<PAGE>
Registration No. 33-76434
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 5 TO
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 J
(Exact name of Trust)
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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Name and complete address
of agent for service: Copy to:
Carl L. Baker, Esquire Brian Burke, Esquire
Vice President & Counsel
Deputy General Counsel The Lincoln National
The Lincoln National Life Insurance Company
Life Insurance Company 1300 South Clinton Street
1300 South Clinton Street P.O. Box 1110
P.O. Box 1110 Fort Wayne, Indiana 46801
Fort Wayne, IN 46801
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It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a) (1)
[x] on April 30, 1997 pursuant to paragraph (a) (1) of rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Title and amount of securities being registered: Flexible Premium Variable Life
Insurance Policies. The Policies are not issued in predetermined units or
amounts.
Proposed maximum aggregate offering price to the public of the securities being
registered: The registrant has elected to register an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
Rule 24f-2 notice on Form 24F-2 for the registrant's fiscal year, ending
December 31, 1996, was filed on February 28, 1997.
Approximate date of proposed public offering: As soon as practicable after April
30, 1997.
[_] Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
FOR LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT J
<TABLE>
<CAPTION>
<S>
N-8B-2 ITEM CAPTION IN PROSPECTUS
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<C> <C>
1 Cover Page
2 Cover Page
3 Safekeeping of account's assets
4 Distribution of the policy
5 Lincoln Life, The General Account and The Separate Account
6 The Separate Account
7 Not applicable
8 Not applicable
9 Legal proceedings
10 Summary of the policy; The policy; The Separate Account;
Charges and deductions; Policy benefits;
Voting rights; General provisions
11 Summary of the policy
12 Summary of the policy
13 Summary of the policy; Charges and deductions
14 Summary of the policy; Requirements for issuance of policy
15 Premium payment and allocation of premiums
16 Premium payment and allocation of premiums
17 Summary of the policy; The policy, Charges and deductions;
Policy benefits;
18 Premium payment and allocation of premiums
19 General provisions; Voting rights
20 Not Applicable
21 Policy benefits; General provisions
22 Not applicable
23 Safekeeping of the account's assets
24 General provisions
25 Lincoln Life
26 Charges and deductions
27 Lincoln Life
28 Executive Officers and Directors of the Lincoln National Life
Insurance Co.
29 Lincoln Life, The General Account and The Separate Account
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
</TABLE>
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<TABLE>
<CAPTION>
<S>
N-8B-2 ITEM CAPTION IN PROSPECTUS
- ----------- ---------------------------------------------------------------
<C> <C>
34 Not applicable
35 Lincoln Life
36 Not applicable
37 Not applicable
38 Distribution of the policy
39 Distribution of the policy
40 Distribution of the policy
41 Distribution of the policy
42 Not applicable
43 Not applicable
44 Charges and deductions; The Separate Account; Policy benefits
45 Not applicable
46 Policy benefits
47 The Separate Account; The policy
48 Not applicable
49 Not applicable
50 The Separate Account
51 Cover Page; Summary of the policy; The policy; Charges and
deductions; Policy benefits
52 Addition, deletion or substitution of investments
53 Federal tax matters
54 Not applicable
55 Not applicable
56 Not applicable
57 Not applicable
58 Not applicable
59 Not applicable
</TABLE>
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT J
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
issued by:
The Lincoln National Life Insurance Co.
1300 South Clinton Street
P.O. Box 1110
Fort Wayne, Indiana 46801
(800) 348-0851
The flexible premium variable life insurance policy (policy) offered by Lincoln
National Life Insurance Co. (Lincoln Life) and described in this prospectus is
designed to provide life insurance protection. A policy may be issued only to
persons age 80 or younger and only for an initial specified amount of $50,000
or more. Subject to the payment of a minimum premium for the first policy year,
an owner may, subject to certain restrictions, vary the frequency and amount of
premium payments. The level of life insurance benefits payable under the policy
may also be increased or decreased subject to certain restrictions.
An owner may choose to allocate amounts either to the General Account of Lin-
coln Life (General Account) or to the Lincoln Life Flexible Premium Variable
Life Account J (Separate Account). Amounts allocated to the Separate Account
may be invested in 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 in-
vestment experience of the chosen subaccounts of the Separate Account and in-
terest credited to the policy by the General Account, as well as the frequency
and amount of premiums, and the charges assessed in connection with the policy.
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 deductions
imposed in connection with the policy. The owner bears the entire investment
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 ex-
plained 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.
This prospectus is valid only if accompanied or preceded by a prospectus 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 COMMISSION,
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 April 30, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SUMMARY OF THE POLICY 1
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LINCOLN LIFE, THE GENERAL ACCOUNT
AND THE SEPARATE ACCOUNT
Lincoln Life 3
The General Account 3
The Separate Account 4
The investment advisor 4
Addition, deletion or substitution of investments 4
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THE POLICY
Requirements for issuance of a policy 5
Units and Unit Values 5
Premium payment and allocation of premiums 5
Dollar cost averaging program 6
Effective date 7
Right to examine policy 7
Policy termination 7
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CHARGES AND DEDUCTIONS
Percent of premium charge 7
Contingent Deferred Sales Charge 7
Contingent Deferred Administrative Charge 7
Surrender charge 8
Monthly deductions 8
Cost of insurance charges 8
Monthly charge 9
Fund charges and expenses 9
Mortality and expense risk charge 9
Other charges 9
Reduction of charges 10
Exchange of Lincoln Life Universal Life policies 10
Term conversion credits 10
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POLICY BENEFITS
Death benefit and death benefit types 10
Death benefit guarantee 11
Policy changes 12
Policy value 12
Transfer between subaccounts 13
Transfer to and from the General Account 13
Loans 13
Withdrawals 14
Policy lapse and reinstatement 14
Surrender of the policy 15
Proceeds and payment options 15
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
GENERAL PROVISIONS
The contract 15
Suicide 15
Representations and contestability 16
Incorrect age or sex 16
Change of owner or beneficiary 16
Assignment 16
Reports and records 16
Projection of benefits and values 16
Postponement of payments 16
Riders 17
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DISTRIBUTION OF THE POLICY 18
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FEDERAL TAX MATTERS
Tax status of the policy 19
Tax treatment of policy benefits 19
Taxation of the Separate Account 21
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VOTING RIGHTS 21
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STATE REGULATION OF LINCOLN LIFE
AND THE SEPARATE ACCOUNT 21
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SAFEKEEPING OF THE ACCOUNT'S ASSETS 22
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LEGAL PROCEEDINGS 22
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EXPERTS 22
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ADDITIONAL INFORMATION 22
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APPENDIX A: Table of base minimum premiums 23
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APPENDIX B: Table of surrender charges 25
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APPENDIX C: Executive Officers & Directors
of Lincoln National Life
Insurance Co. 27
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APPENDIX D: Illustrations of policy values 32
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APPENDIX E: Definitions for Separate Account J 41
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FINANCIAL STATEMENTS
</TABLE>
i
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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. For the definition of terms used in this prospectus, see Appendix E,
p. 41. 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; (2) policy loan
privileges, withdrawal rights, and surrender privileges; and (3) the payment
of the net cash surrender value to the owner, if living, on the maturity date.
HOW DOES THE LIFE INSURANCE PROTECTION WORK?
The policy provides for the payment of benefits upon the death of the insured.
The policy contains two types of death benefit coverage. If you choose Type 1,
the death benefit is the greater of the specified amount of the policy or a
specified percentage of policy value. If you choose Type 2, the death benefit
is the greater of the specified amount of the policy plus the policy value or
a specified percentage of policy value. So long as your policy remains in
force, the minimum death benefit payable under either option will be the cur-
rent specified amount, reduced by any outstanding loan and any due and unpaid
charges, and increased by any unearned loan interest. (See Death benefit and
death benefit types, p. 10.)
You also have significant flexibility to adjust the death benefit prior to the
maturity date by increasing or decreasing the specified amount of the policy.
Any increase in the specified amount will require additional evidence of in-
surability satisfactory to us and will result in additional charges. Any vol-
untary decrease during the first 8 years of the policy or during the 8 years
following an increase in the specified amount will result in partial surrender
charges.
HOW ARE THE PREMIUMS FLEXIBLE?
You have considerable flexibility concerning the amount and frequency of pre-
mium payments. During the first three policy years, your policy will lapse un-
less either the total of all premiums paid (minus any partial withdrawals and
minus any outstanding loans) is at all times at least equal to the death bene-
fit guarantee monthly premium times the number of months since the initial
policy date (including the current month) or the net cash surrender value of
the policy is greater than zero. In order to place your policy in force, you
must pay at least the first two death benefit guarantee monthly premiums. In
addition, you will be asked to determine a planned periodic premium schedule,
although you will not be required to adhere to that premium schedule. Instead,
after the first policy year, you may, subject to certain restrictions, make
premium payments in any amount and at any frequency. (See Premium payment and
allocation of premiums, p. 5.)
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 our General Account and to one or
more subaccounts of the Separate Account. Amounts allocated to the General Ac-
count earn a current declared interest rate, subject to the minimum guaranteed
rate shown on the Policy Schedule. The subaccounts of the Separate Account in-
vest in the American Variable Insurance Series. Currently the American Vari-
able Insurance Series consists of nine funds available for investment by the
subaccounts:
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 CURRENT 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 stocks 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 growth of capital and income by investing primar-
ily in common stocks, or securities which demonstrate the potential for appre-
ciation 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
1
<PAGE>
long-term fixed-income securities and money market instruments in any combina-
tion.
The High-Yield Bond Fund seeks high current income and secondarily seeks capi-
tal appreciation by investing primarily in intermediate and long term corporate
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 PRO-
SPECTUS AND WHICH SHOULD BE READ CAREFULLY.
The Bond Fund seeks a high level of current income as is consistent with the
preservation of capital by investing in a broad variety of fixed income securi-
ties including: marketable corporate debt 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.
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 accordance with your instructions in the
application. You may change future allocations of net premiums at any time
without charge by notifying us in writing. Subject to certain restrictions, you
may transfer amounts among the General Account and the subaccounts of the Sepa-
rate 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 failure to pay required premiums or due
to insufficient net cash surrender value, payment of the death benefit, or ma-
turity. During the free look period, you may return the policy for a refund of
all premiums paid. Anytime after the free look period and before the second
policy anniversary, you may surrender the policy and receive its net cash sur-
render value plus any excess sales load. (See Charges and deductions, p. 7.)
After the second policy anniversary, 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 the net cash surrender value at any time. In addition, subject to
some restrictions and charges, you may withdraw portions of the net cash sur-
render value after the first policy year. Loans and withdrawals decrease both
the death benefit and future policy values and may have federal income tax con-
sequences.
WHAT CHARGES AND DEDUCTIONS ARE MADE FROM MY POLICY?
Sales charges will be deducted from your policy in two forms (a percent of pre-
mium charge and a Contingent Deferred Sales Charge) as compensation for distri-
bution expenses we incur in the sales process. These distribution expenses in-
clude sales commissions, the cost of printing the prospectus and sales litera-
ture, and any advertising costs. To the extent that such distribution expenses
are not recovered through explicit sales charges, we will recover them from our
other assets or surplus, including income from mortality and expense risk
charges and cost of insurance charges.
PERCENT OF PREMIUM CHARGE. A percent of premium charge is currently deducted
from each premium you pay. The total charge currently consists of the sum of
the following:
a. 3.25% for charges deemed to be sales loads as defined by the Investment Com-
pany Act of 1940. This item is guaranteed not to exceed 3.25%.
b. 2.50% for premium taxes and other taxes not deemed to be sales loads as de-
fined by the Investment Company Act of 1940. This item is guaranteed not to
exceed 4.50%.
CONTINGENT DEFERRED SALES CHARGE (CDSC). During the first 8 policy years, the
policy value is subject to a Contingent Deferred Sales Charge which is deducted
if the policy lapses or is surrendered or if the specified amount is voluntar-
ily reduced. During the first two policy years, the CDSC is no greater than 44%
of the required base minimum premium for the policy. Upon actual surrender or
voluntary reduction of specified amount in the first two years of the policy,
the actual CDSC is subject to certain maximum allowable sales load limitations.
(See Charges and deductions, p. 7.) During the third and subsequent policy
years, the CDSC will equal the CDSC during the first policy year times the per-
cent indicated in the table on the following page.
CONTINGENT DEFERRED ADMINISTRATIVE CHARGE (CDAC). During the first 8 policy
years, the policy value is subject to a Contingent Deferred Administrative
Charge which is deducted if the policy lapses or is surrendered or if the spec-
ified amount is voluntarily reduced. The CDAC is no greater than 88% of the re-
quired base
2
<PAGE>
minimum premium for the policy. During the second and subsequent policy years,
the CDAC will equal the first year CDAC times the percent indicated in the
following table.
An additional CDAC will be imposed under the policy in the event of each re-
quested increase in specified amount and applies during the 8 years following
such increase. If a requested increase in specified amount occurs, additional
premium will be required if the current net cash surrender value is not suffi-
cient to cover the CDAC associated with the increase.
<TABLE>
<CAPTION>
During policy year Percent of CDSC and CDAC
(or after an increase) to be deducted
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<S> <C>
2 100%
3 100%
4 100%
5 100%
6 75%
7 50%
8 25%
</TABLE>
SURRENDER CHARGE. The total of all Contingent Deferred Sales Charges and all
Contingent Deferred Administrative Charges is collectively referred to as the
surrender charge. (See Surrender charge, p. 8.)
OTHER CHARGES AND DEDUCTIONS. The policy value will be reduced by certain
monthly deductions equal to the sum of a monthly cost of insurance charge (in-
cluding the cost of any optional insurance benefits) and a monthly charge
equal to $7.50 per month. 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 consisting of a process-
ing fee and a possible early withdrawal penalty is deducted from each with-
drawal. The early withdrawal penalty portion is applicable only at times when
the surrender charge is greater than zero. As a current practice, the with-
drawal charge is equal to 3% of the withdrawn amount during the first eight
policy years, and is equal to $10 at all other times. This charge is guaran-
teed not to exceed the greater of $25 or 5% of the withdrawn amount at times
when the surrender charge is greater than zero and is guaranteed not to exceed
$25 at all other times.
A daily charge of .0022191% (which is equivalent to an annual rate of .81%) of
the average daily net assets of the Separate Account is currently imposed for
Lincoln Life's assumption of certain mortality and expense risks. This charge
is guaranteed not to exceed .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
taxes.
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 .45% to .55%. See page 9 for more detailed information.
HOW ARE MY POLICY BENEFITS TAXED?
The taxation of life insurance death benefits and distributions is complex and
is discussed in detail under "Federal tax matters" on pages 18-21. You should
note in particular that the taxation of loans, withdrawals and surrenders of a
life insurance policy that becomes a Modified Endowment Contract is generally
less favorable than 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 Limita-
tion.
LINCOLN LIFE, THE GENERAL ACCOUNT 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) the District of Columbia, Guam, and the Commonwealth
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
3
<PAGE>
been registered as an investment company under the Investment Company Act of
1940.
THE SEPARATE ACCOUNT
Lincoln Life Flexible Premium Variable Life Account J (Separate Account) was
established by Lincoln Life as a Separate Account on March 9, 1994. 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 attributable to the policies are not chargeable
with liabilities arising out of any other business which Lincoln Life may con-
duct. 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 exceed 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 cur-
rently closed on the following holidays: New Year's Day, President's 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 funds comprising the American Variable In-
surance Series: the Global Growth Fund, the Growth Fund, the International
Fund, the Bond Fund, the Growth-Income Fund, the Asset Allocation Fund, the
High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities Fund, and the
Cash Management Fund. Income and both realized and unrealized gains or losses
from the assets of the Separate Account are credited 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
Lincoln Life variable annuity contract holders. For an explanation of the risk
involved with such mixed and/or shared funding, see the prospectus for the un-
derlying 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.
THE INVESTMENT ADVISER
Capital Research and Management Co., 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 advisor.
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
approval of the Securities and Exchange Commission, to the extent required by
the Investment Company Act of 1940 or other applicable law. Nothing contained
herein shall prevent the Separate Account from purchasing other securities for
other series or classes of policies, or from permitting a conversion between
series or classes of policies on the basis of requests made by policyowners.
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 policyowners 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.
4
<PAGE>
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
specified amount of a policy is $50,000. A policy will generally be issued
only to insureds 80 years of age or under who supply satisfactory evidence of
insurability sufficient to Lincoln Life. Acceptance is subject to Lincoln
Life's underwriting rules and, except in California, Lincoln Life reserves the
right to reject an application for any reason.
Additional insurance on the life of other persons may be applied for by sup-
plemental application. Approval of the additional insurance will be subject to
evidence of insurability satisfactory to Lincoln Life.
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 valuation 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 transac-
tion 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 transfer charges, or monthly de-
ductions), units are redeemed from that subaccount; the number of units re-
deemed 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 values in
each subaccount in which policy values are allocated. 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 valuation 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 ANDALLOCATION OF PREMIUMS
Subject to certain limitations, an owner has considerable flexibility in de-
termining the frequency and amount of premiums. During the first three policy
years, the policy will lapse unless either the total of all premiums paid (mi-
nus any partial withdrawals and minus any outstanding loans) is at all times
at least equal to the death benefit guarantee monthly premium times the number
of months since the initial policy date (including the current month) or the
net cash surrender value of the policy is greater than zero. Payment of the
death benefit guarantee monthly premium during the first three policy years
will guarantee that the policy will remain in force for the first three policy
years despite negative net cash surrender value (see Death benefit guarantee,
p. 11), but continued payment of such premiums will not guarantee that the
policy will remain in force thereafter. The amount of the death benefit guar-
antee monthly premium is based on the base minimum premium per $1,000 of spec-
ified amount (determined by the insured's age, sex, and underwriting class)
and includes additional amounts to cover charges for additional benefits,
monthly charges, and substandard extra charges. A table of base minimum premi-
ums per $1,000 of specified amount is in Appendix A, p. 23-24.
