FUND PARTICIPATION AGREEMENT
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This Fund Participation Agreement (the "Agreement"), effective as of
24th day of April, 2009, is made by and among The Lincoln National Life
Insurance Company ("Lincoln Life"), Lincoln Life and Annuity Company of New
York ("Lincoln New York") (Lincoln Life and Lincoln New York collectively
referred to as "Company"), JPMorgan Insurance Trust (the "Trust"), the
Trust's investment advisors, JPMorgan Investment Advisors Inc. and X. X.
Xxxxxx Investment Management Inc. (the "Advisers"), and the Trust's
administrator, JPMorgan Funds Management, Inc. (the "Administrator").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation
and/or pay-out provisions (hereinafter referred to individually and/or
collectively as "Variable Insurance Products");
WHEREAS, insurance companies desiring to utilize the Trust as an
investment vehicle under their Variable Insurance Products are required to
enter into participation agreements with the Trust and the Administrator (the
"Participating Insurance Companies");
WHEREAS, shares of the Trust are divided into several series of shares,
each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
for Variable Insurance Products of Participating Insurance Companies;
WHEREAS, the Trust intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may
be amended from time to time by mutual agreement of the parties hereto under
this Agreement to the accounts of the Company specified on Schedule A
(hereinafter referred to individually as an "Account," collectively, the
"Accounts");
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission, granting the Trust exemptions from the provisions of
Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940,
as amended (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Trust to be sold to and held by Variable Insurance Product separate accounts
of both affiliated and unaffiliated insurance companies (hereinafter the
"Shared Funding Exemptive Order");
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Advisers are duly registered as an investment advisers
under the Investment Advisers Act of 1940, as amended, and any applicable
state securities laws;
WHEREAS, the Advisers is the investment adviser of the Portfolios of the
Trust;
WHEREAS, the Company has registered certain Variable Insurance Products
under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, each Account intends to purchase shares of the Portfolios to
fund certain of the aforesaid Variable Insurance Products and the Trust is
authorized to sell such shares to each such Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust, the Advisers, and the Administrator agree as follows:
ARTICLE 1
THE CONTRACTS
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1. The Company represents that it has established each of the
Accounts specified on Schedule A as a separate account under the laws of the
state indicated on Schedule A, and has registered each such Account as a unit
investment trust under the 1940 Act to serve as an investment vehicle for
variable annuity contracts and/ or variable life contracts offered by the
Company (the "Contracts"). The Contracts provide for the allocation of net
amounts received by the Company to separate divisions of the Account for
investment in the shares of the Portfolios. Selection of a particular
division is made by the Contract owner who may change such selection from
time to time in accordance with the terms of the applicable Contract. In
marketing its Contracts, the Company will comply with all applicable state or
Federal laws.
ARTICLE 2
TRUST SHARES
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2.1. The Trust agrees to make available for purchase by the Company
shares of the Portfolios and shall execute orders placed for each Account on
a daily basis at the net asset value next computed after receipt by the Trust
or its designee of such order. For purposes of this Section 2.1, the Company
shall be the designee of the Trust for receipt of such orders from the
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust's designated transfer agent receives notice of such
order by 10:00 a.m. Eastern Time on the next following Business Day ("Trade
Date plus 1"). Notwithstanding the foregoing, the Company shall use its best
efforts to provide the Trust's designated transfer agent with notice of such
orders by 9:30 a.m. Eastern Time on Trade Date plus 1. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission, as set forth in the Trust's prospectus
and statement of additional information. Notwithstanding the foregoing, the
Board of Trustees of the Trust (hereinafter the "Board") may refuse to permit
the Trust to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
2.2. The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies for their Variable Insurance Products and,
in the Trust's discretion, to qualified pension and retirement plans. No
shares of any Portfolio will be sold to the general public.
2.3. The Trust agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Trust held by an Account, executing such
requests on a daily basis at the net asset value next computed after receipt
by the Trust or its designee of the request for redemption. For purposes of
this Section 2.3, the Company shall be the designee of the Trust for receipt
of requests for redemption from each Account and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust's designated
transfer agent receives notice of such request for redemption on Trade Date
plus 1 in accordance with the timing rules described in Section 2.1.
2.4. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Trust shall be made in
accordance with the provisions of such prospectus. The Accounts of the
Company, under which amounts may be invested in the Trust are listed on
Schedule A attached hereto and incorporated herein by reference, as such
Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto.
