECOME EFFECTIVE PRIOR TO
DELIVERY OF THE POLICY:
1. An amount equal to: at least one full planned modal premium if the policy
applied for will provide for planned periodic premiums to be paid; or at
least the full single premium if the policy applied for is a single premium
policy;
2. All medical examinations, test, x-rays, and electrocardiograms required by
Lincoln Life's rules must be completed within 60 days from the date of this
receipt;
3. Each person proposed for coverage must be, on the effective date indicated
below, a risk acceptable to Lincoln Life exactly as applied for according to
Lincoln Life's rules and practices, without modification of plan, premium
rate, or amount of coverage;
4. On the effective date the state of health and all factors affecting the
insurability of each person proposed for coverage must be as stated in
applications required by the company; and
5. The application may NOT request an amount of insurance on each person
proposed for coverage that exceed $600,000, including accidental death
benefit.
EFFECTIVE DATE: If all conditions above are met, then insurance, subject to
all terms and conditions of the policy applied for (as if the policy applied for
had already been issued and delivered), will become effective on the later of:
(a) the date of the application: or (b) the date of completion of all
underwriting requirements stated in (2) above; or (c) any date of issue
requested in the application.
IMPORTANT NOTE: On each person proposed for coverage, the amount of insurance,
including accidental death benefit, which may become effective prior to delivery
of the policy applied for will not exceed the lower of: (a) the amount of
insurance applied for on this application; or (b) $600,000.
IF ANY OF THE ABOVE CONDITIONS ARE NOT MET, THE LIABILITY OF THE COMPANY WILL BE
LIMITED TO THE RETURN OF THE AMOUNT OF MONEY SUBMITTED.
I have read the Conditional Receipt, and I understand and agree to its terms,
conditions, and limits, These have been fully explained to me by the agent or
broker.
Signature of applicant X Date
- --------------------------------------------------------------------------------
Any check for which this Conditional Receipt is issued must be made payable to
Lincoln Life. Do not make check payable to the agent or leave the payee blank.
Received [_] Cash [_] Check $ From
-------- ----------------------------------
On in connection with an application for life insurance, including
----------
any riders for which application has been made.
Signature of agent/broker X Date
- --------------------------------------------------------------------------------
================================================================================
Electronic Fund Transfer Authorization (Complete information, sign and date
authorization, attach blank check marked
"VOID")
Proposed Insured Bank name
- --------------------------------------------------------------------------------
I authorize Lincoln National Life Insurance Co. (Lincoln Life) to collect
premiums and other payments by electronic fund transfer, or to effect a charge
by any other commercially accepted practice. The enclosed blank check (marked
"VOID") is drawn on the account from which deductions are to be made. This
Authorization will apply to any conversion, renewal, or change later made in the
policy, and in no way affects the terms of the policy.
If I change my financial institutions or my account number, or want to
discontinue this agreement, I agree to give 30 days notice to Lincoln Life,
Notice to the financial institution only is not sufficient. Lincoln Life may
terminate this agreement if any debit is not paid upon presentation. Any debit
returned to Lincoln Life marked "insufficient funds" or "uncollected funds" will
automatically be processed against the account a second time. Lincoln Life
assumes no responsibility for bank charges or, in the case of Variable Universal
Life, for investment losses on these debits.
Signature of bank account owner X Date
- --------------------------------------------------------------------------------
<PAGE>
[LETTERHEAD OF LINCOLN LIFE AMERICAN LEGACY APPEARS HERE]
================================================================================
Conditional Receipt
NO COVERAGE WILL BECOME EFFECTIVE PRIOR TO DELIVERY OF THE POLICY APPLIED FOR
UNLESS AND UNTIL ALL THE CONDITIONS OF THIS RECEIPT ARE MET. NO AGENT OR BROKER
HAS THE AUTHORITY TO ALTER OR WAIVE ANY OF ITS TERMS OR CONDITIONS.