The owner may designate in the application one of several ways to pay the
death benefit guarantee monthly premium. The owner may elect to pay the first
twelve months of premiums in full prior to commencement of insurance coverage.
Alternatively, the owner may elect to pay a level planned periodic premium on
a quarterly or semi-annual basis sufficient to meet the premium requirements.
Premiums may also be paid monthly if paid by a pre- authorized check. Premi-
ums, other than the initial premium, are payable only at the Home Office of
Lincoln Life.
Each owner will also define a planned periodic premium schedule that provides
for payment of a level premium at fixed intervals for a specified period of
time. The owner is not required to pay premiums in accord with this schedule.
Furthermore, the owner has flexibility to alter the amount, frequency, and the
time period over which planned periodic premiums are paid. Failure to pay
planned periodic premiums will not of itself cause the policy to lapse, nor
will the payment of planned periodic premiums equal to or in excess of the re-
quired death benefit guarantee monthly premiums guarantee that the policy will
remain in force beyond the first three policy years. Unless the policy is be-
ing continued under the death benefit guarantee, (see Death benefit guarantee,
p. 11), the policy will lapse any time outstanding loans with interest 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 rein-
statement, p. 14.) Subject to the minimum premiums required to keep the policy
in force and
5
<PAGE>
the maximum premium limitations established under section 7702 of the Internal
Revenue Code 1986, as amended (the Code), an owner may make unscheduled pre-
mium payments at any time in any amount during the lifetime of the insured un-
til the maturity date. Monies received that are not designated as premium pay-
ments 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 pre-
mium 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 insur-
ance, as set forth under Section 7702 of the Code. Those limitations will vary
by issue age, sex, classification, benefits provided, and even policy dura-
tion. If at any time a premium is paid which would result in total premiums
exceeding the current maximum premium limitation, Lincoln Life will only ac-
cept that portion 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 pol-
icy are dependent in part on whether or not the policy becomes a Modified En-
dowment Contract. A policy will become a Modified Endowment Contract if premi-
ums paid into the policy cause the policy to fail the 7-pay test set forth un-
der Section 7702A of the Code. Lincoln Life will monitor premiums paid into
each policy after the date of this prospectus to determine when a premium pay-
ment will exceed the 7-pay test and cause the policy to become a Modified
Endowment Contract. If the owner has given Lincoln Life instructions that the
policy should not be allowed to become a Modified Endowment Contract, any pre-
miums 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 of receipt. If the owner has not given Lincoln Life in-
structions to the contrary, however, the premium will be paid into the policy
and a letter of notification of Modified Endowment Contract status will be
sent to the owner. The letter of notification will include the available op-
tions, if any, for remedying the Modified Endowment Contract status of the
policy.
NET PREMIUMS. The net premium equals the premium paid less the percent of pre-
mium charge (see Percent of premium charge, p. 7).
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 various
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 requirements.
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 desig-
nates the total amount of policy value ($5,000 minimum) to be transferred from
the General Account to the chosen subaccounts in accord with the most recent
premium allocation. The transfers continue until the end of the DCA period or
until the policy value in 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 av-
6
<PAGE>
erage 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 un-
der the program, nor will it prevent or necessarily alleviate losses in a de-
clining 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 increase, the effective date will be the first monthly anniversary day
on or next following the day the application for the increase is approved.
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. An owner wanting a refund should return the policy to ei-
ther 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, and the
policy is not being continued under the death benefit guarantee provision, 2)
the policy is surrendered, 3) the insured dies, or 4) the policy matures.
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 and any optional
insurance benefits added by rider.
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 more fully below.
PERCENT OF PREMIUM CHARGE. A percent of premium charge is currently deducted
from each premium you pay. The total charge currently consists of the sum of
the following:
a. 3.25% for charges deemed to be sales loads as defined by the Investment
Company Act of 1940. This item is guaranteed not to exceed 3.25%.
b. 2.50% for premium taxes and other taxes not deemed to be sales loads as de-
fined by the Investment Company Act of 1940. This item is guaranteed not to
exceed 4.50%.
CONTINGENT DEFERRED SALES CHARGE (CDSC). During the first 8 policy years, the
policy value is subject to a Contingent Deferred Sales Charge which is de-
ducted if the policy lapses or is surrendered or upon a voluntary reduction in
specified amount. During the first policy year, the CDSC is approximately
equal to 44% (less at older ages) of the required base minimum premium for the
designated specified amount. The base minimum premium required varies with the
age, sex, and rating class of the insured. To determine the first year CDSC
per $1,000 of specified amount, multiply the surrender charge found in the ta-
ble of surrender charges (see Appendix B, pp. 25-26) times one-third. (For ex-
ample, the surrender charge for a male preferred smoker age 35 is $9.99 per
$1000 of specified amount, or $999 for a policy with $100,000 specified
amount. One-third of the surrender charge, or $333, is the CDSC for the poli-
cy.) Furthermore, upon lapse or surrender of the policy or voluntary reduction
in specified amount at any time during the first two policy years, the total
sales charges actually deducted (the sales charge component of the percent of
premium charge plus the CDSC) will never exceed the following maximum: 30% of
premiums paid up to the first 12 death benefit guarantee monthly premiums,
plus 10% of premiums paid up to the next 12 death benefit guarantee monthly
premiums, plus the sales charge component of the percent of premium charge on
premiums paid in excess of those amounts.
During the second and subsequent policy years, the CDSC will equal the CDSC
during the first policy year times the percent indicated in the table below.
CONTINGENT DEFERRED ADMINISTRATIVE CHARGE (CDAC). During the first 8 policy
years, the policy value is subject to a Contingent Deferred Administrative
Charge which is deducted if the policy lapses or is surrendered or upon a vol-
untary reduction in specified amount. During the first policy year, the CDAC
is approximately equal to 88% (less at older ages) of the required base
7
<PAGE>
minimum premium for the designated specified amount. To determine the first
year CDAC per $1,000 of specified amount, multiply the surrender charge found
in the table of surrender charges (see Appendix B, pp. 25-26) times two-
thirds. (For example, the surrender charge for a male preferred smoker age 35
is $9.99 per $1000 of specified amount, or $999 for a policy with $100,000
specified amount. Two-thirds of the surrender charge, or $666, is the CDAC for
the policy).
During the second and subsequent policy years the CDAC will equal the CDAC
during the first policy year times the percent indicated in the table below.
An additional CDAC will be imposed under the policy in the event of each re-
quested increase in specified amount. The additional CDAC is an amount per
$1,000 of increased specified amount and will be deducted upon lapse or the
surrender of the policy or upon a voluntary reduction of the increased speci-
fied amount at any time during the 8 years following such increase. The amount
of the CDAC will be equal to the CDAC that would apply to a newly issued pol-
icy at the age of the insured at the time of the increase. The percentage of
the CDAC applicable in any year after the increase is shown in the table be-
low, where policy year is calculated from the date of the increase.
<TABLE>
<CAPTION>
During policy year Percent of CDSD and CDAC
(or after an increase) to be deducted
- ------------------------------------------------------------------------------
<S> <C>
2 100%
3 100%
4 100%
5 100%
6 75%
7 50%
8 25%
</TABLE>
When the owner requests an increase in the specified amount, no additional
premium is required provided that the current net cash surrender value is suf-
ficient to cover the CDAC associated with the increase, as well as the in-
crease in the cost of insurance charges which result from the increase in
specified amount. However, if the net cash surrender value is insufficient to
cover such costs, additional premium will be required for the increase to be
granted, and the percent of premium charge will be deducted from that addi-
tional premium.
SURRENDER CHARGE. The total of all Contingent Deferred Sales Charges and all
Contingent Deferred Administrative Charges are collectively referred to as the
surrender charge. The surrender charges for the first 5 years are shown in Ap-
pendix B. For surrender charges during policy years 6 through 8 the values
shown in Appendix B should be multiplied by the percentages given in the table
under Charges and deductions above. For increases in the specified amount, ad-
ditional surrender charges apply. During the first 8 years after an increase,
the values in Appendix B are multiplied by two-thirds and times the percentage
given in the table above.
MONTHLY DEDUCTIONS. On the policy date and on each monthly anniversary day
following, deductions will be made from the policy value. These deductions are
of two types: A monthly charge and a monthly cost of insurance deduction. Or-
dinarily, the monthly deductions are deducted from the policy value in propor-
tion to the values in the General Account and the subaccounts. The monthly de-
ductions may be made by some other method if requested by the owner, and if
such method is acceptable to Lincoln Life.
COST OF INSURANCE CHARGES. On the policy date and on each monthly anniversary
day following, cost of insurance charges will be deducted from the policy val-
ue. Ordinarily, the cost of insurance charges are deducted in proportion to
the values in the General Account and 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 cost of insurance charges depend upon a number of variables, and the cost
for each policy month can vary from month to month. On each monthly anniver-
sary day, Lincoln Life will determine the monthly cost of insurance for the
following month as equal to:
a. the death benefit on the monthly anniversary day; divided by
b. 1.0032737 (the monthly interest factor equivalent to an annual interest
rate of 4%); minus,
c. the policy value on the monthly anniversary day without regard to the cost
of insurance; divided by
d. 1,000; the result multiplied by
e. the applicable cost of insurance rate per $1,000 as described below.
The cost of insurance rates are based on the sex, attained age, rate class of
the person insured, and specified amount of the policy. In states requiring
unisex rates, in federally qualified pension plan sales, in employer sponsored
situations, and in any other situation where unisex rates are required by law,
the cost of insurance rates are not based on sex. The monthly cost of insur-
ance rates may be changed by Lincoln Life from time to time. A change in the
cost of insurance rates will
apply to all persons of the same attained age, sex, rate class, and specified
amount 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 guar-
anteed 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 Table Age last birthday, or the 1980 Commissioner's Stan-
dard Ordinary Smoker Mortality Table Age last birthday, for attained ages six-
teen and over, depending on the smoking status of the insured. Standard rate
classes
8
<PAGE>
have guaranteed rates which do not exceed 100% of the applicable table.
The rate class of an insured will affect the cost of insurance rate. Lincoln
Life currently places insureds into a standard rate class or rate classes in-
volving a higher mortality risk. In an otherwise identical policy, insureds in
the standard rate class will have a lower cost of insurance than those in the
rate class with the higher mortality risk. The standard rate class is also di-
vided into four categories: Preferred nonsmoker, Standard nonsmoker, Preferred
smoker, and Standard smoker. Insureds who are Standard nonsmoker or Preferred
nonsmoker will generally incur a lower cost of insurance than those insureds
who are in the smoker rate classes. Likewise, insureds who are Preferred
smoker or Preferred nonsmoker will generally incur a lower cost of insurance
than similarly situated insureds who are Standard smoker or Standard nonsmoker
respectively.
The specified amount of the policy will affect the cost of insurance rates ap-
plied to a specific policy. In general, policies with a specified amount of
$200,000 or more will have lower current cost of insurance rates than policies
with smaller specified amounts.
MONTHLY CHARGE. A monthly charge of $7.50 is deducted from the policy value
each month the policy is in force to compensate Lincoln Life for continuing
administration of the policy, premium billings, overhead expenses, and other
miscellaneous expenses. Lincoln Life does not anticipate any profits from this
charge. This charge is guaranteed not to increase during the life of the poli-
cy.
FUND CHARGES AND EXPENSES. The investment advisor for each of the funds de-
ducts a daily charge as a percent of the net assets in each fund as an asset
management charge. The charge has the effect of reducing the investment re-
sults 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 fees of the investment advisor, but also other miscellaneous expenses
incurred by those funds.
The asset management charges, miscellaneous expenses and total expenses for
each of the funds are currently estimated, on the basis of their most recent
fiscal year experience, where applicable, to be as follows:
<TABLE>
<CAPTION>
Asset Mgt. Misc.
Fund Charge* Expenses* Total*
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Growth** .75% .06% .81%
Growth .42% .02% .44%
International .61% .08% .69%
Growth-Income .39% .02% .41%
Asset Allocation .47% .02% .49%
High-Yield Bond .50% .03% .53%
Bond .51% .01% .52%
U. S. Gov't/AAA-Rated .51% .02% .53%
Cash Management .45% .02% .47%
</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. Lincoln Life deducts a daily charge as a
percent of the assets of the Separate Account as a mortality and expense risk
charge. This charge has the effect of reducing gross investment results cred-
ited to the subaccounts. The daily rate currently charged is .0022191% (which
is equivalent to an annual rate of .81 of 1%) of the value of the net assets
of the Separate Account. This deduction may increase or decrease, but is guar-
anteed not to exceed .90 of 1% in any policy year.
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.
OTHER CHARGES. Two other miscellaneous charges are occasionally incurred: a
withdrawal charge and a transfer charge. The withdrawal charge is incurred
when the owner of the policy requests a withdrawal from the policy value; the
charge is deducted from the withdrawn amount and the balance is paid to the
owner. Withdrawals may be made any time after the first policy year, but only
one withdrawal may be made per year. The withdrawal charge is equal to the
greater of (1) a minimum withdrawal charge or processing fee (currently lim-
ited voluntarily to $10), or (2) at times when the surrender charge is greater
than zero, an amount equal to the amount withdrawn multiplied by the percent
of withdrawal charge (currently limited voluntarily to 3%, during the first
eight policy years only). The amount, if any, by which the withdrawal charge
exceeds the processing fee first reduces any remaining CDSC; any further ex-
cess next reduces any remaining CDAC; and any remaining excess will be waived.
The
9
<PAGE>
withdrawal charge is guaranteed not to exceed the greater of $25 or 5% of the
withdrawn amount at times when the surrender charge is greater than zero and is
guaranteed not to exceed $25 at all other times.
The transfer charge is incurred when the owner requests that funds be trans-
ferred from one subaccount or the General Account to another subaccount or the
General Account. The transfer charge is $10, and is deducted from the amount
transferred; however, the transfer charge is currently being waived for all
transfers. The maximum number of transfers allowed between subaccounts in a
policy year is twelve.
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 may make deductions from the policy to pay those taxes. (See Federal
tax matters, p. 18).
REDUCTION OF CHARGES
The percent of premium charge, surrender charge and monthly charge set forth in
this prospectus may be reduced because of special circumstances that result in
lower sales or administrative expenses. In particular, the percent of premium
charge and surrender charge will not be deducted on policies issued to employ-
ees and registered representative of any member of the selling group and their
spouses and minor children, or to officers, directors, trustees or bona-fide
full-time employees of Lincoln National Corp. or The Capital Group, 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 re-
duced sales and administrative expenses resulting from the special circumstanc-
es. Reductions will not be unfairly discriminatory against any person, includ-
ing the affected policyowners and owners of all other policies funded by the
Separate Account.
EXCHANGE OF LINCOLN LIFE UNIVERSAL LIFE POLICIES
Existing Lincoln Life Universal Life policies may currently be exchanged for a
policy described in this prospectus. Because Lincoln Life's expenses are re-
duced in such exchanges, as a current practice the percent of premium charge
will be waived on the amount of policy value exchanged. In addition, as a cur-
rent practice the Contingent Deferred Sales Charge and the Contingent Deferred
Administrative Charge will be reduced to 25% of the normal charges for the
specified amount transferred and further reduced by the amount of any surrender
charge collected on the surrendered policy. All additional premiums will be
subject to the percent of premium charge and any increase in specified amount
will be subject to additional surrender charges. Existing Lincoln Life Variable
Life policies may not be exchanged
unless or until Lincoln Life receives special exemptive relief from the Securi-
ties and Exchange Commission to honor such exchange requests.
TERM CONVERSION CREDITS
Lincoln Life currently has a term conversion program which gives premium cred-
its to the policy if the owner is converting from a term insurance policy. Term
insurance policies issued by Lincoln Life or by most other life insurance com-
panies may be converted to the policy under this program and receive term con-
version credits. Except for guaranteed term conversion privileges provided un-
der some Lincoln Life term insurance policies or otherwise provided by special
agreement, all term insurance policy conversions are subject to evidence of in-
surability satisfactory to Lincoln Life. All conversion credits are deposited
in the policy without the percent of premium charge. The amount of the term
conversion credits and the requirements for qualification for those credits is
subject to change by Lincoln Life, but such changes will not be unfairly dis-
criminatory against any person, including the affected policyowners and owners
of all other policies funded by the Separate Account.
POLICY BENEFITS
DEATH BENEFIT AND DEATH BENEFIT TYPES
As long as the policy remains in force (see Policy lapse and reinstatement, p.
14), Lincoln Life will, upon proof of the insured's death, pay the death bene-
fit proceeds of the policy to the named beneficiary in accordance with the des-
ignated death benefit type. 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
options, p. 15.) The death benefit proceeds payable under the designated death
benefit type will be increased by any unearned loan interest, and will be re-
duced by any outstanding loan and any due and unpaid charges. (See Policy lapse
and reinstatement, p. 14.) These proceeds will be further increased by any ad-
ditional insurance on the insured provided by rider.
The policy provides two death benefit types: Type 1, basic coverage, and Type
2, basic plus policy value coverage. Generally, the owner designates the death
benefit type in the application. The owner may change the death benefit type at
any time. (See Policy changes, p. 12.)
TYPE 1. 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 anytime is based on the attained age of the insured
as of the beginning of the policy year.
TYPE 2.The death benefit is equal to the greater of the specified amount plus
the policy value 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.
10
<PAGE>
Under a Type 1 basic coverage, the net amount at risk decreases as the policy
value increases. (The net amount at risk is equal to the death benefit less
the policy value.) Under a Type 2 basic plus policy value coverage, the net
amount at risk remains constant, so the cost of insurance deduction will be
relatively higher on a Type 2 basic plus policy value coverage than on a Type
1 basic coverage. As a result, policy values under a Type 1 basic coverage
tend to increase faster than under a Type 2 basic plus policy value coverage,
assuming favorable investment performance. Because of this, policyowners that
are more interested in achieving higher policy values more quickly (assuming
favorable investment experience) would be more likely to select a Type 1 basic
coverage. In contrast, the death benefit under Type 2 will increase or de-
crease as the policy value increases or decreases. Consequently, policyowners
who are more interested in increasing total death benefits (assuming favorable
investment experience) would be more likely to select a Type 2 basic plus pol-
icy value coverage.