2.5. The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares
and dollar amount of each Portfolio to be purchased or redeemed. In the
event of net purchases, the Company shall pay for Portfolio shares on Trade
Date plus 1. Payment shall be in federal funds transmitted by wire. In the
event of net redemptions, the Portfolio shall pay the redemption proceeds in
federal funds transmitted by wire by 3:00 p.m. Eastern Time on Trade Date
plus 1. Notwithstanding the foregoing, if the payment of redemption proceeds
on the next Business Day would require the Portfolio to dispose of Portfolio
securities or otherwise incur substantial additional costs, and if the
Portfolio has determined to settle redemption transactions for all
shareholders on a delayed basis, proceeds shall be wired to the Company
within seven (7) days and the Portfolio shall notify in writing the person
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designated by the Company as the recipient for such notice of such delay by
3:00 p.m. Eastern Time on Trade Date plus 1. Upon mutual agreement by the
Administrator and the Company, (i) payments for shares purchased and redeemed
shall be made in federal funds transmitted via the NSCC Fund/SERV DCC & S
platform to or from the Company on the next business day following the
Company's receipt of the order, and the Company and the Administrator shall
each use commercially reasonable efforts to transmit (or cause to be
transmitted) funds to the other, for the purpose of settling net purchase
orders or orders of redemption, by 3:00p.m. Eastern Time on Trade Date plus 1
and (ii) all purchase and redemption transactions with respect to any shares
shall be settled via the NSCC Fund/SERV platform settlement process on the
next business day following the effective trade date and the Administrator
shall provide to the Company a daily transmission of positions and trading
activity taking place in a format agreed upon by the parties.
2.6. Issuance and transfer of the Trust's shares will be by book
entry only. Share certificates will not be issued to the Company or any
Account. Shares ordered from the Trust will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
2.7. On each record date, the Administrator shall use its best
efforts to furnish same day notice by 6:30 p.m. Eastern Time (by wire,
telephone, electronic media or by fax) to the Company of any dividends or
capital gain distributions payable on the Trust's shares. The Company hereby
elects to receive all such dividends and capital gain distributions as are
payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
dividends and capital gain distributions in cash. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
2.8. The Administrator shall make the net asset value per share of
each Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. Eastern Time. Such information will be furnished
(electronically or by fax), or upon mutual agreement by the Administrator and
the Company, such net asset values shall be provided via the NSCC Profile I
platform. In the event that the Administrator is unable to meet the 6:30
p.m. time stated immediately above, then the Administrator shall provide the
Company with additional time to notify the Administrator of purchase or
redemption orders pursuant to Sections 2.1 and 2.3, respectively, above.
Such additional time shall be equal to the additional time that the
Administrator takes to make the net asset values available to the Company.
If on a Business Day the net asset value per share of a Portfolio is not made
available by the time the Company begins its calculation of an Account's unit
value, the Company will use the previous Business Day's net asset value per
share in its calculations. If such previous Business Day's net asset value
per share is a materially incorrect share net asset value for the current
Business Day, any adjustment under Section 2.9 hereof shall be made.
2.9. If the Administrator provides materially incorrect share net
asset value information through no fault of the Company, the Company shall be
entitled to an adjustment with respect to the Trust shares purchased or
redeemed to reflect the correct net asset value per share as subsequently
determined by the Administrator. The determination of the materiality of any
net asset value pricing error shall be based on the Trust's policy for
correction of pricing errors (the "Pricing Policy"). The Company shall
correct such error in its records and in the records prepared by it for
Contract owners in accordance with information provided by the Administrator.
Any material error in the calculation or reporting of net asset value per
share, dividend or capital gain information shall be reported promptly upon
discovery to the Company.
2.10 The Administrator shall provide information to the Company of the
amount of shares traded and the associated cost per share (NAV) total trade
amount and the outstanding share balances held by the Account in each
Portfolio as of the end of each Business Day. Such information will be
furnished (electronically or by fax) by 1:00 p.m. Eastern time on the next
Business Day, or, if so agreed by the Administrator and the Company, via the
NSCCFund/SERV platform.
2.11 Contract Owner Information
2.11(a) Agreement to Provide Information. Company agrees to provide the
Fund, or its designee, upon written request, the taxpayer identification
number ("TIN"), the Individual/International Taxpayer
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Identification Number ("ITIN"), or other government-issued identifier
("GII"), and the Contract owner number or participant account number
associated with the owner of a Contract ("Contractowner"), if known, of any
or all Contractowner(s) of the Account, and the amount, date and transaction
type (purchase, redemption, transfer, or exchange) of every purchase,
redemption, transfer, or exchange of Shares held through an Account that
maintains an Insurance Company Fund Account during the period covered by the
request. Unless otherwise specifically requested by the Fund, the Company
shall only be required to provide information relating to
Contractowner-Initiated Transfer Purchases or Contractowner-Initiated
Transfer Redemptions.