NO AGENT OR BROKER IS AUTHORIZED TO TAKE A DEPOSIT OR ISSUE THIS RECEIPT, AND NO
INSURANCE IS PROVIDED, IF THE PROPOSED INSURED HAS WITHIN THE PAST 12 MONTHS
BEEN TREATED FOR OR HAD HEART DISEASE, STROKE, CANCER, OR DIABETES.
CONDITIONS WHICH MUST BE MET BEFORE INSURANCE MAY BECOME EFFECTIVE PRIOR TO
DELIVERY OF THE POLICY:
1. An amount equal to: at least one full planned modal premium if the policy
applied for will provide for planned periodic premiums to be paid; or at
least the full single premium if the policy applied for is a single premium
policy;
2. All medical examinations, tests, x-rays, and electrocardiograms required by
Lincoln Life's rules must be completed within 60 days from the date of this
receipt;
3. Each person proposed for coverage must be, on the effective date indicated
below, a risk acceptable to Lincoln Life exactly as applied for according to
Lincoln Life's rules and practices, without modification of plan, premium
rate, or amount of coverage;
4. On the effective date the state of health and all factors affecting the
insurability of each proposed for coverage must be as stated in applications
required by the company; and
5. The application may NOT request an amount of insurance on each person
proposed for coverage that exceed $600,000, including accidental death
benefit.
EFFECTIVE DATE: If all conditions above are met, then insurance, subject to all
terms and conditions of the policy applied for (as if the policy applied for had
already been issued and delivered), will become effective on the later of: (a)
the date of the application; or (b) the date of completion of all underwriting
requirements stated in (2) above; or (c) any date of issue requested in the
application.
IMPORTANT NOTE: On each person proposed for coverage, the amount of insurance,
including accidental death benefit, which may become effective prior to delivery
of the policy applied for will not exceed the lower of: (a) the amount of
insurance applied for on this application; or (b) $600,000.
IF ANY OF THE ABOVE CONDITIONS ARE NOT MET, THE LIABILITY OF THE COMPANY WILL
BE LIMITED TO THE RETURN OF THE AMOUNT OF MONEY SUBMITTED.
I have read the Conditional Receipt, and I understand and agree to its terms,
conditions, and limits. These have been fully explained to me by the agent or
broker.
Signature of applicant X Date
- --------------------------------------------------------------------------------
Any check for which this Conditional Receipt is issued must be made payable to
Lincoln Life, Do not make check payable to the agent or leave the payee blank.
Received [ ] Cash [ ] Check $ From
------ -------------------------------------
On in connection with an application for life insurance, including
----------
any riders for which application has been made.
Signature of agent/broker X Date
- --------------------------------------------------------------------------------
================================================================================
Electronic Fund Transfer Authorization (Complete information, sign and date
authorization, attach blank check marked
"VOID".)
Proposed Insured Bank name
- --------------------------------------------------------------------------------
I authorize Lincoln National Life Insurance Co. (Lincoln Life) to collect
premiums and other payments by electronic fund transfer, or to effect a charge
by any other commercially accepted practice. The enclosed blank check (marked
"VOID") is drawn on the account from which deductions are to be made. This
Authorization will apply to any conversion, renewal, or change later made in the
policy, and in no way affects the terms of the policy.
If I change my financial institution or my account number, or want to
discontinue this agreement, I agree to give 30 days notice to Lincoln Life.
Notice to the financial institution only is not sufficient. Lincoln Life may
terminate this agreement if any debit is not paid upon presentation. Any debit
returned to Lincoln Life marked "insufficient funds" or "uncollected funds" will
automatically be processed against the account a second time. Lincoln Life
assumes no responsibility for bank charges or, in the case of Variable Universal
Life, for investment losses on these debits.
Signature of bank account owner X Date
- --------------------------------------------------------------------------------
Customer copy
<PAGE>
[LETTERHEAD OF LINCOLN LIFE AMERICAN LEGACY(R) APPEARS HERE]
- --------------------------------------------------------------------------------
Investigative Consumer Reports
As part of our regular underwriting procedure, an investigative consumer report
may be obtained which will provide applicable information concerning character,
general reputation, personal characteristics, and mode of living. This
information will be obtained through personal interviews with your friends,
neighbors, and associates. You may (1) request to be personally interviewed
and/or (2) request a copy of the investigative consumer report. Further
information on the nature and scope of the report will be provided upon written
request to the Underwriting Manager, Lincoln Life, PO Box 2348, Fort Wayne,
Indiana 46801-2348. You may receive a copy of such reports by mailing a written
request to us, your agent, or the reporting agency, after proper identification.