*The specified percentages are shown in the table that follows:
<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 both examples, assume that the insured is under the age of 40
and that there is no outstanding policy loan.
Under Type 1, a policy with a specified amount of $250,000 will generally pay
$250,000 in life insurance proceeds. However, because life insurance proceeds
cannot be less than 250% (the applicable specified percentage) of policy val-
ue, any time the policy value of this policy exceeds $100,000, life insurance
proceeds 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 in-
crease the life insurance proceeds by $2.50. Thus, for a policy with a speci-
fied amount of $250,000 and a policy value of $200,000, the beneficiary will
be entitled to life insurance proceeds of $500,000 (250% x $200,000); a policy
value of $300,000 will yield life insurance proceeds of $750,000 (250% x
$300,000); a policy value of $500,000 will yield life insurance proceeds of
$1,250,000 (250% x $500,000). Similarly, so long as policy value exceeds
$100,000, each dollar taken out of policy value will reduce the life insurance
proceeds by $2.50. If at any time the policy value multiplied by the specified
percentage is less than the specified amount, the life insurance proceeds will
equal the specified amount of the policy.
Under Type 2, a policy with a specified amount of $250,000 will generally pay
life insurance proceeds of $250,000 plus policy value. Thus, for example, a
policy with a specified amount of $250,000 and policy value of $50,000 will
yield life insurance proceeds equal to $300,000 ($250,000 + $50,000); a policy
value of $100,000 will yield life insurance proceeds of $350,000 ($250,000 +
$100,000). The life insurance proceeds cannot, however, be less than 250% (the
applicable specified percentage) of policy value. As a result, if the policy
value of the policy exceeds $166,667, the life insurance proceeds will be
greater than the specified amount plus policy value. Each additional dollar
added to policy value above $166,667 will increase the life insurance proceeds
by $2.50. A policy with a policy value of $200,000 will therefore have life
insurance proceeds of $500,000 (250% x $200,000); a policy value of $500,000
will yield life insurance proceeds of $1,250,000 (250% x $500,000); a policy
value of $1,000,000 will yield life insurance proceeds of $2,500,000 (250% x
$1,000,000).
Similarly, any time policy value exceeds $166,667, each dollar withdrawn from
policy value will reduce the life insurance proceeds by $2.50. If at any time,
however, policy value multiplied by the specified percentage is less than the
specified amount plus policy value, then the life insurance proceeds will be
the specified amount plus policy value.
The above examples describe scenarios which include favorable investment per-
formance. 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.
DEATH BENEFIT GUARANTEE
Lincoln Life expects payment of the required death benefit guarantee monthly
premiums will be sufficient, when combined with net investment results, to pay
for all charges to the policy during the first three policy years, and thereby
provide life insurance protection on the insured for that period. In some sit-
uations, however, the
combination of poor net investment results and monthly deductions could result
in the net cash surrender value being reduced to zero. In such situations,
Lincoln Life will
11
<PAGE>
continue the policy in force for the first three policy years, provided the
death benefit guarantee monthly premium requirement continues to be met. Lin-
coln Life makes no charge for this additional benefit.
POLICY CHANGES
CHANGE IN TYPE OF DEATH BENEFIT. The owner may also change the type of death
benefit coverage from Type 1 to Type 2 or from Type 2 to Type 1. The request
for such a change must be made in writing on a form suitable to Lincoln Life.
The change will be effective on the first monthly anniversary day on or next
following the day Lincoln Life receives the request. No change in the type of
death benefit will be allowed if the resulting specified amount would be less
than the minimum specified amount of $50,000.
If the change is from Type 1 to Type 2, the insured's specified amount after
such change will be equal to the insured's specified amount prior to such
change minus the policy value on the date of change.
If the change is from Type 2 to Type 1, the insured's specified amount after
such change will be equal to the insured's specified amount prior to such
change plus the policy value on the date of change.
CHANGES IN AMOUNT OF INSURANCE COVERAGE. In addition to the above changes, the
owner may request to increase or decrease the specified amount at any time. The
request for such a change must be from the owner and in writing on a form suit-
able to Lincoln Life. Any decrease will become effective on the first monthly
anniversary day on or next following the day the request is received by Lincoln
Life. Any such decrease will reduce insurance first against insurance provided
by the most recent increase, next against the next most recent increases suc-
cessively, and finally against insurance provided under the original applica-
tion. The specified amount after any requested decrease may not be less than
$50,000. Any request for an increase must be applied for on a supplemental ap-
plication. Such increase will be subject to evidence of insurability satisfac-
tory to Lincoln Life and to its issue rules and limits at the time of increase.
Furthermore, such increase will not be allowed unless the net cash surrender
value is sufficient to cover the next monthly deductions and the surrender
charge for the increase. Any increase will become effective on the first
monthly anniversary day on or next following the day the application for in-
crease is approved.
POLICY VALUE
The policy provides for the accumulation of policy value, which is calculated
as often as the assets of the Separate Account are valued. 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 any charges and deductions assessed the policy. The pol-
icy has no guaranteed minimum policy value or net cash surrender value.
On the policy date, the policy value will be the initial net premium, minus the
sum of the following:
a. The monthly charge;
b. The cost of insurance for the first month;
c. 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 rate shown on the policy schedule on any
outstanding loan amount;
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;
h. Any amount charged against the investment amount for federal or other gov-
ernmental income taxes;
i. All partial surrender charges deducted since the preceding day;
j. The monthly charge;
k. The cost of insurance for the following month;
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 General Account guaranteed interest 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;
e. Any net premiums received since the preceding day.
12
<PAGE>
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. All partial surrender charges deducted since the preceding day.
The charges and deductions described above are further discussed in Charges
and deductions, p. 7.
GROSS INVESTMENT RESULTS. The gross investment results are equal to the change
in the market value of the assets of a fund 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 the asset management charges and any miscellaneous fund ex-
penses, and minus the mortality and expense risk charge.
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.
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 transfers 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 transfers, 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 is received at the Home Office
at Lincoln Life. A transfer charge of $10 is made for each transfer and is de-
ducted from the amount transferred; however, the transfer charge is currently
being waived for all transfers. The minimum amount which may be transferred
between subaccounts is $100. The maximum number of transfers allowed in a pol-
icy year is twelve.
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 unloaned
policy value in 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 unloaned amount
in the General Account is $500 or less, the owner may transfer the entire
unloaned 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.
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, p. 16.)
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, p. 18.)
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, p. 14.)
LOAN INTEREST. Interest on any loan will be payable annually in advance at an
annual rate of 6.0%, which is 6.38% effective annual rate of interest. Any in-
terest not paid when due will be added to the loan amount and will bear inter-
est at the same policy loan rate.
DEDUCTION OF LOAN AND LOAN INTEREST. Ordinarily the amount of any loan or un-
paid loan interest will be deducted from the General Account and the
subaccounts in proportion to the value in each. The deduction may be made by
some other method if the owner requests, and if such method is acceptable to
Lincoln Life. Amounts deducted from the Separate Account will be transferred
to the Lincoln Life General Account, where they will earn interest at an an-
nual rate of no less than 4.0%; currently, loaned amounts earn interest at an
annual rate of 5.0%. 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
13
<PAGE>
would have been if the policy loan had not been made, depending on the invest-
ment results in the Separate Account compared to the interest credited to the
assets transferred to the General Account to secure the loan. In this way, a
loan may have a permanent effect upon both the policy value and the death ben-
efit and may increase or decrease the potential for policy lapse. In addition,
outstanding policy loans reduce the death benefit.
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, maturity, or death of the insured will be deducted
from the amount otherwise payable.
WITHDRAWALS
Any time after the first policy year, and 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 certain limitations. The minimum withdrawal is
$500 and only one withdrawal may be made during a policy year. During any year
in which the surrender charge is greater than zero, the amount of the with-
drawal may not be more than 20% of the net cash surrender value (except that
Lincoln Life has the current practice of waiving the 20% limitation after the
eighth policy year). During any year in which the surrender charge is equal to
zero, the amount of the withdrawal may not be more than the net cash surrender
value. As a current practice, the withdrawal charge is equal to 3% of the
withdrawn amount during the first 8 policy years, and is equal to $10 at all
other times. This charge is guaranteed not to exceed the greater of $25 or 5%
of the withdrawn amount at times when the surrender charge is greater than
zero and is guaranteed not to exceed $25 at all other times. The owner should
be aware that withdrawals may result in the owner incurring a tax liability.
(See Federal tax matters, p. 18.)
DEDUCTION OF WITHDRAWAL. When a withdrawal is made, the policy value will be
reduced by the amount of the withdrawal. The amount will be deducted from the
General Account and the subaccounts in proportion to the values in the General
Account and the subaccounts. 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 WITHDRAWALS ON DEATH BENEFIT AND COST OF INSURANCE. A withdrawal may
affect the death benefit amount in one of several ways. First, if the death
benefit type is Type 1, the specified amount will automatically be reduced by
the amount of the withdrawal, and thus will lower the death benefit by the
same
amount. If the death benefit is Type 2, this reduction in the specified amount
does not occur, but the death benefit is lowered by the amount the policy
value is decreased by the withdrawal. In addition, since the death benefit is
required to be at least equal to the specified percentage multiplied times the
policy value, a reduction in the policy value will sometimes result in a re-
duction in the death benefit equal to the specified percentage times the re-
duction in policy value. (See Death benefit and death benefit types, p. 10.)
In such cases, where the death benefit is reduced by an amount greater than
the withdrawal, the subsequent cost of insurance will be reduced (under either
type of death benefit) to reflect the excess reduction in death benefit.
No withdrawal will be allowed if the resulting insured's specified amount
would be less than $50,000. The request for withdrawal must be in writing on a
form suitable to Lincoln Life.
Ordinarily, withdrawals will be processed within seven days from the date the
request for a withdrawal is received at the Home Office of Lincoln Life. Pay-
ment of the withdrawal amount may be postponed under certain circumstances.
(See Postponement of payments, p. 16.)
POLICY LAPSE AND REINSTATEMENT
During the first three policy years, insurance coverage under the policy will
be continued in force as long as the total premiums paid (minus any partial
withdrawals and minus any outstanding loans) equals or exceeds the death bene-
fit guarantee monthly premium times the number of months since the policy
date, including the current month. Unless coverage is being continued under
the death benefit guarantee (see Death benefit guarantee, p. 11) lapse will
occur when the policy value less surrender charges and less outstanding loans
is insufficient to cover the monthly deductions and the 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 pur-
poses of policy loans and surrenders. Regardless of premium payments or cur-
rent net cash surrender value, coverage will never be continued beyond the ma-
turity date of the policy.
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, regardless of the
cause of the grace period, any due and unpaid monthly deductions will be de-
ducted from the death benefit.
14
<PAGE>
A lapsed policy may be reinstated at any time within five years after the date
of lapse and before the maturity date by submitting evidence of insurability
satisfactory to Lincoln Life and a premium sufficient to keep the policy in
force for two months. The effective date of a reinstatement will be the first
monthly anniversary day on or next following the day the application for rein-
statement is approved.
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 plus any unearned 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 surrender of the policy may have tax consequences.
PROCEEDS AND PAYMENT OPTIONS
PROCEEDS. The amount payable under the policy on the maturity date, 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 plus any unearned loan interest. The
proceeds to be paid on the surrender of the policy or on the maturity date
will be the net cash surrender 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 or maturity 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, plus any unearned loan interest, mi-
nus any prior withdrawals, and minus the cost of any riders.
If the insured commits suicide, while sane or insane, within two years from
the effective date of any increase in insurance, our total liability with re-
spect to such increase will be its cost of insurance and monthly charges.
15
<PAGE>
If the insured commits suicide, while sane or insane, within two years from
the effective date of any reinstatement, our total liability with respect to
such reinstatement will be the premiums paid since the effective date of the
reinstatement, minus any policy loan, plus any loan interest, minus any prior
withdrawals, and minus the cost of any riders.
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 increase in coverage or any reinstatement will not be
contestable after that increase or reinstatement has been in force two years
from its effective date during the lifetime of the insured. Any contest will
then be based only on the application for the increase or reinstatement and
will be subject to the same conditions as for contest 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 to that which would be pur-
chased 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.
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 cost of insurance charges deducted, and any withdrawals made. The
report will also include any other data that may be required where the con-
tract is delivered. In addition, Lincoln Life will provide to policyowners
semi-annually, or otherwise as may be required by regulations under the In-
vestment Company Act of 1940, a report containing information about the opera-
tions of the funds.
We have entered into an agreement with Delaware Management Holdings, Inc.,
2005 Market Street, Philadelphia, PA 19203, 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 D 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, or benefits payable at
death or maturity 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
Exchange Commission; (ii) the Commission by order per-
16
<PAGE>
mits postponement for the protection of owners; or (iii) an emergency exists,
as determined by the Commission, as a result of which disposal of securities
is not reasonably practical or it is not reasonably practical to determine the
value of the Separate Account's net assets. Transfers may also be postponed
under such circumstances.
Requests for surrenders or policy loans of policy values representing premiums
paid by check may be delayed until such time as the check has cleared the own-
er's bank.
RIDERS
The availability of the riders listed below 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 application. The underwriting and issue procedures are subject to
change without notice.
TERM RIDER FOR COVERED INSURED. The spouse and/or children of the Primary In-
sured may be added as an Other Insured on the base plan. Likewise, other indi-
viduals can be added as an Other Insured. The Term Rider for Covered Insured
is a term rider available for issue ages 0 to 80 and the cost of insurance is
deducted monthly for this benefit. Up to three such riders may be added to a
base policy. The maximum amount which may be issued on any rider equals the
amount of coverage on the policy multiplied times 19. The minimum amount is
$25,000 for each Other Insured.
CHILDREN'S TERM RIDER. The Children's Term Rider is a term rider available for
children (natural, adopted, or stepchild) of the Primary Insured. Children 15
days to age 24 inclusive are covered. The rider is available in units of
$1,000 with a minimum of $2,000 and a maximum of $20,000 per any one family.
The cost of insurance for this rider is deducted monthly.
GUARANTEED INSURABILITY RIDER. This rider is available for issue ages 0 to 40
and it is available for the Primary Insured, and/or those covered under the
Term Rider for Covered Insured. This rider allows the Covered Insured to pur-
chase, without evidence of insurability, additional insurance on the option
dates, or alternate option dates. It can be purchased in units of $1,000, with
a minimum amount of $10,000 and a maximum amount of $100,000 or the specified
amount, if less. Total amount of options exercised may not exceed five times
the option amount. There are eight regular option dates, beginning at age 25,
every three years thereafter, and the last option is at age 46. An alternate
option date will occur three months after marriage, birth of a child, or adop-
tion of a child. Exercising an alternate option date reduces the next regular
option date. This rider is not available for substandard risks. The cost of
insurance for this rider is deducted monthly from the policy value.
ACCIDENTAL DEATH BENEFIT RIDER. This rider is available for the Primary In-
sured, and/or those covered under the Term Rider for Covered Insured. The Ac-
cidental Death Benefit Rider provides an additional life insurance benefit in
the case of accidental death. It is available for ages 5 through 69. The mini-
mum amount which can be purchased is $10,000 and the maximum
amount is two times the specified amount on the Covered Insured, not to exceed
a total of $350,000 in all policies, in all companies, for that insured. The
cost of insurance for this rider is deducted monthly from the policy value.
WAIVER OF COST OF INSURANCE RIDER. This rider is available for ages 5 through
64. It waives the total cost of insurance for the policy, the monthly charge,
and the cost of any additional benefit riders, after the Primary Insured has
been totally disabled for six consecutive months and the claim for total dis-
ability has been approved. The cost of insurance for this rider is deducted
monthly from the policy value.
DISABILITY BENEFIT PAYMENT RIDER. This rider is available for ages 5 through
64. If the Covered Insured (Primary Insured or Other Insureds) under this
rider has been totally disabled for six consecutive months, and the claim for
total disability has been approved, a disability benefit amount will be paid
as a premium to the policy. The minimum benefit which can be selected is $50
per month. The maximum is two times the death benefit guarantee monthly premi-
um. The cost of insurance for this rider is deducted monthly from the policy
value.
CONVALESCENT CARE BENEFIT RIDER. This rider may be available in several forms
which differ by the amount and duration of benefit payments and also by the
conditions required to receive benefit payments. The rider is available for
the Primary Insured only and its availability may stipulate certain minimum or
maximum policy specified amounts. The rider provides benefit payments when the
health of the insured is such that covered convalescent care services are nec-
essary. The cost of insurance for this rider is deducted monthly from the pol-
icy value.
CONTINGENT OPTION RIDER. The Contingent Option Rider is a guaranteed insur-
ability rider that gives the owner the right to purchase an additional policy
without evidence of insurability upon the death of the designated person (the
Option Life). Available to issue ages 0 through 80. The cost of insurance for
this rider is based on the Contingent Option Amount and is deducted monthly
from the policy value.
RETIREMENT OPTION RIDER. The Retirement Option Rider is a guaranteed insur-
ability rider that gives the owner the right to purchase an additional policy
without evidence of insurability within 60 days after a specific date (the op-
tion date). The option date, determined at the issue of the rider, may be the
owner's anticipated retirement date or some other date after which additional
insurance may be needed. Available to issue ages 0 through 70. The cost of in-
surance for this rider is
17
<PAGE>
based on the retirement option amount and is deducted monthly from the policy
value.