(i) Period Covered by Request. Requests must set forth a specific
period, not to exceed one year prior to the date of the request, for
which transaction information is sought. A request may be ongoing and
continuous (e.g., for each trading day throughout the year) or for
specified periods of time beginning on the day the request is received.
A Portfolio may request transaction information older than one year from
the date of the request as it deems necessary to investigate compliance
with policies established by the Portfolio for the purpose of
eliminating or reducing market timing and abusive trading practices.
(ii) Form and Timing of Response. Company agrees to provide, promptly
upon request of the Fund or its designee, the requested information
specified in 2.11(a). If requested by the Fund, or its designee,
Company agrees to use best efforts to determine promptly whether any
specific person about whom it has received the identification and
transaction information specified in 2.11(a) is itself a financial
intermediary ("indirect intermediary") and, upon further request of the
Fund, or its designee, promptly either (i) provide (or arrange to have
provided) the information set forth in 2.11(a) for those
Contractowner(s) who are an indirect intermediary or (ii) restrict or
prohibit the Contractowner as shown on the records of the Company from
requesting Contractowner-Initiated Transfer Purchases or
Contractowner-Initiated Transfer Redemptions on behalf of other persons.
Company additionally agrees to inform the Fund whether it plans to
perform (i) or (ii). Responses required by this paragraph must be
communicated in writing and in a format mutually agreed upon by the Fund
or its designee and the Company; and to the extent practicable, the
format for any transaction information provided to the Fund should be
consistent with the NSCC Standardized Data Reporting Format.
(iii) Limitations on Use of Information. The Fund agrees not to use
the information received pursuant to this Amendment for any purpose
other than as necessary to comply with the provisions of Rule 22c-2 or
to fulfill other regulatory or legal requirements subject to the privacy
provisions of Title V of the Xxxxx-Xxxxx-Xxxxxx Act (Public Law 106-102)
and comparable state laws.
2.11 (b) Agreement to Restrict Trading. The Company agrees to execute written
instructions from the Fund to restrict or prohibit further
Contractowner-Initiated Transfer Purchases or Contractowner-Initiated Transfer
Redemptions requested by a Contractowner that has been identified by the Fund as
having engaged in such transactions that violate policies established by the
Fund for the purpose of eliminating or reducing market timing and abusive
trading practices. Instructions must be received by us at the address provided
in Article 12 for the giving of notices, or such other address that Company may
communicate to you in writing from time to time, including, if applicable, an
e-mail and/or facsimile telephone number:
(i) Form of Instructions. Instructions to restrict or prohibit trading
must include the TIN, ITIN, or GII and the specific individual
Contractowner number or participant account number, if known, and the
specific restriction(s) to be executed, including how long the
restriction(s) is(are) to remain in place. If the TIN, ITIN, GII or the
specific individual Contractowner number or participant account number
is not known, the instructions must include an equivalent identifying
number of the Contractowner(s) or other agreed upon information to which
the instruction relates.
(ii) Timing of Response. Company agrees to execute instructions, as
soon as reasonably practicable, but not later than five Business Days
after receipt of the instructions by the Company.
(iii) Confirmation by Company. Company must provide written
confirmation to the Fund that instructions have been executed. Company
agrees to provide confirmation as soon as reasonably practicable, but
not later than ten business days after the instructions have been
executed.
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2.11 (c) Definitions. For purposes of this Section 2.11:
(i) The term "Insurance Company Fund Account" means an omnibus account
with the Fund maintained by an Account
(ii) The term "Fund" includes JPMorgan Distribution Services, Inc.,
which is the Trust's principal underwriter; the Trust's transfer agent
and the series of the Trust listed in the Agreement.
(iii) The term "Shares" means the interests corresponding to the
redeemable securities of record issued by the Fund under the Investment
Company Act that are held by or through an Account[J1] that maintains an
Insurance Company Fund Account.
(iv) The term "Contractowner" means the holder of interests in a
variable annuity or variable life insurance contract issued by the
Company ("Contract"), or a participant in an employee benefit plan with
a beneficial interest in a Contract.