Privacy Notice
Personal information may be collected from persons other than you. Such
information, as well as other personal or privileged information subsequently
collected by us or your agent, may in certain circumstances be disclosed to
third parties without authorization. You have a right of access and correction
with respect to all personal information collected. A detailed notice of
information practices will be furnished to you upon request.
Important Notice
The underwriting process (evaluation and classification of risks) is necessary
to ensure reasonable cost of insurance and provide a mechanism by which
policyholders pay their fair share of the cost. In considering your application,
information from various sources is considered. These sources include your own
statements, the results of your physical examination (if required), and any
reports we obtain from doctors or medical facilities where you have received
treatment or consultation.
Information regarding your insurability and/or any past or future claims will be
treated as confidential. We, or our reinsurers, may, however, make a brief
report thereon to the Medical Information Bureau, Inc., a non-profit
corporation, which operates as an information exchange on behalf of its
members. If you apply to another Bureau member company for life or health
insurance coverage, or a claim for benefits is submitted to such a company, the
Bureau, upon request, will supply that company with the information it may have
in its file.
Upon receipt of a request from you, the Bureau will arrange the disclosure of
any information it may have in your file. If you question the accuracy of
information in the Bureau's file, you may contact the Bureau and seek a
correction in accordance with the procedures set forth in the Federal Fair
Credit Reporting Act. The address of the Bureau's information office is: Post
Office Box 105, Essex Station, Boston, MA 02112; telephone number (617)
423-3660. We, or our reinsurers, may also release information in our file to
other life insurance companies to whom you may apply for life or health
insurance, or to whom a claim may be submitted.
- --------------------------------------------------------------------------------
Agreement I understand and agree that:
1. This application is made up of Part One, Part One R if completed, Part Two
is required by Lincoln National Life Insurance Co. (Lincoln Life), and any
supplement to the application if required by Lincoln Life. The application,
any policy issued as a result of it, and any papers attached to the policy
by Lincoln Life will form the entire contract of insurance.
2. Only an officer of Lincoln Life (the President, a Vice President, the
Secretary, or an Assistant Secretary) may make or alter any contract or
agree not to enforce any of Lincoln Life's rights. No agent, broker, or
medical examiner is authorized to accept risks, pass on insurability, make
or alter contracts, or waive any of Lincoln Life's other rights or
requirements. Notice to, or knowledge imputed to, any agent, broker, or
medical examiner will not be notice to, or knowledge imputed to, Lincoln
Life unless it is set out in writing in this application.
3. I have read the statements and answers in this application. To the best of
my knowledge and belief, they are true, complete, and correctly stated. They
will be the basis for any policy issued based on this application.
4. Acceptance of the policy will mean acceptance of its terms and ratification
of any changes noted on the "Home Office Corrections and Additions" form
220ENDORSE in the policy to which this application is attached. The
following changes must be agreed to by me in writing: age at issue; plan or
amount of insurance; premium; classification of risks; or added benefits.
5. Unless the policy becomes effective as specified in the Conditional Receipt
attached to this application, Lincoln Life will incure no liability until:
(1) any policy applied for has been delivered to and accepted by me; and (2)
the first premium is paid. When I accept the policy, the state of health of
the proposed insured, or any other factor affecting insurability, must be
the same as set forth in this application.
6. If money was collected with this application, I have received and read the
Conditional Receipt and agree to its terms, conditions, and limits. They
have been fully explained to me by the agent or broker.
7. Applies only if telephone transfers are authorized in section 9
I agree that Lincoln Life is not liable for any loss arising from any
telephone transfers or change in allocation of future premium payments which
are made upon the telephone instructions of any person who can furnish
proper identification.