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 ben-
efit
prior to death if the insured is diagnosed as having an illness which with rea-
sonable 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 subsequent accelerated benefit is also available to pay
premiums and interest charges required on the policy. The amount of all ad-
vanced accelerated benefits creates an interest-bearing lien against the death
benefit otherwise payable at death. There is no cost of insurance for this rid-
er, but an administrative expense charge is payable upon application for bene-
fits.
JOINT LIFE TERM RIDER FOR COVERED INSUREDS. This rider is available for issue
ages 20 to 80. This rider provides term insurance for two, three, or four indi-
viduals and pays the Joint Life Term death benefit upon the death of the first
to die of the Covered Insureds. The cost of insurance and monthly charges for
this rider are deducted monthly from the policy value.
LAST SURVIVOR TERM RIDER FOR COVERED INSUREDS. This rider is available for is-
sue ages 20 to 85 if the average of the ages does not exceed 80. This rider
provides term insurance for two, three, or four individuals and pays the Last
Survivor Term death benefit upon the death of the last to die of the Covered
Insureds. The cost of insurance and monthly charges for this rider are deducted
monthly from the policy value. The minimum issue amount is $25,000; the maximum
issue amount is equal to 19 times the specified amount of the policy.
LAST SURVIVOR CONTINGENT OPTION INSURABILITY RIDER AND LAST SURVIVOR RETIREMENT
OPTION INSURABILITY RIDER. These riders are only available if a Last Survivor
Term Rider for covered insureds is on the policy. The Last Survivor Contingent
Option Rider is a guaranteed insurability rider that gives the owner the right
to purchase an additional last survivor policy without evidence of insurability
upon the death of the designated person (the option life). The Last Survivor
Retirement Option Insurability Rider grants a similar benefit to be exercised
within 60 days of the option date. The option date is chosen at issue and can-
not be later than age 80 of the oldest insured. Available to issue ages 20
through 70 of the oldest insured. The cost of insurance for this rider is based
on the contingent option amount and is deducted monthly from the policy value.
The minimum issue amount is $100,000; the maximum issue amount is 5 times the
specified amount of the Last Survivor Term rider to which it is attached.
DISTRIBUTION OF THE POLICY
Lincoln Life intends to offer the policy in all jurisdictions where it is li-
censed to do business.
Lincoln Life and American Fund Distributors, Inc. (AFD) are the co-principal
underwriters for the policies. Both Lincoln Life and AFD are registered with
the Securities and Exchange Commission under the Securities Exchange Act of
1934 as broker-dealers and are members of the National Association of Securi-
ties Dealers (NASD). The principal business address of Lincoln Life is 1300
South Clinton Street, Fort Wayne, Ind. 46802. The principal business address of
AFD is 333 South Hope Street, Los Angeles, Calif. 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 in-
dependent 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 commission and service
fees up to 80% of the first year required premium (the Death Benefit Guarantee
Monthly Premium times 12), plus up to 3.0% of all other premiums paid, plus
.25% of accumulated policy values in the third policy year and each year there-
after. The local agency or broker-dealer receives additional compensation on
the first year required premium and all additional premiums, plus a small per-
centage of accumulated policy values. In some situations, the local agency or
broker-dealer may elect to share its commission with the registered representa-
tive. Selling representatives are also eligible for bonuses and non-cash com-
pensation if certain production levels are reached. All compensation is paid
from Lincoln Life's resources, which include sales charges made under the poli-
cy.
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 in-
tended to be taken as tax advice.
Consult a qualified tax advisor for more complete information. This discussion
is based upon Lincoln Life's understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service. No rep-
resentation is made as to the likelihood 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.
18
<PAGE>
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 the
policies with section 7702. Guidance as to how these modified requirements are
to be applied is extremely limited. If a policy was 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 insurance poli-
cy.
With respect to a policy (other than a policy in respect of a smoker) issued
on the basis of a standard rate class or a rate class involving a lower mor-
tality risk (i.e., preferred basis), while there is some uncertainty due to
the lack of regulations and the limited guidance on the modified section 7702
requirements, Lincoln Life nonetheless believes that such a policy should meet
the section 7702 definition of a life insurance contract. With respect to a
policy issued on a substandard basis (i.e., a rate class involving higher than
standard mortality risk), a policy in respect of a smoker issued on a standard
rate class or a rate class with a lower mortality risk, or a policy which has
a last survivor of multiple insureds or first to die of multiple insureds fea-
ture, there is even less guidance in particular as to how the modified re-
quirements 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, particularly if the
owner pays the full amount of premiums permitted under the policy. 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 premiums refunded as required by law). For
these reasons, Lincoln Life reserves the right to modify the policy as neces-
sary to qualify it as a life insurance contract under section 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 policyowners 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.
A change in a policy's specified amount, a change in death benefit option, the
payment of premiums, the addition of additional insurance, a policy loan, a
partial withdrawal, a lapse with outstanding indebtedness, exchange of a poli-
cy, 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. General-
ly, 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 distri-
bution. The tax consequences of distributions from, and loans taken from or
secured by, a policy depend on whether the policy is classified as a "Modified
Endowment Contract" under section 7702A.
19
<PAGE>
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. In addition, if a policy is "materi-
ally 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 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 pre-
miums 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 Modified Endowment Contract status will be sent to the own-
er. The letter of notification will include the available options, if any, for
remedying the Modified 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 distributions upon surren-
der and benefits paid at maturity, from such a policy are treated as ordinary
income subject 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 pol-
icy 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% additional income tax is imposed on the portion of any distribution from,
or loan taken from or secured by, such a policy that is included in income ex-
cept 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 se-
ries of substantially equal periodic payments for the life of the owner or the
joint lives of the owner and the owner's beneficiary. Fourth, the Cost of In-
surance for certain riders which are not "qualified additional benefits" such
as the Convalescent Care Rider may be treated as distributions from such a
policy and taxed accordingly.
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, a change in
death benefits from Type 2 to Type 1, or any other change that reduces bene-
fits 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 limits. In that case,
such distribution will be taxed in whole or in part as ordinary 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, or when benefits are paid at such a policy's maturity date, if
the amount received plus the amount of indebtedness exceeds the total invest-
ment in the policy, the excess will generally be treated as ordinary income
subject to tax.
Finally, neither distributions (including distributions upon surrender or
lapse) nor loans from, or secured by, a policy that is not a Modified Endow-
ment 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. In addition, interest on
any loan under a policy owned by a taxpayer and covering the life of any indi-
vidual who is an officer of or is financially interested in the business car-
ried on by that taxpayer will not be tax deductible to the extent the aggre-
gate amount of such loans with respect to contracts covering such individual
exceeds $50,000. No amount of policy loan interest is, however, deductible if
the policy was deemed for federal tax purposes to be a single premium life in-
surance contract. For interest paid or accrued after October 13, 1996, addi-
tional rules apply which may reduce or eliminate any interest deduction. The
owner should consult a competent tax advisor concerning the rules and limita-
tions.
20
<PAGE>
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 Endow-
ment 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 CONVALESCENT CARE BENEFIT RIDER AND ACCELERATED BENEFIT ELEC-
TION RIDER. Lincoln Life believes that any benefits paid under the Accelerated
Benefit Election Rider generally will be excludable from the recipient's in-
come. It is unclear whether Convalescent Care Benefit Riders issued prior to
January 1, 1997, constitute qualified long-term care insurance contracts under
the Code. If a rider is qualified, long-term care benefits generally will be
excludable from income. (Benefits received may be includable in income, howev-
er, if other long-term care insurance contracts or riders cover the insured.)
If a rider is not qualified, benefits may be includable in income. In addi-
tion, Convalescent Care Benefit Riders issued after December 31, 1996, do not
constitute qualified long-term care insurance contracts under the Code. Thus,
benefits received from such riders may be includable in 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, Lincoln Life determines that it may incur such taxes, it
may assess a charge for those taxes from the Separate Account.
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 inter-
pretation 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 policyowner 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 policyowner has the right to instruct will be determined as of
the date coincident with the date established by the various series for deter-
mining shareholders eligible to vote at the meetings of the funds. Voting in-
structions 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 propor-
tion to the voting instructions which are received with respect to all Poli-
cies participating in that fund. Each person having a voting interest will re-
ceive 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-
classification or investment objective of any of the funds 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 policyowner 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 semi-
annual report to policyowners.
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 In-
diana. An annual statement is filed with the Indiana Department of Insurance
(Department) on or before March 1st of each year covering the operations and
reporting on the financial condition of Lincoln Life as of December 31 of the
preceding year. Periodically, the Department examines the liabilities and re-
serves of Lincoln Life and the Separate Account and certifies their adequacy,
and a full
21
<PAGE>
examination of Lincoln Life's operations is conducted 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 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 Ac-
count 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 Co. of Maryland cov-
ers 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
There are no material legal or administrative proceedings pending or known to
be contemplated, other than ordinary routine litigation incidental to the
business, to which Lincoln Life or the Separate Account are party, or to which
any of their property is subject. The co-principal underwriter, AFD, is not
engaged in any material litigation of any nature.
EXPERTS
The financial statements of the Separate Account and consolidated financial
statements and schedules of Lincoln Life appearing in this prospectus and reg-
istration statement have been audited by Ernst & Young LLP, independent audi-
tors, to the extent indicated in their reports thereon also appearing else-
where herein and in the registration statement. Such financial statements and
schedules have been included herein in reliance upon such reports given upon
the authority of such firm 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 registra-
tion 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
policy offered hereby. This prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
Registration Statement, to all of which reference is made for further informa-
tion concerning the Separate Account, Lincoln Life and the policy offered
hereby. Statements contained in this prospectus as to the contents of the pol-
icy and other legal instruments are summaries. For a complete statement of the
terms thereof reference is made to such instruments as filed.
22
<PAGE>
APPENDIX A
<TABLE>
<S> <C> <C>
Prf NS = Preferred nonsmoker
Std NS = Standard nonsmoker
Prf SM = Preferred smoker
Std SM = Standard smoker
</TABLE>
Base minimum premiums Per $1,000 of specified amount*
Male (or unisex), age on policy date
<TABLE>
<CAPTION>
Age Prf NS Std NS Prf SM Std SM Age Prf NS Std NS Prf SM Std SM
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 ** 3.62 ** **
- ---------------------------------------------------------------------------------
1 2.12 41 8.33 8.81 11.82 12.18
2 2.12 42 8.80 9.28 12.88 13.24
3 2.12 43 9.17 9.77 13.81 14.29
4 2.12 44 9.69 10.29 15.17 15.53
5 2.12 45 10.12 10.84 16.46 16.94
- ---------------------------------------------------------------------------------
6 2.12 46 10.59 11.43 17.58 18.18
7 2.12 47 11.34 12.18 18.69 19.41
8 2.13 48 11.98 13.06 20.10 20.82
9 2.21 49 12.86 13.94 21.52 22.24
10 2.31 50 13.80 15.00 22.98 23.82
- ---------------------------------------------------------------------------------
11 2.41 51 14.92 16.24 24.75 25.59
12 2.65 52 16.0 17.47 26.57 27.53
13 3.00 53 17.27 18.71 28.74 29.82
14 3.18 54 18.73 20.29 31.04 32.12
15 3.35 55 20.26 22.06 33.39 34.59
- ---------------------------------------------------------------------------------
16 3.59 3.71 4.29 4.41 56 21.90 23.82 35.66 36.98
17 3.94 4.06 4.64 4.76 57 23.72 25.76 36.62 38.06
18 4.12 4.24 4.82 4.94 58 25.72 27.88 37.59 39.15
19 4.12 4.24 4.82 4.94 59 27.78 30.18 38.68 40.36
20 4.12 4.24 5.00 5.12 60 30.13 32.65 39.90 41.70
- ---------------------------------------------------------------------------------
21 4.12 4.24 5.05 5.29 61 32.83 35.47 41.25 43.17
22 4.12 4.24 5.05 5.29 62 34.55 37.43 42.79 44.83
23 4.12 4.24 5.23 5.47 63 35.58 38.70 44.46 46.74
24 4.12 4.24 5.41 5.65 64 36.80 40.04 46.01 48.65
25 4.12 4.24 5.41 5.65 65 38.03 41.51 47.93 50.57
- ---------------------------------------------------------------------------------
26 4.17 4.29 5.41 5.65 66 38.73 42.39 51.20 52.47
27 4.36 4.48 5.41 5.65 67 39.58 43.30 53.53 54.93
28 4.57 4.69 5.41 5.65 68 41.17 45.11 55.99 57.52
29 4.78 4.90 5.60 5.84 69 43.28 47.35 58.82 60.26
30 5.01 5.13 5.94 6.18 70 45.66 49.78 61.93 63.21
- ---------------------------------------------------------------------------------
31 5.26 5.38 6.18 6.42 71 48.30 52.46 65.39 66.41
32 5.52 5.64 6.50 6.74 72 51.55 55.63 69.24 70.09
33 5.80 5.92 6.84 7.08 73 55.35 59.42 73.74 74.33
34 6.09 6.21 7.20 7.44 74 59.69 63.68 78.52 78.90
35 6.40 6.52 7.58 7.82 75 64.41 68.23 83.30 83.55
- ---------------------------------------------------------------------------------
36 6.73 6.85 7.99 8.23 76 69.46 72.85 87.78 88.03
37 7.08 7.20 8.42 8.66 77 74.84 77.72 92.28 92.54
38 7.21 7.57 9.11 9.35 78 80.70 82.95 96.81 97.06
39 7.60 7.96 9.88 10.24 79 87.32 88.72 101.48 101.74
40 8.02 8.38 10.76 11.12 80 94.43 95.11 106.44 106.69
- ---------------------------------------------------------------------------------
</TABLE>
* To determine the death benefit guarantee monthly premium, multiply the speci-
fied amount divided by 1000 times the number shown for the age and classifica-
tion of the insured, then add $100 per policy and divide the result by 12. Ad-
ditional amounts are required for riders and/or substandards.
** This classification is not available below the age of 16.
23
<PAGE>
APPENDIX A CONTINUED
Prf NS
= Preferred
Base minimum premiums Per $1,000 of specified amount* nonsmoker
Std NS
= Standard
nonsmoker
Prf SM
= Preferred smoker
Female, age on policy date Std SM
= Standard smoker
<TABLE>
<CAPTION>
Age Prf NS Std NS Prf SM Std SM Age Prf NS Std NS Prf SM Std SM
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 ** 2.98 ** **
- ---------------------------------------------------------------------------------
1 1.76 41 7.06 7.42 9.29 9.53
2 1.76 42 7.43 7.79 9.88 10.24
3 1.76 43 7.70 8.18 10.58 10.94
4 1.76 44 7.99 8.59 11.64 12.00
5 1.76 45 8.42 9.02 12.70 13.06
- ---------------------------------------------------------------------------------
6 1.76 46 8.76 9.48 13.46 13.94
7 1.76 47 9.24 9.96 14.34 14.82
8 1.76 48 9.63 10.47 15.28 15.88
9 1.83 49 10.06 11.02 16.52 17.12
10 1.90 50 10.69 11.65 17.75 18.35
- ---------------------------------------------------------------------------------
11 1.98 51 11.57 12.53 19.04 19.76
12 2.12 52 12.33 13.41 20.46 21.18
13 2.15 53 13.21 14.29 21.75 22.59
14 2.24 54 14.15 15.35 23.16 24.00
15 2.33 55 14.92 16.24 24.57 25.41
- ---------------------------------------------------------------------------------
16 2.30 2.42 2.76 2.88 56 15.62 16.94 25.69 26.65
17 2.40 2.52 2.88 3.00 57 16.38 17.82 26.92 27.88
18 2.51 2.63 3.06 3.18 58 17.15 18.71 28.04 29.12
19 2.62 2.74 3.13 3.25 59 18.03 19.59 29.27 30.35
20 2.73 2.85 3.28 3.40 60 19.26 20.82 31.04 32.12
- ---------------------------------------------------------------------------------
21 2.85 2.97 3.43 3.55 61 20.73 22.41 33.21 34.41
22 2.98 3.10 3.58 3.70 62 22.73 24.53 35.60 36.92
23 3.12 3.24 3.74 3.86 63 25.08 27.00 36.75 38.19
24 3.25 3.37 3.92 4.04 64 27.61 29.65 37.97 39.53
25 3.41 3.53 4.10 4.22 65 30.19 32.47 39.19 40.87
- ---------------------------------------------------------------------------------
26 3.56 3.68 4.29 4.41 66 32.23 34.59 39.74 41.52
27 3.73 3.85 4.49 4.61 67 33.48 35.93 40.14 42.12
28 3.90 4.02 4.71 4.83 68 33.83 36.35 41.44 42.92
29 4.09 4.21 4.93 5.05 69 34.44 36.92 43.19 44.63
30 4.28 4.40 5.17 5.29 70 35.49 38.12 45.32 46.67
- ---------------------------------------------------------------------------------
31 4.37 4.61 5.42 5.54 71 37.48 40.19 47.97 49.20
32 4.59 4.83 5.69 5.81 72 39.99 42.75 51.10 52.29
33 4.82 5.06 5.97 6.09 73 43.05 45.85 54.79 55.89
34 5.06 5.30 6.27 6.39 74 46.75 49.51 59.11 60.04
35 5.32 5.56 6.58 6.70 75 50.82 53.53 63.83 64.47
- ---------------------------------------------------------------------------------
36 5.59 5.83 6.79 7.03 76 55.39 57.93 68.68 69.06
37 5.76 6.12 7.14 7.38 77 60.51 62.76 73.61 73.86
38 6.06 6.42 7.50 7.74 78 66.49 68.31 79.00 79.26
39 6.38 6.74 7.88 8.12 79 73.50 74.73 84.97 85.22
40 6.71 7.07 8.58 8.82 80 81.21 81.89 91.60 91.86
- ---------------------------------------------------------------------------------
</TABLE>
* To determine the death benefit guarantee monthly premium, multiply the speci-
fied amount divided by 1000 times the number shown for the age and classifica-
tion of the insured, then add $100 per policy and divide the result by 12. Ad-
ditional amounts are required for riders and/or substandards.