(v) The term "Contractowner-Initiated Transfer Purchase" means a
transaction that is initiated or directed by a Contractowner that
results in a transfer of assets within a Contract to a subaccount of the
Account which invests in Shares of the Fund, but does not include
transactions that are executed: (a) automatically pursuant to a
contractual or systematic program or enrollment such as transfer of
assets within a Contract to a subaccount of the Account which invests in
Shares of the Fund as a result of "dollar cost averaging" programs,
insurance company approved asset allocation programs, or automatic
rebalancing programs; (b) pursuant to a Contract death benefit; (c)
one-time step-up in Contract value pursuant to a Contract death benefit;
(d) allocation of assets to a subaccount of the Account which invests in
Shares of the Fund through a Contract as a result of payments such as
loan repayments, scheduled contributions, retirement plan salary
reduction contributions, or planned or other premium payments to the
Contract; or (e) pre- arranged transfers at the conclusion of a required
free look period.
(vi) The term "Contractowner-Initiated Transfer Redemption" means a
transaction that is initiated or directed by a Contractowner that
results in a transfer of assets within a Contract out of a subaccount of
the Account which invests in Shares of the Fund, but does not include
transactions that are executed: (a) automatically pursuant to a
contractual or systematic program or enrollments such as transfers of
assets within a Contract out of a subaccount of the Account which
invests in Shares of the Fund as a result of annuity payouts, loans,
systematic withdrawal programs, insurance company approved asset
allocation programs and automatic rebalancing programs; (b) as a result
of any deduction of charges or fees under a Contract; (c) within a
Contract out of a subaccount of the Account which invests in Shares of
the Fund as a result of scheduled withdrawals or surrenders from a
Contract; or (d) as a result of payment of a death benefit from a
Contract.
(vii) The term "written" and/or "in writing" within this Section 2.11 or
any Section of this Agreement includes electronic writings and facsimile
transmissions.
(viii) The term "Intermediary" shall mean a "financial intermediary" as
defined in 22c-2 of the Investment Company Act.
(ix) The term "purchase" does not include the automatic reinvestment of
dividends.
(x) The term "promptly" as used in 2.11(a)(ii) shall mean as soon as
practicable but in no event later than 10 business days from the
Company's receipt of the request for information from the Fund or its
designee.
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ARTICLE 3
PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS, VOTING
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3.1. The Trust shall provide the Company with as many printed copies
of the Trust's current prospectuses as the Company may reasonably request.
The Administrator will provide the Company with a copy of the statement of
additional information suitable for duplication. If requested by the
Company, in lieu of providing printed copies, the Trust shall provide
camera-ready film or computer diskettes or other electronic files containing
the Trust's prospectuses and statement of additional information in order for
the Company once each year (or more frequently if the prospectuses and/or
statement of additional information for the Trust is amended during the year)
to have the prospectuses for the Contracts and the applicable Trust
prospectuses printed together in one document or separately. The Company may
elect to print the Trust's prospectuses and/or its statement of additional
information in combination with other investment companies' prospectuses and
statements of additional information.
3.2(a). The Company will deliver or cause to be delivered to each of
its Contract owners, at or prior to the time of purchase of any Portfolio
shares, a copy of such Portfolio's prospectus and, upon request, a copy of
its statement of additional information. For prospectuses and statements
of additional information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or
the 1940 Act, the cost of setting in type, printing and distributing shall be
borne by the Trust. If the Company chooses to receive camera-ready film or
computer diskettes or other electronic files in lieu of receiving printed
copies of the Trust's prospectus and/or statement of additional information,
the Trust shall bear the cost of typesetting to provide the Trust's
prospectus and/or statement of additional information to the Company in the
format in which the Trust is accustomed to formatting prospectuses and
statements of additional information, respectively, and the Company shall
bear the expense of adjusting or changing the format to conform with any of
its prospectuses and/or statements of additional information. In such event,
the Trust will reimburse the Company in an amount equal to the product of x
and y where x is the number of such prospectuses distributed to owners of the
Contracts, and y is the Trust's per unit cost of printing the Trust's
prospectuses. The same procedures shall be followed with respect to the
Trust's statement of additional information. The Trust shall not pay any
costs of typesetting, printing and distributing the Trust's prospectus and/or
statement of additional information to prospective Contract owners. Except as
otherwise provided in this Section 3.2, all expenses of preparing, setting in
type and printing and distributing Trust prospectuses and statements of
additional information shall be the expense of the Company.
3.2(b). The Trust, at the Company's expense, shall provide the Company
with copies of Annual and Semi-Annual Reports (the "Reports") in such
quantity as the Company shall reasonably require for distributing to Contract
owners. The Trust, at its expense, shall provide the Contract owners
designated by the Company with copies of its proxy statements and other
communications to shareholders (except for prospectuses and statements of
additional information, which are covered in Section 3.2(a) above, and
Reports). The Trust shall not pay any costs of distributing Reports and
other communications to prospective Contract owners.