8. Applies only if application is made for the accelerated benefit rider in
section 10
I acknowledge that I have received the terminal illness accelerated benefit
election disclosure information form from my agent/broker.
THIS PAGE MUST BE DELIVERED TO THE PROPOSED INSURED
<PAGE>
Exhibit 13
[LETTERHEAD OF LINCOLN LIFE APPEARS HERE
1300 SOUTH CLINTON ST.
FORT WAYNE, INDIANA 46802 ]
November 4, 1997
Gentlemen,
This Opinion is furnished in connection with the initial registration for the
Lincoln Life Account F. In my capacity as Second Vice President-Business
Engineering, I am familiar with the Registration Statement, its exhibits, and
the policy forms associated with the Registration Statement. In my opinion:
1. The fees and charges deducted under the contract, in the aggregate,
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the Lincoln National Life Insurance Company.
2. The illustrations of death benefits, policy values, and accumulated
premiums shown in Appendix B to the Prospectus contained in the Registration
Statement, based on the assumptions stated in the illustrations, are consistent
with the assumptions stated in the policies. The rate structure of the policies
has not been designed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear to be correspondingly more
favorable to the prospective purchaser of policies that are Select Non-Tobacco
Users or Select Tobacco Users Age 45 Male, Age 55 Female, or Age 65 Male than to
prospective purchasers of policies that are at other ages or classifications.
3. The information contained in the illustrations in the section of the
Prospectus entitled "Policy Benefits", based on the assumptions stated in the
examples, is consistent with the provisions of the policies.
I hereby consent to the use of this Opinion as an Exhibit to the Registration
Statement and the use of my name under the heading "Experts" in the Prospectus
contained in the Registration Statement.
Sincerely,
/s/ Denis G. Schwartz
Denis G. Schwartz, FSA
Second Vice President
Business Engineering
<PAGE>
Exhibit 14
November 18, 1997
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
DESCRIPTION OF ISSUANCE, TRANSFER AND REDEMPTION PROCEDURES FOR
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F
Pursuant to Rule 6e-3(T)(b)(12)(iii)
And to Rule 6e-3(T)(b)(13)(v)(B)
This document describes the administrative procedures to be used by The Lincoln
National Life Insurance Company ("Lincoln Life") in the issuance of its flexible
premium variable life policy ("Policy"), the transfer of assets held thereunder,
and the redemption by Owners of their interests in the Policy.
I. UNDERWRITING AND ISSUE
A. Application Process
Purchase of the Policy normally begins with the application process. In this
process, the applicant completes and signs an application that has been filed
and approved by the State Insurance Department. The application contains
questions on the identity and health of the proposed insured, as well as other
information used in the underwriting and issue process. The application is also
signed by the agent, who is a licensed representative of Lincoln Life.
The application may be submitted to Lincoln Life with or without a premium
payment (there are restrictions as to the maximum Specified Amount that may be
applied for when premium is accepted with the application). When a premium is
accepted with the application, a Conditional Receipt is given to the applicant.
B. Underwriting Process
The underwriting process consists of a thorough review of the information
contained in the application. In addition to this information, the underwriting
procedures establish certain other underwriting requirements that must be met
for various age and Specified Amount combinations. Such additional requirements
would include any or all of such items as follows: inspection reports (by
telephone or in person), Medical Information Bureau reports, Attending Physician
Statements, Motor Vehicle Reports, and various levels of physical examination by
paramedical or medical personnel. The underwriting process results in an
evaluation by the underwriter of the nature and degree of mortality risk
associated with the proposed insured. The underwriter assigns a classification
ranging from "select" to "declined," depending on the health, avocations and
other criteria of the proposed insured. Table ratings and temporary or flat
extra premiums are used when appropriate. Insureds are also classified on the
basis of their tobacco use.