** This classification is not available below the age of 16.
24
<PAGE>
APPENDIX B
Prf NS
= Preferred
Surrender charges Per $1,000 of specified amount* nonsmoker
Std NS
= Standard
nonsmoker
Prf SM
= Preferred smoker
Male (or unisex), age on policy date Std SM
= Standard smoker
<TABLE>
<CAPTION>
Age Prf NS Std NS Prf SM Std SM Age Prf NS Std NS Prf SM Std SM
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 ** 3.52 ** **
- ---------------------------------------------------------------------------------
1 2.79 41 10.98 11.62 15.60 16.06
2 2.79 42 11.59 12.23 16.98 17.47
3 2.79 43 12.10 12.89 18.22 18.85
4 2.79 44 12.78 13.57 20.02 20.48
5 2.79 45 13.35 14.30 21.71 22.35
- ---------------------------------------------------------------------------------
6 2.79 46 13.97 15.09 23.19 23.98
7 2.79 47 14.96 16.06 24.66 25.61
8 2.79 48 15.80 17.23 26.53 27.48
9 2.90 49 16.96 18.39 28.40 29.35
10 3.04 50 18.22 19.80 30.34 31.44
- ---------------------------------------------------------------------------------
11 3.17 51 19.69 21.43 32.65 33.77
12 3.48 52 21.14 23.06 35.07 36.32
13 3.96 53 22.79 24.68 37.93 39.36
14 4.18 54 24.73 26.77 40.96 42.39
15 4.42 55 26.73 29.11 44.07 45.65
- ---------------------------------------------------------------------------------
16 4.73 4.88 5.65 5.81 56 28.91 31.44 47.06 48.40
17 5.19 5.35 6.12 6.27 57 31.31 33.99 48.33 48.40
18 5.43 5.59 6.36 6.51 58 33.95 36.81 48.40 48.40
19 5.43 5.59 6.36 6.51 59 36.65 39.82 48.40 48.40
20 5.43 5.59 6.58 6.75 60 39.75 43.08 48.40 48.40
- ---------------------------------------------------------------------------------
21 5.43 5.59 6.67 6.97 61 43.32 46.82 48.40 48.40
22 5.43 5.59 6.67 6.97 62 45.58 48.40 48.40 48.40
23 5.43 5.59 6.89 7.22 63 46.97 48.40 48.40 48.40
24 5.43 5.59 7.13 7.44 64 48.40 48.40 48.40 48.40
25 5.43 5.59 7.13 7.44 65 48.40 48.40 48.40 48.40
- ---------------------------------------------------------------------------------
26 5.50 5.65 7.13 7.44 66 48.40 48.40 48.40 48.40
27 5.74 5.92 7.13 7.44 67 48.40 48.40 48.40 48.40
28 6.03 6.18 7.13 7.44 68 48.12 48.12 48.40 48.40
29 6.31 6.47 7.37 7.70 69 47.85 47.85 48.35 48.35
30 6.60 6.78 7.83 8.14 70 47.62 47.62 48.28 48.28
- ---------------------------------------------------------------------------------
31 6.93 7.08 8.14 8.47 71 47.42 47.42 48.21 48.21
32 7.28 7.44 8.56 8.89 72 47.24 47.24 48.18 48.18
33 7.66 7.81 9.02 9.33 73 47.06 47.06 48.17 48.17
34 8.03 8.18 9.50 9.81 74 46.79 46.79 48.14 48.14
35 8.45 8.60 9.99 10.32 75 46.44 46.44 47.85 47.85
- ---------------------------------------------------------------------------------
36 8.87 9.04 10.54 10.85 76 46.06 46.06 46.81 46.81
37 9.35 9.50 11.11 11.42 77 45.38 45.38 45.65 45.65
38 9.50 9.99 12.01 12.34 78 44.08 44.08 44.37 44.37
39 10.03 10.49 13.02 13.51 79 42.67 42.67 42.96 42.96
40 10.58 11.04 14.19 14.67 80 41.12 41.12 41.41 41.41
- ---------------------------------------------------------------------------------
</TABLE>
* For requested increases in the specified amount, the applicable surrender
charge will be two-thirds that of the corresponding surrender charge listed
above.
** This classification is not available below the age of 16.
25
<PAGE>
APPENDIX B CONTINUED
Prf NS
= Preferred
Surrender charges Per $1,000 of specified amount* nonsmoker
Std NS
= Standard
nonsmoker
Prf SM
= Preferred smoker
Female, age on policy date Std SM
= Standard smoker
<TABLE>
<CAPTION>
Age Prf NS Std NS Prf SM Std SM Age Prf NS Std NS Prf SM Std SM
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 ** 2.90 ** **
- ---------------------------------------------------------------------------------
1 2.31 41 9.31 9.79 12.25 12.56
2 2.31 42 9.79 10.27 13.02 13.51
3 2.31 43 10.14 10.78 13.95 14.43
4 2.31 44 10.54 11.33 15.36 15.84
5 2.31 45 11.11 11.90 16.76 17.23
- ---------------------------------------------------------------------------------
6 2.31 46 11.55 12.50 17.75 18.39
7 2.31 47 12.19 13.13 18.92 19.56
8 2.31 48 12.72 13.82 20.17 20.97
9 2.40 49 13.27 14.54 21.80 22.59
10 2.51 50 14.10 15.36 23.43 24.22
- ---------------------------------------------------------------------------------
11 2.62 51 15.27 16.52 25.12 26.07
12 2.79 52 16.28 17.69 26.99 27.94
13 2.82 53 17.42 18.85 28.69 29.81
14 2.95 54 18.68 20.26 30.56 31.68
15 3.06 55 19.69 21.43 32.43 33.53
- ---------------------------------------------------------------------------------
16 3.04 3.19 3.63 3.78 56 20.61 22.35 33.90 35.16
17 3.17 3.32 3.78 3.96 57 21.63 23.52 35.53 36.81
18 3.30 3.45 4.03 4.18 58 22.62 24.68 37.00 38.43
19 3.45 3.61 4.14 4.29 59 23.78 25.85 38.63 40.06
20 3.61 3.76 4.31 4.47 60 25.41 27.48 40.96 42.39
- ---------------------------------------------------------------------------------
21 3.76 3.92 4.51 4.66 61 27.37 29.57 43.82 45.41
22 3.92 4.09 4.71 4.88 62 29.99 32.36 46.97 48.40
23 4.11 4.27 4.93 5.08 63 33.09 35.64 48.40 48.40
24 4.29 4.44 5.17 5.32 64 36.43 39.12 48.40 48.40
25 4.49 4.64 5.39 5.57 65 39.84 42.86 48.40 48.40
- ---------------------------------------------------------------------------------
26 4.69 4.86 5.65 5.81 66 43.19 46.35 48.40 48.40
27 4.91 5.08 5.92 6.07 67 45.56 48.40 48.40 48.40
28 5.15 5.30 6.20 6.36 68 46.75 48.40 48.40 48.40
29 5.39 5.54 6.51 6.67 69 48.17 48.17 48.31 48.31
30 5.65 5.81 6.82 6.97 70 47.78 47.78 47.97 47.97
- ---------------------------------------------------------------------------------
31 5.76 6.07 7.15 7.30 71 47.41 47.41 47.67 47.67
32 6.05 6.36 7.50 7.66 72 46.96 46.96 47.41 47.41
33 6.36 6.67 7.88 8.03 73 46.38 46.38 47.11 47.11
34 6.67 7.00 8.27 8.43 74 45.76 45.76 46.71 46.71
35 7.02 7.33 8.69 8.84 75 45.13 45.13 46.22 46.22
- ---------------------------------------------------------------------------------
36 7.37 7.70 8.95 9.26 76 44.54 44.54 45.73 45.73
37 7.59 8.07 9.42 9.72 77 43.99 43.99 45.30 45.30
38 7.99 8.47 9.90 10.21 78 43.48 43.48 44.06 44.06
39 8.40 8.89 10.41 10.71 79 42.51 42.51 42.65 42.65
40 8.84 9.33 11.33 11.64 80 40.94 40.94 41.07 41.07
- ---------------------------------------------------------------------------------
</TABLE>
* For requested increases in the specified amount, the applicable surrender
charge will be two-thirds that of the corresponding surrender charge listed
above.
** This classification is not available below the age of 16.
26
<PAGE>
APPENDIX C
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and
position(s)
with registrant Principal occupations last five years
- -----------------------------------------------------------------------------------------------------
<S> <C>
NANCY J. ALFORD Vice President, (formerly Lincoln National Life Insurance Company
Vice President Second Vice President), Lincoln National Life Insurance Co.
- -----------------------------------------------------------------------------------------------------
TIMOTHY J. ALFORD Senior Vice President (formerly Vice President and Second Vice President),
Senior Vice President Lincoln National Life Insurance Co.
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- -----------------------------------------------------------------------------------------------------
Vice President (formerly Second Vice President), Lincoln National Life
NEAL E. ARNOLD Insurance Co.
Vice President
- -----------------------------------------------------------------------------------------------------
Vice President and Deputy General Counsel (formerly Associate General
CARL L. BAKER Counsel);
Vice President and Lincoln National Life Insurance Co.
Deputy General Counsel
- -----------------------------------------------------------------------------------------------------
ROLAND C. BAKER President, First Penn-Pacific Life Insurance Co. Formerly: Chairman and CEO,
Vice President Baker, Ralish, Shipley & Politzer, Inc.
1801 S. Meyers Road
Oakbrook Terrace, Ill.
60181
- -----------------------------------------------------------------------------------------------------
DAVID N. BECKER Vice President, Lincoln National Life Insurance Co.
Vice President,
Appointed Actuary and
Valuation Actuary
- -----------------------------------------------------------------------------------------------------
JOANN E. BECKER Vice President, Lincoln National Life Insurance Co. and Lincoln-Investment
Vice President Management, Inc. Formerly, President, The Richard Leahy Corp. and President,
200 East Berry Street LNC Equity Sales Corp.
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------
JOHN M. BEHRENDT Vice President, Lincoln National Life Insurance Co. and Lincoln Financial
Vice President Group, Inc. Formerly: President, LNC Equity Sales Corp.
- -----------------------------------------------------------------------------------------------------
JON A. BOSCIA President, Director and Chief Executive Officer (formerly Chief Operating
Officer)
President, Director and Lincoln National Life Insurance Co. Formerly: President; Executive Vice
President,
Chief Executive Officer Lincoln Investment Management, Inc.
- -----------------------------------------------------------------------------------------------------
Vice President (formerly Second Vice President), Lincoln National Life
CAROLYN P. BRODY Insurance Co.
Vice President
- -----------------------------------------------------------------------------------------------------
Senior Vice President (formerly Executive Vice President), Lincoln
STEVEN R. BRODY Investment
Vice President Management, Inc.
200 East Berry Street
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------
Vice President, Lincoln National Life Insurance Co.; President, LNC Equity
PRISCILLA S. BROWN Sales
Vice President Corp. (Formerly Vice President, Lincoln Investment Management, Inc.)
- -----------------------------------------------------------------------------------------------------
HAROLD B. CARSTENSEN, Vice President, Lincoln National Life Insurance Co. Formerly: Software
JR.
Vice President Director, Magnavox Electronic Systems Co.
- -----------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
APPENDIX C CONTINUED
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and
position(s)
with registrant Principal occupations last five years
- ----------------------------------------------------------------------------------------------------
<S> <C>
DONALD C. CHAMBERS, M.D. Senior Vice President and Chief Medical Director (formerly Vice President
Senior Vice President and Chief Medical Director), Lincoln National Life Insurance Co.
and
Chief Medical Director
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ----------------------------------------------------------------------------------------------------
THOMAS L. CLAGG Vice President and Associate General Counsel, Lincoln National Life
Vice President and Insurance Co.
Associate General
Counsel
- ----------------------------------------------------------------------------------------------------
KENNETH J. CLARK Senior Vice President, Lincoln National Life Insurance Co.
Senior Vice President
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ----------------------------------------------------------------------------------------------------
KELLY D. CLEVENGER Vice President, Lincoln National Life Insurance Co.
Vice President
- ----------------------------------------------------------------------------------------------------
MARTHA O. D'AMBROSIO Vice President and General Auditor, Lincoln National Corp. and Lincoln
Vice President and National Life Insurance Co. Formerly: Senior Manager, KPMG Peat Marwick.
General
Auditor
- ----------------------------------------------------------------------------------------------------
JEFFREY K. DELLINGER Vice President (formerly Second Vice President), Lincoln National Life
Vice President Insurance Co.
- ----------------------------------------------------------------------------------------------------
ARTHUR W. DETORE, M.D. Vice President (formerly Second Vice President), Lincoln National Life
Vice President Insurance Co. Formerly: Vice President, Lincoln National Risk Management,
Inc.
- ----------------------------------------------------------------------------------------------------
C. LAWRENCE EDRIS Vice President (formerly Senior Vice President), Lincoln National Life
Vice President Insurance Co.
- ----------------------------------------------------------------------------------------------------
THOMAS W. FITCH Vice President, First Penn-Pacific Life Insurance Co. and Senior Vice
Senior Vice President President (formerly Vice President), Lincoln National Life Insurance Co.
1801 S. Meyers Road
Oakbrook Terrace, Ill.
60181
- ----------------------------------------------------------------------------------------------------
ELIZABETH A. FREDERICK Vice President (formerly Second Vice President) and Associate General
Vice President and Counsel, Lincoln National Life Insurance Co.
Associate General
Counsel
- ----------------------------------------------------------------------------------------------------
LUCY D. GASE Vice President and Assistant Secretary (formerly Second Vice President;
Vice President and Assistant Vice President), Lincoln National Life Insurance Co.
Assistant Secretary
- ----------------------------------------------------------------------------------------------------
MELANIE T. HALL Vice President (formerly Second Vice President; Assistant Vice President),
Vice President Lincoln National Life Insurance Co.
- ----------------------------------------------------------------------------------------------------
PHILLIP A. HARTMAN Vice President, Lincoln National Life Insurance Co. and Lincoln Financial
Vice President Group, Inc.
- ----------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
APPENDIX C CONTINUED
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and
position(s)
with registrant Principal occupations last five years
- ----------------------------------------------------------------------------------------------------
<S> <C>
J. MICHAEL HEMP Senior Vice President, Lincoln National Life Insurance Co. Formerly:
Senior Vice President Regional Chief Executive Officer, Lincoln Dallas RMO
- ----------------------------------------------------------------------------------------------------
MATTHEW P. HENDERSON Vice President, Lincoln National Life Insurance Co. (formerly Vice
Vice President President, Second Vice President), Lincoln National Corp.
- ----------------------------------------------------------------------------------------------------
DAVID A. HOPPER Senior Vice President (formerly Vice President) Lincoln National Life
Senior Vice President Insurance Co.
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ----------------------------------------------------------------------------------------------------
JACK D. HUNTER Executive Vice President and General Counsel, Lincoln National Corp. and The
Executive Vice Lincoln National Life Insurance Co.
President,
General Counsel and
Director
200 East Berry Street
Fort Wayne, Ind. 46802
- ----------------------------------------------------------------------------------------------------
DONALD E. KELLER Vice President (formerly Second Vice President), Lincoln National Life
Vice President Insurance Co.
- ----------------------------------------------------------------------------------------------------
LAWRENCE T. KISSKO Vice President (formerly Senior Vice President) Lincoln Investment
Vice President Management Co.
200 East Berry Street
Fort Wayne, Ind. 46802
- ----------------------------------------------------------------------------------------------------
STEPHEN H. LEWIS Senior Vice President, Lincoln National Life Insurance Co. Formerly:
Senior Vice President President, First Penn-Pacific Life Insurance Co.
- ----------------------------------------------------------------------------------------------------
H. THOMAS MCMEEKIN President (formerly Executive Vice President, Senior Vice President),
Director Lincoln National Investment Management Co.; Executive Vice President
200 East Berry Street (formerly Senior Vice President), Lincoln National Corp.
Fort Wayne, Ind. 46802
- ----------------------------------------------------------------------------------------------------
REED P. MILLER Vice President (formerly Senior Vice President), Lincoln National Life
Vice President Insurance Co. Formerly: Senior Vice President; Vice President, Lincoln
National Corp.
- ----------------------------------------------------------------------------------------------------
OLIVER H. G. NICHOLS Vice President, Lincoln Investment Management Co. Formerly: Vice President,
Vice President Aetna, Life & Casualty Co.
200 East Berry Street
Fort Wayne, Ind. 46802
- ----------------------------------------------------------------------------------------------------
DAVID M. ONGMAN Vice President, Lincoln National Life Insurance Co. Formerly: Consultant,
Vice President Computer Horizon Group; Vice President, The Associated Group; Consulting
Center Manager, James Martin & Co.
- ----------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
APPENDIX C CONTINUED
Executive officers and directors
Lincoln National Life Insurance Co.
<TABLE>
<CAPTION>
Name, address and
position(s)
with registrant Principal occupations last five years
- ------------------------------------------------------------------------------------------------------
<S> <C>
ARTHUR L. PAGE Vice President, Lincoln National Life Insurance Co.
Vice President
- ------------------------------------------------------------------------------------------------------
RAYMOND L. PROSSER Vice President and Associate General Counsel, Lincoln National Life
Insurance Co.
Vice President and (formerly Second Vice President and Director of Claims), Lincoln National
Life
Associate General
Counsel Insurance Co.; Associate General Counsel, Lincoln National Corp. and Lincoln
One Reinsurance Place National Life Insurance Co.
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ------------------------------------------------------------------------------------------------------
STEPHEN E. RAHN Vice President (formerly Second Vice President), Lincoln National Life
Insurance Co.