3.2(c). The Company agrees to provide the Trust or its designee with
such information as may be reasonably requested by the Trust to assure that
the Trust's expenses do not include the cost of typesetting, printing or
distributing any of the foregoing documents other than those actually
distributed to existing Contract owners.
3.2(d). Except as otherwise provided in this Agreement, the Trust shall
pay no fee, other compensation or other expenses under this Agreement. The
Trust may, however, pay the Company servicing fees under a written servicing
agreement for certain Portfolios pursuant to the services plan it has
adopted. In addition, the Trust has adopted a plan pursuant to Rule 12b-1 to
finance distribution expenses for certain Portfolios, and the Trust's
distributor may pay fees under such plan to the Company or to a designated
affiliate under a separate written agreement between such parties.
3.2(e). All expenses, including expenses to be borne by the Trust
pursuant to Section 3.2 hereof, incident to performance by the Trust under
this Agreement shall be paid by the Trust. The Trust shall see to it that
all its shares are registered and authorized for issuance in accordance with
applicable federal law and, if
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and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses
for the cost of registration and qualification of the Trust's shares.
3.3. If and to the extent required by law, the Company shall with
respect to proxy material distributed by the Trust to Contract owners
designated by the Company to whom voting privileges are required to be
extended:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instructions received
from Contract owners; and
(iii) vote Trust shares for which no instructions have been received in
the same proportion as Trust shares of such Portfolio for which
instructions have been received, so long as and to the extent
that the Securities and Exchange Commission continues to
interpret the 1940 Act to require pass-through voting privileges
for variable contract owners.
The Company reserves the right to vote Trust shares held in any segregated asset
account in its own right, to the extent permitted by law.
ARTICLE 4
SALES MATERIAL AND INFORMATION
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4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust, the Advisers or their designee, drafts of the separate accounts
prospectuses and statements of additional information and each piece of sales
literature or other promotional material prepared by the Company or any
person contracting with the Company to prepare such material in which the
Trust, the Advisers or the Administrator is described, at least ten Business
Days prior to its use. No such material shall be used if the Trust, the
Advisers, the Administrator or their designee reasonably objects to such use
within ten Business Days after receipt of such material.
4.2. Neither the Company nor any person contracting with the Company to
prepare sales literature or other promotional material shall give any
information or make any representations or statements on behalf of the Trust
or concerning the Trust in connection with the sale of the Contracts other
than the information or representations contained in the registration
statement or Trust prospectus, as such registration statement or Trust
prospectus may be amended or supplemented from time to time, or in reports to
shareholders or proxy statements for the Trust, or in sales literature or
other promotional material approved by the Trust or its designee, except with
the permission of the Trust or its designee.
4.3. The Administrator shall furnish, or shall cause to be furnished,
to the Company or its designee, each piece of sales literature or other
promotional material prepared by the Trust in which the Company or its
Accounts, are described at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to
such use within ten Business Days after receipt of such material.
4.4. Neither the Trust, the Administrator, nor the Advisers shall give
any information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts, other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement or prospectus
may be amended or supplemented from time to time, or in published reports or
solicitations for voting instruction for each Account which are in the public
domain or approved by the Company for distribution to Contract owners, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Trust will provide to the Company, upon its request, at least
one complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate
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to the Trust or its shares, promptly after the filing of such document with
the Securities and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Trust, upon the Trust's request,
at least one complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no action letters, and all amendments to any of
the above, that relate to the investment in an Account or Contract, prior to
with the filing of such documents with the Securities and Exchange Commission
or other regulatory authorities.
4.7. For purposes of this Article 4, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use
in, a newspaper, magazine, or other periodical, radio, television, internet,
telephone or tape recording, videotape, display, signs or billboards, motion
pictures, or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), and educational or training
materials or other communications distributed or made generally available to
some or all agents or employees.
4.8. The Company and its agents shall make no representations concerning
the Trust except those contained in the then-current prospectus and statement
of additional information of the Trust and in current printed sales
literature of the Trust.
ARTICLE 5
ADMINISTRATIVE SERVICES TO CONTRACT OWNERS
------------------------------------------
5. Administrative services to Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the
Trust, the Advisers or the Administrator. The Company, the Trust and the
Administrator recognize that the Account(s) will be the sole shareholder(s)
of Trust shares issued pursuant to the Contracts.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
6.1. The Trust represents that, each Portfolio is currently qualified as
a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code") and that it will make every effort to
maintain such qualification of the Trust and that it will notify the Company
immediately upon having a reasonable basis for believing that a Portfolio has
ceased to so qualify or that it might not so qualify in the future.