C. Issue Process
The issue process consists of "building" the policy on the computer system that
issues and administers the Policy, as well as the printing and assembling of the
policy itself. The underwriting class assigned by
<PAGE>
the underwriter is reflected in the Cost of Insurance Charges used in the
policy. The policy reflects the Specified Amount, beneficiary, and other
relevant information contained on the application. The policy is normally
delivered by the agent to the applicant or owner; if no premium was accepted
with the application, the premium is normally collected when the policy is
delivered. In cases where the premium is to be paid by the proceeds of a
surrender of an existing life insurance policy, the proceeds are normally paid
directly to Lincoln Life by the other insurance company.
The minimum Specified Amount that may be issued is $10,000; there is no stated
maximum Specified Amount allowable. Issue ages for the primary insured may be
from 0 to 80 inclusive, or ages 81-85 with prior approval of the underwriter.
D. Increases in Specified Amount
Although the majority of flexible premium variable universal life policies allow
for increases in the Specified Amount (generally, only if satisfactory evidence
of insurability is provided), this policy does not allow increases in Specified
Amount.
E. Reinstatements
Policies that lapse due to insufficient premium payments or insufficient policy
value may be reinstated within 5 years of the date of lapse. An application
similar to that required for new issue is required and the proposed insured must
qualify for the same underwriting class as originally issued. Premiums
sufficient to make the next two Death Benefit Guarantee Monthly Premiums (if the
net cash surrender value is negative) or else the next two monthly deductions
are required to reinstate the Policy. The period from lapse to reinstatement
becomes a period of noncoverage.
II. PREMIUM PROCESSING
A. Initial Premium
The initial premium must be paid before the policy can be issued. The initial
premium may range from 80% of the Guideline Single Premium (GSP) to 100% of the
GSP, and normally the owner will be encouraged to pay the full GSP. After
payment of the initial premium, additional premiums may be paid at any time and
with any frequency; however, the total of all premiums paid may not exceed the
Federal maximum premium limitations at all times.
Initial premiums are paid: 1) with the application, or 2) upon delivery of the
policy, or 3) by proceeds of surrender of a policy issued by another company.
All net premiums received prior to the Record Date (generally a date within
three business days of the later of the date the last requirement is received or
the date of underwriting approval) are allocated to the General Account as of
the later of the Policy Date or the date the premium is received. Interest is
credited to policy values from the date of allocation to the General Account
until the Record Date; the day after the Record Date, the value in the General
Account is reallocated to each of the subaccounts and the General Account
according to the instructions of the individual (contained in the application or
a supplement to the application or any other suitable form). In cases where the
initial premium is received later than the Policy Date, the amount credited to
the General Account is net of Monthly Deductions (Cost of Insurance and Monthly
Charge) for monthly anniversaries preceding the date of receipt.
Exhibit Page 2
<PAGE>
Additional premium is required only if the net cash surrender value is
insufficient to meet monthly deductions; whenever the net cash surrender value
is insufficient to meet those deductions, the policy will enter into a 61 day
grace period. During the grace period, the owner must make a premium payment
sufficient for two months' monthly deductions, or the Policy will lapse at the
end of the grace period.
B. Loan Repayments
Whenever a loan is outstanding on the Policy, the owner may make payments to
reduce the outstanding balance of the loan. The payments reduce the outstanding
loan balance by the amount of the loan repayment plus any unearned interest on
that amount. The total amount of loan reduction is immediately allocated to the
General Account and the funds according to the most recent premium allocation
instructions provided by the owner.
C. Unscheduled Payments
Unscheduled payments are payments other than the initial premium that are
received by Lincoln Life. If such payments are designated as premium payments,
they are allocated in the same fashion as the initial premium (unless a new
allocation has been requested by the owner). If the payments are not designated
as premium payments, they are first applied to repay any outstanding loan on the
Policy and any excess is then applied as an unscheduled premium.
D. Excess Premiums
Excess premiums can occur when a premium payment causes total premiums paid to
exceed the maximum Federal premium limitation under section 7702 of the Internal
Revenue Code of 1986, as amended. Also, when the owner has given Lincoln Life
instructions not to allow the Policy to become a Modified Endowment Contract
under section 7702 (A) of the IRC of 1986, as amended, excess premiums can
result when a premium payment causes total premiums paid to exceed the 7-pay
limitation. In either case, Lincoln Life allocates as much premium as possible
to the Policy; any excess is then applied first to the repayment of any
outstanding loan on the Policy, and any further excess is refunded to the owner.