Vice President
- ------------------------------------------------------------------------------------------------------
IAN M. ROLLAND Chairman, President and Chief Executive Officer, Lincoln
National Corp. (formerly Chairman and Chief Executive Officer, President),
Director Lincoln
200 East Berry Street National Life Insurance Co.
Fort Wayne, Ind. 46802
- ------------------------------------------------------------------------------------------------------
ARTHUR S. ROSS Vice President, Lincoln National Life Insurance Co. and Lincoln Financial
Group Inc.
Vice President
- ------------------------------------------------------------------------------------------------------
LAWRENCE T. ROWLAND Executive Vice President (formerly Senior Vice President and Vice
President),
Executive Vice President Lincoln National Life Insurance Co.
and Director
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ------------------------------------------------------------------------------------------------------
KEITH J. RYAN Vice President, Chief Financial Officer and Assistant Treasurer (formerly
Controller,
Vice President, Chief Business Controls Director), Lincoln National Life Insurance Co.
Financial Officer and
Assistant Treasurer
- ------------------------------------------------------------------------------------------------------
CASEY J. TRUMBLE Vice President, Lincoln National Corp. Formerly: tax partner, KPMG Peat
Marwick.
Vice President
200 East Berry Street
Fort Wayne, Ind. 46802
- ------------------------------------------------------------------------------------------------------
WILLIAM K. TYLER Senior Vice President, Lincoln National Life Insurance Co.
Senior Vice President
and
Assistant Treasurer
One Reinsurance Place
1700 Magnavox Way
Fort Wayne, Ind. 46804
- ------------------------------------------------------------------------------------------------------
RICHARD C. VAUGHAN Executive Vice President (formerly Senior Vice President) and Chief
200 East Berry Street Financial Officer, Lincoln National Corp.
Fort Wayne, Ind. 46802
Director
- ------------------------------------------------------------------------------------------------------
MICHAEL R. WALKER Vice President, Lincoln National Life Insurance Co. Formerly: Vice
President,
Vice President Employers Health Insurance Co; Vice President/HR, Baker Hughes, Inc.
- ------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
APPENDIX C CONTINUED
Executive officers and directors
Lincoln National Life Insurance Co.
Name,
address and
position(s)
with
registrant Principal occupations last five years
- --------------------------------------------------
<TABLE>
<S> <C>
ROY V. WASHINGTON Vice Vice President, (formerly, Associate Counsel) Lincoln National Life
President Insurance Co.; Formerly: Director of Compliance, Lincoln Investment
Management, Inc.; Compliance Consultant, Lincoln National Corp.).
- -----------------------------------------------------------------------------------------------------
JANET C. WHITNEY Vice President and Treasurer, Lincoln National Life Insurance Co. (formerly
Vice
Vice President and President and General Auditor), Lincoln National Corp. and Lincoln National
Treasurer Life
200 East Berry Street Insurance Co.
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------
C. SUZANNE WOMACK Secretary and Assistant Vice President, Lincoln National Corp. and Lincoln
National
Secretary and Life Insurance Co.
Assistant Vice President
200 East Berry Street
Fort Wayne, Ind. 46802
- -----------------------------------------------------------------------------------------------------
O. DOUGLAS WORTHINGTON Vice President, Controller and Assistant Vice President, Controller
Treasurer, Lincoln
National Life Insurance and Assistant Treasurer Co. (formerly Vice
Vice President President),
Lincoln National Investment Management Co.
- -----------------------------------------------------------------------------------------------------
MICHAEL L. WRIGHT Senior Vice President, Lincoln National Life Insurance Co.
Senior Vice President Formerly: Executive Vice President & COO; The Associated Group.
- -----------------------------------------------------------------------------------------------------
KATHERINE K. WYSS Vice President (formerly Second Vice President), Lincoln National Life
Insurance Co.
Vice President
- -----------------------------------------------------------------------------------------------------
</TABLE>
* The principal business address of each person listed, unless otherwise indi-
cated, is 1300 South Clinton Street, P.O. Box 1110, Fort Wayne, Ind. 46801.
31
<PAGE>
APPENDIX D
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 Type 1 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
different policyowner underwriting assumptions were used or if the returns av-
eraged 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 percent of premium
charge is deducted, the current cost of insurance charges are deducted, and the
current mortality and expense risk charge is deducted. Although the contract
allows for a maximum percent of premium charge, maximum cost of insurance
charges specified in the l980 Commissioners Standard Ordinary Smoker and
Nonsmoker tables, and a maximum mortality and expense risk charge of .90%, Lin-
coln Life expects that it will continue to charge the current percent of pre-
mium charge, the current cost of insurance charges, and the current mortality
and expense risk charge for the indefinite future. The figures shown on pages
using guaranteed maximum charges show the death benefits and net cash surrender
values which would result if the guaranteed maximum percent of premium charge,
the guaranteed maximum cost of insurance charges, and the guaranteed maximum
mortality and expense risk charge were deducted. However, these are primarily
of interest only to show by comparison the benefits of the lower current
charges.
In each of the illustrations, an assumed gross investment result is
indicated.The gross investment results used in the illustrations are reduced by
the asset management charge (current average .51%), the mortality and expense
risk charge (.81% current and .90% guaranteed), and other expenses incurred by
the funds including printing, mailing, Directors' fees, etc. (current average
.03%).
32
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 35Standard nonsmoker $100,000 specified amount $1,325 annual
premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical Assuming hypothetical
Premiums gross annual investment gross annual investment gross annual investment
End accumulated return of return of return of
of at 5% --------------------------- --------------------------- ---------------------------
policy interest 0% gross 0% gross
year per year 0% gross 6% gross 12% gross 6% gross 12% gross 6% gross 12% gross
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,391 $100,000 $100,000 $100,000 $ 974 $ 1,040 $ 1,106 $ 114 $ 180 $ 246
2 2,852 100,000 100,000 100,000 1,929 2,121 2,321 1,069 1,261 1,461
3 4,386 100,000 100,000 100,000 2,860 3,241 3,654 2,000 2,381 2,794
4 5,996 100,000 100,000 100,000 3,768 4,401 5,115 2,908 3,541 4,255
5 7,688 100,000 100,000 100,000 4,653 5,605 6,721 3,793 4,745 5,861
- -------------------------------------------------------------------------------------------------------
6 9,463 100,000 100,000 100,000 5,513 6,850 8,483 4,868 6,205 7,838
7 11,328 100,000 100,000 100,000 6,346 8,138 10,417 5,916 7,708 9,987
8 13,285 100,000 100,000 100,000 7,153 9,471 12,542 6,938 9,256 12,327
9 15,341 100,000 100,000 100,000 7,931 10,850 14,878 7,931 10,850 14,878
10 17,499 100,000 100,000 100,000 8,682 12,276 17,446 8,682 12,276 17,446
- -------------------------------------------------------------------------------------------------------
15 30,021 100,000 100,000 100,000 11,942 20,137 34,746 11,942 20,137 34,746
20 46,003 100,000 100,000 100,000 14,146 29,273 63,117 14,146 29,273 63,117
25 66,400 100,000 100,000 147,015 14,745 39,714 109,713 14,745 39,714 109,713
30 92,433 100,000 100,000 225,920 13,181 51,879 185,181 13,181 51,879 185,181
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 rates of return
can be achieved for any one year or sustained over any period of time. Values
illustrated are net of a .51% asset management charge, a .81% current mortal-
ity and expense risk charge and other expenses estimated at .03%. Values il-
lustrated are also net of any other applicable contract charges, such as pre-
mium expense, administration, and cost of insurance charges.
33
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 35Standard nonsmoker$100,000 specified amount
$1,325 Annual premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- -------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical Assuming hypothetical
Premiums gross annual investment gross annual investment gross annual investment
End accumulated return of return of return of
of at 5% --------------------------- -------------------------- ---------------------------
policy interest 12%
year per year 0% gross 6% gross 12% gross 0% gross 6% gross gross 0% gross 6% gross 12% gross
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,391 $100,000 $100,000 $100,000 $ 946 $ 1,010 $ 1,075 $ 86 $ 150 $ 215
2 2,852 100,000 100,000 100,000 1,872 2,059 2,254 1,012 1,199 1,394
3 4,386 100,000 100,000 100,000 2,775 3,144 3,546 1,915 2,284 2,686
4 5,996 100,000 100,000 100,000 3,654 4,268 4,962 2,794 3,408 4,102
5 7,688 100,000 100,000 100,000 4,509 5,431 6,514 3,649 4,571 5,654
- ------------------------------------------------------------------------------------------------------
6 9,463 100,000 100,000 100,000 5,337 6,632 8,216 4,692 5,987 7,571
7 11,328 100,000 100,000 100,000 6,140 7,873 10,082 5,710 7,443 9,652
8 13,285 100,000 100,000 100,000 6,915 9,156 12,129 6,700 8,941 11,914
9 15,341 100,000 100,000 100,000 7,662 10,481 14,377 7,662 10,481 14,377
10 17,499 100,000 100,000 100,000 8,380 11,848 16,845 8,380 11,848 16,845
- ------------------------------------------------------------------------------------------------------
15 30,021 100,000 100,000 100,000 11,474 19,346 33,404 11,474 19,346 33,404
20 46,006 100,000 100,000 100,000 13,503 27,964 60,380 13,503 27,964 60,380
25 66,400 100,000 100,000 140,147 13,849 37,601 104,587 13,849 37,601 104,587
30 92,433 100,000 100,000 214,250 11,438 48,166 175,615 11,438 48,166 175,615
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates or return averaged 0.00%, 6.00%
and 12.00% over a period of years, but also fluctuated above or below those av-
erages for individual contract years. No representations can be made by Lincoln
Life or any of the funds that these hypotheticla rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .90% guaranteed maximum
mortality and expense risk charge and other expenses estiamted at .03%. Values
illustrated are also net of any other applicable contract charges, such as pre-
mium expense, administration, and cost of insurance charges.
34
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 35 Standard smoker $100,000 specified amount $1,675 annual
premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Premiums Assuming hypothetical Assuming hypothetical Assuming hypothetical
End accumulated gross annual investment gross annual investment gross annual investment
of at 5% return of return of 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 $ 1,759 $100,000 $100,000 $100,000 $ 1,222 $ 1,305 $ 1,388 $ 190 $ 273 $ 356
2 3,605 100,000 100,000 100,000 2,420 2,662 2,914 1,388 1,630 1,882
3 5,544 100,000 100,000 100,000 3,582 4,060 4,580 2,550 3,028 3,548
4 7,580 100,000 100,000 100,000 4,708 5,504 6,402 3,676 4,472 5,370
5 9,718 100,000 100,000 100,000 5,801 6,996 8,399 4,769 5,964 7,367
- -------------------------------------------------------------------------------------------------------
6 11,693 100,000 100,000 100,000 6,861 8,539 10,590 6,087 7,765 9,816
7 14,320 100,000 100,000 100,000 7,878 10,126 12,987 7,362 9,610 12,471
8 16,794 100,000 100,000 100,000 8,852 11,759 15,614 8,594 11,501 15,356
9 19,393 100,000 100,000 100,000 9,786 13,443 18,498 9,786 13,443 18,498
10 22,121 100,000 100,000 100,000 10,679 15,180 21,670 10,679 15,180 21,670
- -------------------------------------------------------------------------------------------------------
15 37,951 100,000 100,000 100,000 14,358 24,609 42,997 14,358 24,609 42,997
20 58,155 100,000 100,000 122,417 16,359 35,322 77,973 16,359 35,322 77,973
25 83,940 100,000 100,000 180,102 16,358 47,759 134,404 16,248 47,759 134,404
30 116,849 100,000 100,000 274,620 13,037 62,708 225,098 13,037 62,708 225,098
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 Lin-
coln Life or any of the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .81% current mortality and
expense risk charge and other expenses estimated at .03%. Values illustrated
are also net of any other applicable contract charges, such as premium ex-
pense, administration, and cost of insurance charges.
35
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 35Standard smoker$100,000 specified amount
$1,675 annual premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Premiums Assuming hypothetical Assuming hypothetical Assuming hypothetical
End accumulated gross) annual investment gross ) annual investment gross annual investment
of at 5% return of return of 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 $ 1,759 $100,000 $100,000 $100,000 $ 1,168 $ 1,249 $ 1,329 $ 136 $ 217 $ 297
2 3,605 100,000 100,000 100,000 2,304 2,537 2,780 1,272 1,505 1,748
3 5,544 100,000 100,000 100,000 3,403 3,862 4,361 2,371 2,830 3,329
4 7,580 100,000 100,000 100,000 4,463 5,224 6,084 3,431 4,192 5,052
5 9,718 100,000 100,000 100,000 5,482 6,621 7,962 4,450 5,589 6,930
- -------------------------------------------------------------------------------------------------------
6 11,693 100,000 100,000 100,000 6,455 8,052 10,008 5,681 7,278 9,234
7 14,320 100,000 100,000 100,000 7,383 9,516 12,238 6,867 9,000 11,722
8 16,794 100,000 100,000 100,000 8,261 11,012 14,673 8,003 10,754 14,415
9 19,393 100,000 100,000 100,000 9,088 12,541 17,331 9,088 12,541 17,331
10 22,121 100,000 100,000 100,000 9,860 14,100 20,238 9,860 14,100 20,238
- -------------------------------------------------------------------------------------------------------
15 37,951 100,000 100,000 100,000 12,847 22,378 39,612 12,847 22,378 39,612
20 58,155 100,000 100,000 111,913 13,930 31,345 71,282 13,930 31,345 71,282
25 93,940 100,000 100,000 163,643 12,069 40,721 122,122 12,069 40,721 122,122
30 116,849 100,000 100,000 247,300 5,513 50,381 202,705 5,513 50,381 202,705
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of return averaged 0.00%, 6.00%
and 12.00% over a period of years, but also fluctuated above or below those av-
erages for
individual contract years. No representations can be
made by Lincoln Life or any of the funds that these hypothetical rates of re-
turn can be achieved for any one year or sustained over any period of time.
Values illustrated are net of a .51% asset management charge, a .90% guaranteed
maximum mortality and expense risk charge and other expenses estimated at .03%.
Values illustrated are also net of any other applicable contract charges, such
as premium expense, administration, and cost of insurance charges.
36
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 55Standard nonsmoker$100,000 specified amount
$3,300 annual premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Premiums Assuming hypothetical Assuming hypothetical Assuming hypothetical
End accumulated gross gross gross
of at 5% annual investment return of annual investment return of annual investment 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 $ 3,465 $100,000 $100,000 $100,000 $ 2,188 $ 2,344 $ 2,501 $ 0 $ 0 $ 0
2 7,103 100,000 100,000 100,000 4,285 4,734 5,204 1,374 1,823 2,293
3 10,923 100,000 100,000 100,000 6,291 7,173 8,132 3,380 4,262 5,221
4 14,935 100,000 100,000 100,000 8,223 9,681 11,331 5,312 6,770 8,420
5 19,146 100,000 100,000 100,000 10,075 12,257 14,828 7,164 9,346 11,917
- -------------------------------------------------------------------------------------------------------
6 23,569 100,000 100,000 100,000 11,830 14,887 18,643 9,647 12,704 16,460
7 28,212 100,000 100,000 100,000 13,491 17,582 22,824 12,036 16,127 21,369
8 33,088 100,000 100,000 100,000 15,051 20,341 27,414 14,323 19,613 26,686
9 38,207 100,000 100,000 100,000 16,506 23,166 32,465 16,506 23,166 32,465
10 43,582 100,000 100,000 100,000 17,848 26,059 38,042 17,848 26,059 38,042
- -------------------------------------------------------------------------------------------------------
15 74,770 100,000 100,000 100,000 22,713 41,823 77,055 22,713 41,823 77,055
20 114,574 100,000 100,000 155,109 23,498 60,768 144,962 23,498 60,768 144,962
25 165,374 100,000 100,000 269,116 16,468 85,828 256,301 16,468 85,828 256,301
30 230,211 0 100,000 456,346 0 122,030 434,616 0 122,030 434,616
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 Lin-
coln Life or any of the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .81% current mortality and
expense risk charge and other expenses estimated at .03%. Values illustrated
are also net of any other applicable contract charges, such as premium ex-
pense, administration, and cost of insurance charges.
37
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 55Standard nonsmoker$100,000 specified amount
$3,300 annual premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Premiums Assuming hypothetical Assuming hypothetical Assuming hypothetical
End accumulated gross annual investment gross annual investment gross annual investment
of at 5% return of return of 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 $ 3,465 $100,000 $100,000 $100,000 $ 2,120 $ 2,272 $ 2,425 $ 0 $ 0 $ 0
2 7,103 100,000 100,000 100,000 4,147 4,584 5,041 1,236 1,673 2,130
3 10,923 100,000 100,000 100,000 6,081 6,937 7,868 3,170 4,026 4,957
4 14,935 100,000 100,000 100,000 7,917 9,328 10,927 5,006 6,417 8,016
5 19,146 100,000 100,000 100,000 9,646 11,752 14,240 6,735 8,841 11,329
- -------------------------------------------------------------------------------------------------------
6 23,569 100,000 100,000 100,000 11,263 14,207 17,833 9,080 12,024 15,650
7 28,212 100,000 100,000 100,000 12,760 16,690 21,739 11,305 15,235 20,284
8 33,088 100,000 100,000 100,000 14,121 19,189 25,988 13,393 18,461 25,260
9 38,207 100,000 100,000 100,000 15,335 21,699 30,622 15,335 21,699 30,622
10 43,582 100,000 100,000 100,000 16,389 24,213 35,692 16,389 24,213 35,692
- -------------------------------------------------------------------------------------------------------
15 74,770 100,000 100,000 100,000 18,789 36,769 70,445 18,789 36,769 70,445
20 114,574 100,000 100,000 141,096 13,699 48,730 131,865 13,699 48,730 131,865
25 165,374 0 100,000 243,953 0 59,093 232,336 0 59,093 232,336
30 230,211 0 100,000 409,750 0 67,528 390,238 0 67,528 390,238
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 Lin-
coln Life or any of the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .90% guaranteed maximum
mortality and expense risk charge and other expenses estimated at .03%. Values
illustrated are also net of any other applicable contract charges, such as
premium expense, administration, and cost of insurance charges.