6.2. The Company represents that, that the Contracts will at all times
be treated as life insurance contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that
it will notify the Trust immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future.
6.3. The Trust represents that the Portfolios will at all times comply
with the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code, and that it will
make every effort to maintain the Trust's compliance with such
diversification requirements, and that it will notify the Company immediately
upon having a reasonable basis for believing that a Fund has ceased to so
qualify or that a Portfolio might not so qualify in the future.
6.4. The Company represents and warrants that the interests of the
Contracts are or will be registered unless exempt and that it will maintain
such registration under the 1933 Act and the regulations thereunder to the
extent required by the 1933 Act and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws and
regulations. The Company also represents and warrants that the Portfolios
will be sold in accordance with such Portfolio's current prospectus. The
Company further represents
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and warrants that it is an insurance company duly organized and in good
standing under applicable law and that it has legally and validly established
each Account prior to any issuance or sale thereof as a segregated asset
account under under applicable laws and regulations and has registered or,
prior to any issuance or sale of the Contracts, will maintain the
registration of each Account as a unit investment trust in accordance with
and to the extent required by the provisions of the 1940 Act and the
regulations thereunder, unless exempt therefrom or such registration is no
longer required, to serve as a segregated investment account for the
Contracts. The Company shall amend its registration statement for its
Contracts under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its Contracts.
6.5. The Company represents that the Account is a "segregated asset
account" and that interests in the Account are offered exclusively through
the purchase of a "variable contract," within the meaning of such terms under
Section 1.817-5(f)(2) of the regulations under the Code, and that it will
make every effort to continue to meet such definitional requirements, and
that it will notify the Trust immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not
be met in the future.
6.6. The Trust represents and warrants that it is and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Trust in an amount no less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. Such bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
The Trust will notify the Company immediately upon having a reasonable basis
for believing that the Trust no longer has the coverage required by this
Section 6.6.
6.7. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other entities dealing with the
money or securities of the Trust are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Trust, in an amount not less than five million dollars ($5,000,000). Such
bond shall include coverage for larceny and embezzlement and shall be issued
by a reputable bonding company. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect and agrees to notify the Trust immediately upon having a
reasonable basis for believing that the Company no longer has the coverage
required by this Section 6.7.
6.8. The Trust represents that a majority of its disinterest trustees
have approved the Trust's distribution plan adopted pursuant to Rule 12b-1
under the 1940 Act.
6.9. The Advisers and the Administrator each represents and warrants
that it complies with all applicable federal and state laws and regulations
and that it will perform its obligations for the Trust and the Company in
compliance with the laws and regulations of its state of domicile and any
applicable state and federal laws and regulations.
ARTICLE 7
STATEMENTS AND REPORTS
----------------------
7.1. The Administrator or its designee will make available
electronically to the Company within five (5) Business Days after the end of
each month a monthly statement of account confirming all transactions made
during that month in the Account.
7.2. The Trust and Administrator agree to provide the Company no later
than March 1 of each year with the investment advisory and other expenses of
the Trust incurred during the Trust's most recently completed fiscal year, to
permit the Company to fulfill its prospectus disclosure obligations under the
SEC's variable annuity fee table requirements.
-9-
ARTICLE 8
POTENTIAL CONFLICTS
-------------------
8.1. If required under the Shared Funding Exemptive Order, the Board
will monitor the Trust for the existence of any material irreconcilable
conflict between the interests of the Contract owners of all Accounts
investing in the Trust. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance Contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
8.2. If required under the Shared Funding Exemptive Order, the Company
will report in writing any potential or existing material irreconcilable
conflict of which it is aware to the Administrator. Upon receipt of such
report, the Administrator shall report the potential or existing material
irreconcilable conflict to the Board. The Administrator shall also report
to the Board on a quarterly basis whether the Company has reported any
potential or existing material irreconcilable conflicts during the previous
calendar quarter. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
8.3. If required under the Shared Funding Exemptive Order, the and it is
determined by a majority of the Board, or a majority of its disinterested
trustees, that a material irreconcilable conflict exists, the Company and
other Participating Insurance Companies shall, at their expense and to the
extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract
owners, life insurance policy owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account. No charge or penalty will be imposed as
a result of such withdrawal. The Company agrees that it bears the
responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict and the cost of such remedial action,
and these responsibilities will be carried out with a view only to the
interests of Contract owners.