An exception occurs when premiums in excess of the 7-pay limitation or in excess
of the maximum Federal premium limitation are received within 15 days of the
policy anniversary and the owner has instructed Lincoln Life to hold the premium
until it may be paid into the policy on the next policy anniversary.
III. Redemptions
A. Surrenders
Surrender of the policy is accomplished by requesting full surrender in writing
on a form suitable to Lincoln Life and results in the full Surrender Charge
being deducted from surrender proceeds. The full value in the General Account
and each of the subaccounts is deducted from each account and the Surrender
Charge is deducted from the total of those amounts; the remaining net cash
surrender value is paid to the owner. For surrenders in the first two policy
years, a calculation is performed to determine whether any excess sales load has
been deducted in the surrender process; if so, the excess sales load is added to
the amount of surrender proceeds otherwise calculated and the total is paid to
the owner.
Exhibit Page 3
<PAGE>
B. Lapse
If the owner fails to make required premium payments and the 61 day grace period
expires, the policy will lapse. In this case, the Surrender Charge and any due
and unpaid monthly deductions are deducted from the Policy Value. The full
value in the General Account and each of the subaccounts is deducted from each
account and the Surrender Charge and other amounts due are deducted from the
total of those amounts.
C. Withdrawals
After the first policy year, the owner may make withdrawals from the Policy
Value once per policy year. The maximum withdrawal is 10% of the net cash
surrender value for the first 10 policy years. The amount withdrawn is subject
to withdrawal charges (see below). The total amount of the withdrawal is
deducted from the General Account and each of the subaccounts in proportion to
the value in each account, unless the owner has given special instructions to
deduct the amount in some other fashion and Lincoln Life has agreed to do so.
Withdrawals incur a withdrawal charge of $20.
Withdrawals will affect the death benefit under the Policy; the death benefit is
reduced in the same proportion as the withdrawal bears to the full policy value.
For example, if 20% of the policy value is withdrawn, the death benefit is
reduced by 20%. However, if the policy value is such that the death benefit is
determined by using one of the IRC-required percentages, any withdrawal may
reduce the death benefit by as much as the applicable percentage times the
amount of the withdrawal.
D. Loans
At any time, the owner may borrow amounts up to the total net cash surrender
value. Any amount borrowed bears interest of 6.0% in arrears and is credited a
current interest rate no less than 4.0% in arrears. Interest may be paid in
cash or added to the loan, in which case the total loaned amount is charged and
credited interest as described above. The total amount loaned is transferred
from the General Account and each of the subaccounts in proportion to the value
in each such account, unless the owner has given special instructions to deduct
the amount in some other fashion and Lincoln Life has agreed to do so. The
amount of the loan is paid to the owner and the amount of the loan reduces the
net cash surrender value.
E. Death Benefits
The Policy provides for the payment of the Death Benefit as defined in the
policy form upon the death of the insured. The actual death benefit may be
larger than the Specified Amount if required under section 7702 of the Internal
Revenue Code of 1986, as amended. Death benefit proceeds are reduced by the
amount of any outstanding loans.
The exact amount of the death benefit is determined as of the date of the
insured's death. Effective that day, the policy value in the General Account
and each of the subaccounts is valued and the results are used in the
calculation of the actual death benefit. Interest is paid on the death benefit
from the date of death until actual payment to the beneficiaries.
Exhibit Page 4
<PAGE>
F. Accelerated Death Benefits
The owner may elect to attach the Accelerated Death Benefit Rider to the Policy.
If benefit claims occur under this rider, a lien is placed against the Policy
equal in amount to the benefit paid (increased with interest in arrears until
the date of death). The payment of the benefit has no effect on the policy
value in the General Account and in each of the subaccounts. When the death
benefit is calculated, the amount of the lien (plus interest) is deducted from
the death proceeds under the terms of the rider.