38
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 55
Standard smoker
$100,000 specified amount
$4,300 annual premium using current charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
-------------------------- ------------------------- -------------------------
Assuming hypothetical Assuming hypothetical Assuming hypothetical
Premiums gross annual investment gross annual investment gross annual investment
End accumulated return of return of return of
of at 5% -------------------------- ------------------------- -------------------------
policy interest 0% gross 12% 0% 12% 0% 12%
year per year 6% gross gross gross 6% gross gross gross 6% gross gross
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 4,515 $100,000 $100,000 $100,000 $ 2,648 $ 2,846 $ 3,044 $ 0 $ 0 $ 0
2 9,256 100,000 100,000 100,000 5,193 5,757 6,346 628 1,192 1,781
3 14,234 100,000 100,000 100,000 7,632 8,734 9,933 3,067 4,169 5,368
4 19,460 100,000 100,000 100,000 9,969 11,787 13,849 5,404 7,222 9,284
5 24,948 100,000 100,000 100,000 12,199 14,919 18,134 7,634 10,354 13,569
- --------------------------------------------------------------------------------------------------
6 30,711 100,000 100,000 100,000 14,317 18,134 22,836 10,893 14,710 19,412
7 36,761 100,000 100,000 100,000 16,330 21,446 28,023 14,048 19,164 25,741
8 43,114 100,000 100,000 100,000 18,213 24,843 33,748 17,072 23,702 32,607
9 49,785 100,000 100,000 100,000 19,961 28,337 40,093 19,961 28,337 40,093
10 56,789 100,000 100,000 100,000 21,563 31,931 47,154 21,563 31,931 47,154
- --------------------------------------------------------------------------------------------------
15 97,427 100,000 100,000 114,025 27,472 52,290 98,297 27,472 52,290 98,297
20 149,293 100,000 100,000 197,629 29,143 79,713 184,700 29,143 79,713 184,700
25 215,488 100,000 125,666 342,624 23,303 119,682 326,308 23,303 119,682 326,308
30 299,971 100,000 177,391 580,443 3,943 168,943 552,802 3,943 168,943 552,802
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 Lin-
coln Life or any of the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .81% current mortality and
expense risk charge and other expenses estimated at .03%. Values illustrated
are also net of any other applicable contract charges, such as premium ex-
pense, administration, and cost of insurance charges.
39
<PAGE>
AMERICAN LEGACY VARIABLE LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male issue age 55 Standard smoker $100,000 specified amount $4,300 annual
premium using guaranteed charges
<TABLE>
<CAPTION>
Death benefit Policy value Net cash surrender value
--------------------------- --------------------------- ---------------------------
Premiums Assuming hypothetical Assuming hypothetical Assuming hypothetical
End accumulated gross annual investment gross annual investment gross annual investment
of at 5% return of return of 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 $ 4,515 $100,000 $100,000 $100,000 $ 2,301 $ 2,485 $ 2,671 $ 0 $ 0 $ 0
2 9,256 100,000 100,000 100,000 4,466 4,980 5,520 0 415 955
3 14,234 100,000 100,000 100,000 6,495 7,487 8,571 1,930 2,922 4,006
4 19,460 100,000 100,000 100,000 8,386 10,005 11,851 3,821 5,440 7,286
5 24,948 100,000 100,000 100,000 10,132 12,534 15,390 5,567 7,969 10,825
- -------------------------------------------------------------------------------------------------------
6 30,711 100,000 100,000 100,000 11,722 15,066 19,217 8,298 11,642 15,793
7 36,761 100,000 100,000 100,000 13,140 17,591 23,366 10,858 15,309 21,084
8 43,114 100,000 100,000 100,000 14,365 20,096 27,877 13,224 18,955 26,736
9 49,785 100,000 100,000 100,000 15,375 22,569 32,803 15,375 22,569 32,803
10 56,798 100,000 100,000 100,000 16,153 25,002 38,212 16,153 25,002 38,212
- -------------------------------------------------------------------------------------------------------
15 97,427 100,000 100,000 100,000 15,972 36,596 76,749 15,972 36,596 76,749
20 149,293 100,000 100,000 157,333 5,064 46,666 147,040 5,064 46,666 147,040
25 215,488 0 100,000 274,444 0 53,212 261,375 0 53,212 261,375
30 299,971 0 100,000 461,909 0 52,562 439,914 0 52,562 439,914
</TABLE>
The hypothetical rates of return shown above and elsewhere in this prospectus
are illustrative only and should not be deemed a representation of past or fu-
ture investment rates of return. Actual rates of return 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 rates of 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 Lin-
coln Life or any of the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time. Values illus-
trated are net of a .51% asset management charge, a .90% guaranteed maximum
mortality and expense risk charge and other expenses estimated at .03%. Values
illustrated are also net of any other applicable contract charges, such as
premium expense, administration, and cost of insurance charges.
40
<PAGE>
APPENDIX E
Definitions for Separate Account J
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.
Base minimum premium -- A premium per $1,000 of specified amount used in the
calculation of the death benefit guarantee monthly premium. The base minimum
premium is also used in determining the Contingent Deferred Sales Charge and
the Contingent Deferred Administrative Charge.
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.
Contingent Deferred Administrative Charge (CDAC) -- An administrative charge
for underwriting, issue, and initial administration of the policy, which is
imposed under the policy and deducted upon lapse or surrender of the policy or
voluntary reduction in the specified amount. The Contingent Deferred Adminis-
trative Charge is part of the total surrender charge.
Contingent Deferred Sales Charge (CDSC) -- A sales charge based upon the base
minimum premium required for the first policy year, which is imposed under the
policy and deducted upon lapse or surrender of the policy or voluntary reduc-
tion in the specified amount. The Contingent Deferred Sales Charge is part of
the total surrender charge.
Cost of insurance charge -- A charge deducted monthly from the policy value to
provide the life insurance protection for the insured.
Death benefit guarantee -- The guarantee that, provided the death benefit
guarantee monthly premium requirements are met, the policy will not lapse dur-
ing the first three policy years due to negative net cash surrender value.
Death benefit guarantee monthly premium -- The minimum monthly premium which
must be paid each month or in advance during the first policy year and which
must continue to be paid in the second and third policy years if the policy
does not have positive net cash surrender value. Failure to pay this premium
when required will result in the policy lapsing at the end of the grace peri-
od.
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.
Gross investment results -- The gross investment results are equal to the
change in the market value of the assets of a fund from the previous valuation
day to the current day, plus the investment income on those assets during the
same period.
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 invested in the Separate
Account, and equal in amount to the policy value minus amounts invested in the
General Account (including any outstanding loans).
Lincoln Life (we, our, us) -- Lincoln National Life Insurance Co.
Maturity date -- The policy anniversary following the insured's 99th birthday,
if living. It is the last date insurance coverage can remain in force and the
date any remaining net cash surrender value will be payable.
Mortality and expense risk charge -- A daily charge deducted from the assets
of the Separate Account to provide for the risks of excessive mortality and
expense.
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 plus any unearned loan interest.
Net investment results -- The gross investment results of a fund minus the as-
set management charges and any miscellaneous fund expenses, and minus the mor-
tality and expense risk charge.
Option date -- Any date the policy terminates under the Termination Provision.
The term option date may also be used with certain riders.
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.
Planned periodic premium -- A scheduled premium of a level amount at a fixed
interval over a specified period of time.
41
<PAGE>
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 values in the Separate Account and in the Gen-
eral Account at any time, irrespective of outstanding loans or surrender
charge.
Proceeds -- The amount payable on the maturity date, or on surrender of the
policy, or after the death of any insured person. The proceeds will be differ-
ent on each of these events.
Record Date -- The record date is 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 outstanding requirement or the date of underwriting approval. The rec-
ord 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 J,
a Separate Account established by Lincoln Life to receive and invest net premi-
ums 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 or upon a voluntary reduction in specified amount during the first 8
policy years or during the 8 years following a requested increase in specified
amount. The surrender charge is equal to the combination of the Contingent De-
ferred Sales Charge and the Contingent Deferred Administrative Charge.
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.
42
<PAGE>
This filing is made pursuant to Rule 6e-3(T)
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.
REPRESENTATION PURSUANT TO SECTION 26(e) (2) (A) OF THE INVESTMENT COMPANY ACT
OF 1940
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 Lincoln National Life
Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
A reconciliation and tie-in of information shown in the Prospectus with the
items of Form N-8B-2.
The Prospectus consisting of ____ pages.
The undertaking to file reports.
The representation pursuant to Section 26 (e) (2) (A) of the Investment Company
Act of 1940.
The Signatures.
Written consents of the following persons:
Jeremy Sachs, Esquire
Denis G. Schwartz, FSA
Ernst & Young LLP
The following exhibits:
1. (1) Certified Resolution of the Board of Directors of the Company
establishing the Account.*
(2) Not applicable.
(3) (a) Underwriting Agreement.
(b) Form of Agents Contract.*
(c) Commission Schedule (Revised).*
(4) Not applicable.
(5) Form of Policy.*
<PAGE>
(6) (a) Certificate of Incorporation of the Company.*
(b) By-Laws of the Company.*
(7) Not applicable.
(8) Form of Participation Agreement (Revised).*
(9) Form of Indemnification Agreement (Revised).*
(10) Form of Application.*
2. See Exhibit 1(5)
3. Opinion and Consent of Jeremy Sachs, Esquire.*
4. Not applicable.
5. Opinion and Consent of Denis G. Schwartz, FSA, Second Vice President.
6. Consent of Ernst & Young LLP, Independent Auditors.**
7. Memorandum describing the Company's issuance, transfer and redemption and
conversion procedures for the Policy.*
8. Other Exhibits.*
(1) Power of Attorney - Jack D. Hunter
(3) Power of Attorney - Ian M. Rolland
(5) Power of Attorney - O. Douglas Worthington
(6) Power of Attorney - Jon A. Boscia
(7) Power of Attorney - Richard C. Vaughan
9. Services Agreement between Delaware Management Holdings, Inc., Delaware
Service Company, Inc. and Lincoln National Life Insurance Company dated
8/29/96.
10. Financial Data Schedule**
* Previously filed as an exhibit to the registration statement.
** 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 J, has duly caused this
Post-Effective Amendment No. 5 to this registration statement to be signed on
its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Fort Wayne, State of Indiana
on this 12th day of March, 1997.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
on its own behalf as Depositor and on behalf of
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT J
By:/s/ Stephen H. Lewis
Stephen H. Lewis, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement 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, Chief Executive Officer March 12, 1997
Jon A. Boscia and Director (Principal Executive
Officer)
*
/s/ Keith J. Ryan Vice President, Chief Financial March 12, 1997
- ---------------------------------- Officer and Assistant Treasurer
Keith J. Ryan (Principal Financial Officer)
*
- ---------------------------------- Vice President, Controller and March 12, 1997
O. Douglas Worthington Assistant Treasurer (Principal
Accounting Officer)
- ---------------------------------- Director March 12, 1997
Jack D. Hunter
- ---------------------------------- Director _________________, 1997
H. Thomas McMeekin
*
- ---------------------------------- Director March 12, 1997
Ian M. Rolland
- ---------------------------------- Director _________________, 1997
Lawrence T. Rowland
*
- ---------------------------------- Director March 12, 1997
Richard C. Vaughan
/s/ Jeremy Sachs * Pursuant to Power of Attorney March 12, 1997
- ----------------------------------
Jeremy Sachs
</TABLE>
<PAGE>
Exhibit 1(3)
UNDERWRITING AGREEMENT
----------------------
THIS AGREEMENT is entered into on this 30th day of April, 1995 among THE
LINCOLN NATIONAL LIFE INSURANCE COMPANY ("LNL"), a life insurance company
organized under the laws of the State of Indiana on behalf of itself and LINCOLN
NATIONAL FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT J, a separate account
established by LNL pursuant to the Indiana Insurance Code ("Separate Account
J"), and AMERICAN FUNDS DISTRIBUTORS, INC. ("AFD"), a corporation organized
under the laws of the State of California.
WITNESSETH:
WHEREAS, LNL proposes to issue to the public certain individual flexible
premium variable life insurance policies through Separate Account J (the
"Policies"); and
WHEREAS, LNL has established Separate Account J for the purpose of issuing
the Policies and has registered Separate Account J with the Securities and
Exchange Commission (the "Commission") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Policies to be issued are registered by LNL with the
Commission for offer and sale to the public, and otherwise are in compliance
with all applicable laws; and
WHEREAS, AFD is a broker-dealer registered under the Securities Exchange
Act of 1934 (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"), and proposes to form a selling group for
the distribution of the Policies; and
WHEREAS, LNL will be the principal underwriter of the Policies; and
WHEREAS, LNL desires to obtain the services of AFD as a co-underwriter of
the Policies;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, LNL, Separate Account J and AFD hereby agree as follows:
Duties of AFD
- -------------
1. Upon agreement with LNL, AFD will form a selling group consisting of
broker-dealers other than those listed in the attached Schedule of Excluded
Broker-Dealers (the "Broker Schedule"), to distribute the Policies which are
issued by LNL through Separate Account J and are registered with the Commission
under the Securities Act of 1933 (the "1933 Act") for offer and sale to the
public.
2. AFD will enter into and maintain a selling group agreement with each
broker-dealer joining such selling group (each, a "Member"). Promptly
<PAGE>
after execution, AFD will provide an executed copy of each selling group
agreement to LNL. Any such selling group agreement will expressly be made
subject to this Agreement and will provide:
(i) that each Member will distribute the Policies only in those
jurisdictions in which the Policies are registered or qualified for sale
and only through duly licensed registered representatives of the Members
who are properly insurance licensed with LNL to sell the Policies in the
applicable jurisdiction(s);
(ii) that all applications and initial and subsequent payments under the
Policies collected by the Member will be remitted promptly by the Member to
LNL at such address as it may from time to time designate;
(iii) that each Member will comply with all applicable federal and state
laws, rules and regulations.
3. AFD will use reasonable efforts to provide information and marketing
assistance to the Members, including preparing and providing Members will
advertising materials and sales literature, and providing Members with current
Prospectuses for the Policies and for the shares of American Variable Insurance
Series (the "Series"). AFD will use reasonable efforts to ensure that Members
deliver only the currently effective Prospectuses of the Policies and the
Series.
AFD and LNL will cooperate in the development of advertising and sales
literature to be used by Members and by AFD itself.
LNL will deliver to LNC Equity Sales Corporation ("LNESCO") and to any
other broker-dealers listed in the Broker Schedule, and will use reasonable
efforts to ensure that LNESCO and any of those broker-dealers use, only sales
literature and advertising material which conform to the requirements of federal
and state laws and regulations and which have been authorized by both LNL and
AFD.
AFD will deliver to Members, and use reasonable efforts to ensure that
Members use, only sales literature and advertising material which conform to the
requirements of federal and state laws and regulations and which have been
authorized by both LNL and AFD.
Until such time as AFD has begun forming a selling group to distribute the
Policies, LNL will be responsible for filing sales literature used by LNESCO and
any other broker-dealer listed in the attached Broker Schedule and advertising
material, where necessary, with appropriate securities regulatory authorities,
including the NASD. Once AFD has begun forming a selling group, AFD will perform
these functions.
Neither LNL nor AFD will distribute any Prospectus, sales literature,
advertising material or any other printed matter or material relating to the
Policies or the Series, if, to its knowledge, any of the foregoing misstates the
duties,
<PAGE>
obligations or liabilities of LNL or AFD.
4. AFD shall not be responsible for
(i) taking or transmitting applications for the Policies;
(ii) examining or inspecting risks or approving, issuing or delivering
Policies;
(iii) receiving, collecting or transmitting insurance premiums;
(iv) assisting in the completion of applications for Policies;
(v) paying sales commissions to licensed broker-dealers and insurance
agents; and
(vi) otherwise offering and selling Policies directly to the public.
5. AFD will bear all its expenses of providing services under this
Agreement, including the cost of preparing, printing and mailing advertising and
sales literature used by Members (other than LNL and LNESCO), and the cost of
printing and mailing Policy and Series Prospectuses which are used by Members
(other than LNESCO) for sales purposes, except that AFD shall not bear the
expenses of registering and qualifying the Policies for sale under federal and
state laws, nor expenses of preparing, printing and mailing Policy Prospectuses,
proxies and shareholder reports for purposes other than sales of new Policies by
Members besides LNESCO. It is understood that LNL will not be required to bear
the cost of preparing, printing and mailing Series Prospectuses (except for the
printing and mailing duties provided in paragraph 13), or of registering Series
shares. AFD will reimburse LNL for all state insurance licensing fees and
associated renewal fees incurred to enable representatives of Members to sell
the Policies.
6. AFD will furnish to LNL such information with respect to the Series in
such form and signed by such of its officers as LNL may reasonably request, and
will warrant that the statements therein when so signed are true and correct.
AFD will advise LNL immediately of:
(a) any request by the Commission (i) for amendment of the registration
statement relating to the Policies or the Series or (ii) for additional
information;
(b) the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement of the Policies or the Series
or the initiation of any proceedings for that purpose;
<PAGE>
(c) the institution of any proceeding, investigation or hearing involving
the offer or sale of the Policies or the Series of which it becomes aware;
or
(d) the occurrence of any material event, if known, which makes untrue any
statement made in the registration statement of the Policies or the Fund or
which requires the making of a change therein in order to make any
statement made therein not misleading.
7. AFD will use reasonable efforts to have the Series register for sale
under the 1933 Act and, if required, under any applicable state laws, from time
to time as necessary, such additional shares of the Series as may reasonably be
necessary for use as the funding vehicle for Separate Account J.