8.4. If required under the Shared Funding Exemptive Order, if a material
irreconcilable conflict arises because of a decision by the Company to
disregard Contract owner voting instructions and that decision represents a
minority position or would preclude a majority vote, the Company may be
required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account (at the Company's expense); provided, however that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed as
a result of such withdrawal. The Company agrees that it bears the
responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict and the cost of such remedial action,
and these responsibilities will be carried out with a view only to the
interests of Contract owners.
8.5. If required under the Shared Funding Exemptive Order, the, for
purposes of Sections 8.3 through 8.4 of this Agreement, a majority of the
disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Trust be
-10-
required to establish a new funding medium for the Contracts. The Company
shall not be required by Section 8.3 through 8.4 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
8.6. If required under the Shared Funding Exemptive Order, and to the
extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such rules are applicable.
8.7. If required under the Shared Funding Exemptive Order, each of the
Company and the Advisers shall at least annually submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out the obligations imposed upon them by the provisions
hereof and in the Shared Funding Exemptive Order, and said reports, materials
and data shall be submitted more frequently if deemed appropriate by the
Board. Without limiting the generality of the foregoing or the Company's
obligations under Section 8.2, the Company shall provide to the Administrator
a written report to the Board no later than January 15th of each year
indicating whether any material irreconcilable conflicts have arisen during
the prior fiscal year of the Trust. All reports received by the Board of
potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, shall be properly recorded in the minutes of
the Board or other appropriate records, and such minutes or other records
shall be made available to the Securities and Exchange Commission upon
request.
ARTICLE 9
INDEMNIFICATION
---------------
9.1. INDEMNIFICATION BY THE COMPANY
------------------------------
9.1 (a). The Company agrees to indemnify and hold harmless the Trust,
the Administrator, the Advisers, and each member of their respective Boards
and officers and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 9.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on
behalf of the Trust for use in the registration statement or
prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Trust not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Trust) or unlawful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts
or Trust shares; or
-11-
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading
if such a statement or omission was made in reliance upon and in
conformity with information furnished to the Trust by or on behalf
of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company; as limited by and in accordance
with the provisions of Section 9.1(b) and 9.1(c) hereof.
9.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
9.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at as own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
Indemnified Party named in the action. After notice from the Company to such
Indemnified Party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company shall not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof
other than reasonable costs of investigation.
9.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
9.2. INDEMNIFICATION BY ADMINISTRATOR
--------------------------------
9.2(a). The Administrator agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 9.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Administrator) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this
-12-
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Trust or the Administrator by or on
behalf of the Company, the Advisers, Counsel for the Trust, the
independent public accountant to the Trust, or any person or
entity that is not acting as agent for or controlled by the
Administrator for use in the registration statement or prospectus
for the Trust or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Portfolio shares; or
(ii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf
of the Administrator; or
(iii) arise as a result of any failure by the Administrator to provide
the services (and furnish the materials under the terms of this
Agreement; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Administrator in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Administrator; as limited by and in
accordance with the provisions of Section 9.2(b) and 9.2(c) hereof.
9.2(b). The Administrator shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
9.2(c). The Administrator shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Administrator in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Administrator
of any such claim shall not relieve the Administrator from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Administrator will be
entitled to participate, at its own expense, in the defense thereof. The
Administrator also shall be entitled to assume the defense thereof, with counsel
satisfactory to the Indemnified Party named in the action. After notice from
the Administrator to such Indemnified Party of the Administrator's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Administrator will
not be liable to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
9.2(d). The Company agrees promptly to notify the Administrator of the
commencement of any litigation or proceedings against it or any of its
Indemnified Parties in connection with the issuance or sale of the Contracts or
the operation of each Account in which the Portfolios are made available.
9.3. INDEMNIFICATION BY THE ADVISERS
-------------------------------
9.3(a). The Advisers agree to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this
-12-
Section 9.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Advisers)
or litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Advisers or the
Trust by or on behalf of the Company, the Administrator, Counsel
for the Trust, the independent public accountant to the Trust, or
any person or entity that is not acting as agent for or controlled
by the Advisers for use in the registration statement or
prospectus for the Trust or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of
the Contracts or Portfolio shares; or
(ii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf
of the Advisers; or
(iii) arise as a result of any failure by the Advisers to provide the
services and furnish the materials under the terms of this
Agreement; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Advisers in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Advisers; as limited by and in accordance
with the provisions of Section 9.3(b) and 9.3(c) hereof.
9.3(b). The Advisers shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
9.3(c). The Advisers shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Advisers in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Advisers of any
such claim shall not relieve the Advisers from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Advisers will be entitled to participate,
at its own expense, in the defense thereof. The Advisers also shall be entitled
to assume the defense thereof, with counsel satisfactory to the Indemnified
Party named in the action. After notice from the Advisers to such Indemnified
Party of the Advisers's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Advisers will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
then reasonable costs of investigation.