III. Refund Procedures
A. Declines and Non-Taken-Outs
In cases where the application is declined by Lincoln Life or the policy is Not-
Taken-Out by the owner, all monies received are refunded to the owner without
interest; such monies would not have been invested in any of the underlying
funds, so no investment experience is possible.
B. Free Look Procedures
The Policy contains a Free Look provision that allows the owner to cancel the
Policy and receive a full refund of premiums paid. The Free Look period extends
to the latest of: 10 days from receipt of the Policy, 45 days from the signing
of Part 1 of the application, or 10 days from the mailing or personal delivery
of the Notice of Withdrawal Rights. Where state insurance regulations so
require, the Free Look period may be extended to meet such requirements. If the
owner exercises the Free Look privilege, all policy value is removed from the
General Account and each of the funds and the full amount of all premiums paid
is refunded, without interest or investment experience.
C. Suicide
The Policy contains a suicide provision that limits Lincoln Life's liability if
the insured commits suicide within two years of the issue of the Policy and
again within two years of any reinstatement or any increase in Specified Amount.
If it is determined that the insured committed suicide within two years of
initial policy issue, all policy value is removed from the General Account and
each of the funds and an amount (without interest or investment experience)
equal to the following is paid to the owner or beneficiary: all premiums paid,
minus any policy loan, plus any unearned loan interest, minus any prior
withdrawals, and minus the cost of any riders. Similarly, if suicide occurs
within two years of any reinstatement, an amount similarly calculated (except
that only premiums paid since the date of reinstatement are refunded) is paid.
If suicide occurs within two years of any increase in Specified Amount (and
after two years from policy issue), the death benefit for the original Specified
Amount is processed normally and any Cost of Insurance Deductions made for the
increased Specified Amount are added to the death benefit proceeds (the death
benefit of the increased Specified Amount is not paid).
D. Incontestability
The Policy contains a Contestability provision that allows Lincoln Life to
contest the validity of the Policy based on representations made in the
applications, any supplement to the application, or any application for increase
in Specified Amount or any reinstatement application.
Exhibit Page 5
<PAGE>
E. Incorrect Age or Sex
If there is a mistake in the age or sex of the insured that is determined while
the insured is still living, the age and sex are corrected and an adjustment is
made to the policy values accordingly. If the mistake is determined in the
process of settling the death claim, the death benefit is adjusted to the amount
that would be purchased by the most recent cost of insurance at the correct age
and sex.
IV. Transfers
A. Transfers From the General Account to the Separate Account
The owner may request to transfer amounts from the General Account to the
Separate Account at any time. The maximum amount transferrable from the General
Account is 20% of the policy value in the General Account in any twelve
consecutive months. However, this limitation is currently waived for the first
six policy months. Amounts transferred from the General Account are paid into
each of the subaccounts according to the instructions of the owner. Telephone
transfers are permitted if the owner has completed the necessary telephone
transfer authorization form and correctly identifies himself or herself (based
on information contained in the authorization form) prior to making the transfer
request. Transfers may be made by other persons who can provide the required
authorization information. Transfers are subject to a transfer charge of as much
as $10; under current practice, the transfer charge is $0.
B. Transfers Between Subaccounts and From the Separate Account to the
General Account
The owner may request to transfer amounts between the subaccounts or from the
Separate Account to the General Account. A maximum of twelve transfers is
permitted per year (including transfers from the General Account to the Separate
Account). Amounts transferred between subaccounts are redeemed from one fund
and invested into the requested fund as of the day the request is received.
Telephone transfers are permitted, as described in the preceding section.
C. Transfer Privilege Under Rule 6e-3 (T) (b) (v) (B)
At any time in the life of the Policy, the owner may transfer 100% of the value
in the subaccounts to the General Account. By so doing, the owner effectively
eliminates the investment risks associated with the underlying funds and causes
the Policy to benefit from a guaranteed minimum interest crediting rate of 4%.
Accordingly, the death benefit and policy values of the Policy will no longer
depend on the investment experience of the Separate Account. On the date of
transfer of all values of the General Account, the death benefit, net-amount-at-
risk, and policy values require no special adjustments.
Exhibit Page 6