Duties of LNL
- -------------
8. LNL or its agent will receive and process applications and premium
payments in accordance with the terms of the Policies and the current
Prospectuses. All applications for Policies are subject to acceptance or
rejection by LNL in its sole discretion. LNL will inform AFD of any such
rejection.
9. LNL will be responsible for filing with appropriate insurance
regulatory authorities, all materials required to permit the sale and
maintenance of the Policies, including the Policy Prospectus, Policies, forms,
sales literature andadvertising material, where necessary.
10. LNL will furnish to AFD such information with respect to Separate
Account J and the Policies in such form and signed by such of its officers as
AFD may reasonably request, and will warrant that the statements therein
contained, when so signed, are true and correct. LNL will advise AFD immediately
of:
(a) any request by the Commission or by any state insurance regulatory
authority (i) for amendment of the registration statement relating to
the Policies or the Series or (ii) for additional information;
(b) the issuance by the Commission or by any state insurance regulatory
authority of any stop order suspending the effectiveness of the
registration statement of the Policies or the Series or the initiation of
any proceedings for that purpose;
(c) the institution of any proceeding, investigation, hearing or other
action involving the offer or sale of the Policies or of shares of the
Series, of which it becomes aware;
<PAGE>
(d) the occurrence of any material event, if known, which makes untrue any
statement made in the registration statement of the Policies or the Series
or which requires the making of a change therein in order to make any
statement made therein not misleading.
11. LNL will use reasonable efforts to register for sale, from time to
time as necessary, additional dollar amounts of the Policies under the 1933 Act
and, should it ever be required, under state securities laws; and to file for
approval under state insurance laws, when necessary; and will maintain
registration of Separate Account J under the 1940 Act.
12. LNL will pay on behalf of and as agent for AFD to Members of AFD's
selling group such commissions as are from time to time set forth in the selling
group agreements furnished to LNL by AFD. Such selling group agreements shall
provide for the return of sales commissions by the Members to LNL if the
Policies are tendered for redemption to LNL in accordance with the "right to
examine policy" provisions in the Policy. AFD shall also return to LNL any
remuneration paid to AFD for policies so tendered.
13. (a) LNL will bear its expenses of providing services under this
Agreement, including:
1. the cost of preparing, printing and mailing advertising and sales
literature used by LNL, LNESCO or any other broker-dealer listed in the Broker
Schedule;
2. the cost of preparing the Prospectus for the Policies;
3. the cost of printing and mailing the Prospectuses for the Policies
and the Series to Policy owners;
4. the cost of printing and mailing Policy and Series Prospectuses
which are used for sales purposes by LNL, LNESCO or any other broker-dealer
listed in the Broker Schedule;
5. expenses and fees of registering or qualifying the Policies and
Separate Account J under federal or state laws; and
6. any expenses incurred by its employees in assisting AFD in
performing its duties hereunder.
(b) Until AFD forms a selling group under this agreement, decisions
regarding selection of a financial printer for the printing of Policy
prospectuses shall be in the sole discretion of LNL. Thereafter, those
decisions
<PAGE>
shall be in the sole discretion of AFD.
(c) LNL will pay to AFD such remuneration as may be contained in the
particular Schedule of Commissions to Dealers and Remuneration to AFD
("Commissions/Remuneration Schedule") which has been adopted and appended to
this Agreement and which is in force when the remuneration or reimbursement is
earned. That Schedule may be amended from time to time in the manner set forth
in Paragraph 26.
Warranties
- ---------
14. LNL represents and warrants to AFD that:
(i) a registration statement under the 1933 Act (File No. 33-76434) and
under the 1940 Act (File No. 811-8410) with respect to the Policies and
Separate Account J has been filed with Commission (a copy of which has been
delivered to AFD), and copies of any and all amendments thereto will be
forwarded to AFD at the time that they are filed with the Commission;
(ii) the registration statement and any further amendments or supplements
thereto will, when they become effective, conform in all material respects
to the requirements of the 1933 Act and the 1940 Act, and the rules and
regulations of the Commission thereunder, and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statement or omission made in reliance upon and in
conformity with information furnished in writing to LNL by AFD expressly
for use therein;
(iii) LNL is validly existing as a stock life insurance company under the
laws of the State of Indiana, with power (corporate or other) to own its
properties and conduct its business, as described in the Prospectus for the
policies, and has been duly qualified for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business to the extent such
qualification is required;
(iv) the Policies to be issued through Separate Account J have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided in the Prospectuses and in the Policies, will be duly
and validly issued, and will conform to the description of the Policies
contained in the Prospectuses relating thereto;
<PAGE>
(v) the performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement or instrument to
which LNL is a party or by which LNL is bound, LNL's Charter as a stock life
insurance company or By-Laws, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over LNL or any of its
properties; and no consent, approval, authorization or order of any court or
governmental agency or body which has not been obtained by the effective date of
this Agreement is required for the consummation by LNL of the transactions
contemplated by this Agreement; and
(vi) there are no material legal or governmenetal proceedings pending to which
LNL or Separate Account J is a party or of which any property of LNL or Separate
Acount J is subject, other than as set forth in the Prospectus relating to the
Policies, and other than litigation incidential to the kind of business
conducted by LNL which, if determined adversely to LNL, would not individually
or in the aggregate have a material adverse effect on the financial position,
surplus or operations of LNL;
(vii) any information furnished in writing by LNL to AFD for use in the
registration statement of the Series will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, nor result in the
registraion statement's failing to conform in all respects to the requirements
of the 1933 Act and the rules and regulations thereunder;
(viii) LNL will comply with all applicable requirements of state insurance laws
and regulations; and
(ix) LNL will not pay commissions to persons who, to the best of LNL's
knowledge, are not appropriately licensed in a manner as to comply with
applicable state insurance laws and regulations.
15. AFD represents and warrants to LNL that:
(i) a registration statement under the 1933 Act (File No. 2-86838), and under
the 1940 Act (File No. 811-3857) with respect to the Series has been filed with
the Commision in the form previously delivered to LNL, and copies of any and all
amendments thereto will be forwarded to LNL at the time that they are filed with
the Commission;
<PAGE>
(ii) the registration statement for the Series and any further amendments
or supplements thereto will, when they become effective, conform in all
material respects to the requirements of the 1933 Act and the 1940 Act, and
the rules and regulations of the Commission thereunder, and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to AFD by LNL
expressly for use therein;
(iii) it is validly existing as a corporation in good standing under the
laws of California and it is a broker-dealer duly registered with the
Commission pursuant to the 1934 Act and is a member in good standing of the
NASD, with power (corporate or other) to own its properties and conduct its
business, and has been duly qualified for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business, to the extent such
qualification is required;
(iv) the shares to be issued by the Series have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided in the Series Prospectus, will be duly and validly issued and will
conform to the description of such shares contained in that Prospectus;
(v) the performance of its duties under this Agreement by AFD will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which AFD is a
party or by which AFD is bound, the Articles of Incorporation or By-Laws of
AFD, or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over AFD or its property;
(vi) there are no material legal or governmental proceedings pending to
which AFD or the Series is a party or of which any property of AFD or the
Series is the subject which are required to be described in the
registration statement of the Series and/or the Policies;
(vii) it will use reasonable efforts to ensure that no offering, sale or
other disposition of the Policies will be made until it has been notified
by LNL that the subject registration statements have been declared
<PAGE>
effective and the Policies have been released for sale by LNL, and that
such offering, sale or other disposition shall be limited to those
jurisdictions that have approved or otherwise permit the offer and sale of
the Policies by LNL;
(viii) any information furnished in writing by AFD to LNL for use in the
registration statement for the Policies will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, nor result in the registration statement's failing to conform
in all respects to the requirements of the 1933 Act and the rules and
regulations thereunder; and
(ix) it will comply with the requirements of state broker-dealer
regulations and the 1934 Act as each applies to AFD and shall conduct its
affairs in accordance with the rules of Fair Practice of the NASD.
Miscellaneous
- -------------
16. AFD makes no representation or warranty regarding the number of
Policies to be sold by licensed broker-dealers and insurance agents or the
amount to be paid thereunder. AFD does, however, represent that once the parties
agree to begin forming the selling group it will actively engage in its duty to
market the Policies under this Agreement on a continuous basis while the
Agreement is in effect and there is an effective registration of the Policies
and the Series with the Commission. This duty to actively market the Policies
will commence when the parties agree in writing upon the terms of Part A of the
Commission/Remuneration Schedule. (See paragraph 13.)
17. The parties shall coordinate with each other in the filing with the
Commission of amendments to the registration statements for the Policies and for
the Series, respectively.
18. (a) AFD may act as principal underwriter, co-underwriter, sponsor,
distributor or dealer for issuers other than LNL or its affiliates in
connection with mutual funds or insurance products; except that AFD shall not,
while this Agreement is in effect, act as principal underwriter, co-underwriter,
sponsor, distributor or dealer with respect to insurance policies which are
issued by insurance companies other than LNL or its affiliates that are similar
to the Policies. (However, nothing in the previous sentence shall diminish any
restriction upon AFD's activities imposed under any agreement between AFD and
LNL relating to variable annuity contracts.)
<PAGE>
(b) While this Agreement is in effect, LNL will not:
(i) issue through broker-dealers (except itself, LNESCO and any other
broker-dealers listed in the Broker Schedule) any insurance policy
similar to the Policies unless agreed upon in writing by AFD and LNL.
(ii) enter into an agreement with any other organization for the
purpose of distributing the Policies, unless agreed to in writing by
AFD and LNL.
(iii) pay commissions or remuneration to AFD for Policies sold by
broker-dealers listed in that schedule.
(c) It is understood that shares of the Series may be sold to fund
insurance policies of issuers other than LNL or its affiliates or to
other shareholders, as long as that activity is in accordance with
Internal Revenue Code Section 817(h) and the regulations thereunder.
19. Nothing in this Agreement shall obligate LNL to appoint any Member or
registered representative of a Member its agent for purposes of the distribution
of the Policies. Nothing in this Agreement shall be construed as requiring AFD
to effect sales of the Policies directly to the public or to act as an insurance
agent or insurance broker on behalf of LNL for purposes of state insurance laws.
20. AFD agrees to indemnify LNL (or any affiliate, control person,
shareholder, director, officer or employee of LNL) for any liability incurred
(including reasonable costs relating to defense of any action) arising out of
any act or omission of AFD (or those of its affiliates) relating to
(i) rendering services under this Agreement or;
(ii) the purchase, retention or surrender of a Policy by any person or
entity;
provided, however, that indemnification will not be provided hereunder for
any such liability that results from the willful misfeasance, bad faith or
gross negligence of LNL or from the reckless disregard by LNL of the duties
and obligations arising under this Agreement.
21. LNL agrees to indemnify AFD (or any affiliate, control person,
shareholder, director, officer or employee of AFD) for any liability incurred
(including reasonable costs
<PAGE>
relating to defense of any action) arising out of any act or omission of LNL (or
those of its affiliates) relating to
(i) rendering services under this Agreement or;
(ii) the purchase, retention or surrender of a Policy by any person or
entity;
provided, however, that indemnification will not be provided hereunder for any
such liability that results from the willful misfeasance, bad faith or gross
negligence of AFD or from the reckless disregard by AFD of the duties and
obligations arising under this Agreement.
22. This Agreement will terminate automatically upon its assignment, as
that term is defined in the 1940 Act. The parties understand that there is no
intention to create a joint venture in the subject matter of this Agreement.
Accordingly, the right to terminate this Agreement and to engage in any activity
not inconsistent with this Agreement is absolute. This Agreement will
terminate, without the payment of any penalty by either party:
(a) at the option of LNL upon six months' advance written notice to AFD;
or,
(b) at the option of AFD upon six months' advance written notice to LNL;
or,
(c) at the option of LNL upon institution of formal proceedings against AFD
by the NASD or by the Commission; or,
(d) at the option of AFD upon institution of formal proceedings against LNL
by the Commission or by the Department of Insurance of any state; or,
(e) as otherwise provided in the 1940 Act.
23. Each notice required by this Agreement shall be given in writing and
delivered by certified mail-return receipt requested.
24. This Agreement shall be controlled by the laws of the State of Indiana
and construed so as to interpret the Policies as insurance products written
within the business operation of LNL.
25. This Agreement, including the Broker Schedule and the
Commission/Remuneration Schedule, constitutes the entire agreement among the
parties pertaining to the marketing and distribution of the Policies, and
supersedes any and all prior agreements between the parties with respect to the
subject matter of this Agreement. This Agreement shall not affect the operation
of any previous
<PAGE>
agreements entered into between LNL and AFD unrelated to the subject matter of
this Agreement.
26. (a) Amending the Agreement. This Agreement and any Schedule may be
amended from time to time only by agreement in writing of the parties.
(b) Amending the Schedules. For purposes of simplifying and expediting
amendments to the Broker Schedule and to the Commission/Remuneration Schedule,
the parties shall observe the rule that a Schedule shall be deemed amended as of
the date on which the parties have executed and signed a new Schedule which
explains the extent to which it supersedes any prior Schedule and which bears
the date as of which it shall take effect. One exception to this rule is that
with respect to any Commission/Remuneration Schedule, AFD in its sole discretion
may alter, upon written notice to LNL, the ratio of commissions paid to dealers
and remuneration paid to AFD. AFD agrees to reimburse LNL for any remuneration
previously received to the extent necessary to pay additional commissions to
dealers due to a retroactive change of this ratio.
27. No waiver of any provision nor consent to any exceptions to the terms
of this Agreement shall be effective unless that waiver or consent is executed
in writing by the parties and then only for the specific purpose, extent and
instance so provided.
28. This Agreement shall inure to the benefit of and be binding upon LNL
and AFD, and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or corporation, other than the parties hereto and their respective successors
and assigns, any legal or equitable right, remedy or claim in respect of this
agreement or any provision herein contained.
29. This Agreement and any amendment to it, including any amended
Schedule, may be executed in one or more counterparts. All of those counterparts
shall constitute one and the same agreement. Neither this Agreement nor any
amendment shall become effective until all conterparts have been fully executed
and delivered.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and attested.
Lincoln National Life
Insurance Company on behalf
of itself and of Lincoln
National Flexible Premium
Variable Life Account J
Attest:
/s/ Ronald Stopher By: /s/ Edward B. Martin
- ------------------------ --------------------------
Its: Vice President
-------------------------
American Funds Distributors,
Inc.
Attest:
/s/ Michael Downer By: /s/ John Post
- ------------------------ --------------------------
Its: Senior Vice President
-------------------------
<PAGE>
SCHEDULE OF COMMISSIONS TO
--------------------------
DEALERS AND REMUNERATION
------------------------
TO AFD
------
("Commission/Remuneration Schedule")
Effective Date: April 30, 1995
All Sales
- ---------
Lincoln National will make direct payment of commissions to dealers and
remuneration to AFD with respect to all sales of the Policies according to the
schedule set forth below. Where state law prohibits direct payment to AFD,
payment will be made in accordance with the applicable state law.
Part A: Commissions Remuneration
- ------- to Dealers to AFD
----------- ------------
All premiums eligible To be agreed To be agreed
for Commissions From upon upon
Policies Sold By
Member Dealers
Part B: Commissions to Remuneration
- ------- Lincoln National to AFD
----------------- ------------
All Premiums Eligible (As determined by 0.10%
for Commissions From Lincoln National)
Policies Sold by LNL
and LNESCO Agents and
Brokers
<PAGE>
SCHEDULE OF EXCLUDED BROKER-DEALERS
-----------------------------------
("Broker Schedule")
1. The Lincoln National Life Insurance Company (LNL)
2. LNC Equity Sales Corporation (LNESCO)
<PAGE>
EXHIBIT 5
[LOGO OF LINCOLN LIFE]
March 7, 1997
Gentlemen:
This Opinion is furnished in connection with the filing of Post-Effective
Amendment #5 to Registration #33-76434 for the Lincoln Life Flexible Premium
Variable Life Account J. 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 D 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 Standard Male Nonsmokers or Smokers Age 35 or Age 55
than to prospective purchasers for policies that are Males or Females 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 Post-Effective
Amendment #5 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
Lincoln National Life Insurance Co. is a part of Lincoln National Corp.
<PAGE>
SERVICES AGREEMENT
------------------
(Exhibit B and Schedules Omitted)
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.
"Calculation Losses" means any losses suffered by a Contractowner, 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.
<PAGE>
"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 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
<PAGE>
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.
"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
<PAGE>
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 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
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,
<PAGE>
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 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.
<PAGE>
Notwithstanding clause (b) of the preceding sentence, if 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 unreason ably 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.
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.
<PAGE>
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 fore going (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, 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
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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 pursuant to
Section 7.2(b) (the "Guaranteed Obligations").
Section 14.2 Guaranty Unconditional. The obligations of
<PAGE>
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 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.
<PAGE>
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 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 assign able by any party, except
assignment to successors in the case of mergers, sales of all or substantially
all of the assets of such
<PAGE>
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.
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
<PAGE>
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
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 enforce ability 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: ____________________________
O. Douglas Worthington
Title: Vice President and
Controller
Date: __________________________
HOLDINGS:
DELAWARE MANAGEMENT HOLDINGS, INC.
By: ____________________________
Title: _________________________
Date: __________________________
DELAWARE:
DELAWARE SERVICE COMPANY, INC.
By: ____________________________
Title: _________________________
Date: __________________________
<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: ____________________________
Kelly D. Clevenger
In his capacity as President of each of
the above-named Funds.
Date: __________________________
<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>
SCHEDULE 1.1(a)
---------------
CUTOVER SCHEDULE
<PAGE>
SCHEDULE 2.1
------------
PROCEDURES FOR CORRECTING ERRORS
<PAGE>
SCHEDULE 3.1
------------
DATA PROVIDED BY LINCOLN LIFE
<PAGE>
SCHEDULE 3.2
------------
UNAFFILIATED MUTUAL FUNDS
AND
SERVICE PROVIDERS
<PAGE>
SCHEDULE 6.1
------------
FEE SCHEDULE