-14-
9.3(d). The Company agrees to promptly notify the Advisers of the
commencement of any litigation or proceedings against it or any of Indemnified
Parties in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Trust.
9.4. INDEMNIFICATION BY THE TRUST
----------------------------
9.4(a). The Trust agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 9.4) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and
in conformity with information furnished the Trust by or on behalf
of the Advisers, the Company, or the Administrator for use in the
registration statement or prospectus for the Trust or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Portfolio shares;
or
(ii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on behalf
of the Trust; or
(iii) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Trust, including, without limitation, the
failure to operate as a regulated investment company under
Subchapter M of the Code and the failure to comply with the
diversification requirements if Section 817(h) of the Code and the
regulations promulgated thereunder; as limited by and in
accordance with the provisions of Section 9.4(b) and 9.4(c) hereof.
9.4(b). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
9.4(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is
-15-
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Trust will be
entitled to participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with counsel
satisfactory to the Indemnified Party named in the action. After notice from
the Trust to such Indemnified Party of the Trust's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Trust will not be liable to
such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection
with the defense thereof other then reasonable costs of investigation.
9.4(d). The Company agrees to promptly notify the Trust of the
commencement of any litigation or proceedings against it or any of the
Indemnified Parties in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Trust.
ARTICLE 10
APPLICABLE LAW
--------------
10.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
10.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE 11
TERMINATION
-----------
11.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason upon ninety days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Trust, the
Advisers, and the Administrator with respect to any Portfolio
based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt of
notice unless the Trust makes available a sufficient number of
shares to reasonably meet the requirements of the Account
within said ten (10) day period; or
(c) termination by the Company upon written notice to the Trust,
the Advisers, and the Administrator with respect to any
Portfolio in the event any of the Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts
issued or to be issued by the Company. The terminating party
shall give prompt notice to the other parties of its decision
to terminate; or
(d) termination by the Company upon written notice to the Trust,
the Advisers and the Administrator with respect to any
Portfolio in the event that such portfolio ceases to qualify
as a Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision; or
-16-
(e) termination by the Company upon written notice to the Trust,
the Advisers, and the Administrator with respect to any
Portfolio in the event that such Portfolio fails to meet the
diversification requirements specified in Section 6.3 hereof;
or
(f) termination by either the Trust, the Advisers, or the
Administrator by written notice to the Company, if either one
or more of the Trust, the Advisers, or the Administrator,
shall determine, in its or their sole judgment exercised in
good faith, that the Company and/or their affiliated companies
has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity
provided that the Trust, the Advisers, or the Administrator
will give the Company sixty (60) days' advance written notice
of such determination of its intent to terminate this
Agreement, and provided further that after consideration of
the actions taken by the Company and any other changes in
circumstances since the giving of such notice, the
determination of the Trust, the Advisers, or the Administrator
shall continue to apply on the 60th day since giving of such
notice, then such 60th day shall be the effective date of
termination; or
(g) termination by the Company by written notice to the Trust, the
Advisers, Administrator, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Trust, the Advisers, or the Administrator has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity, provided that the
Company will give the Trust, the Advisers, and the
Administrator sixty (60) days' advance written notice of such
determination of its intent to terminate this Agreement, and
provided further that after consideration of the actions taken
by the Trust, the Advisers, or the Administrator and any other
changes in circumstances since the giving of such notice, the
determination of the Company shall continue to apply on the
60th day since giving of such notice, then such 60th day shall
be the effective date of termination; or
(h) termination by any party upon the other party's breach of any
representation or any material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction
of the terminating party within ten (10) days after written
notice of such breach is delivered to the Trust or the
Company, as the case may be; or
(i) termination by the Trust, the Advisers, or Administrator by
written notice to the Company in the event an Account or
Contract is not registered (unless exempt from registration or
registration is no longer required) or sold in accordance with
applicable federal or state law or regulation, or the Company
fails to provide pass-through voting privileges as specified
in Section 3.3.
11.2. EFFECT OF TERMINATION. Notwithstanding any termination of
this Agreement, the Trust shall continue to make additional shares of the Trust
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). If Trust shares continue to be made
available after such termination, the provisions of this Agreement shall remain
in effect and thereafter either the Trust or the Company may terminate the
Agreement, as so continued pursuant to this Section 11.3, upon prior written
notice to the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Fund, need not be for more than six
months. . The parties agree that this Section 11.2 shall not apply to any
terminations under Article 8 and the effect of such Article 8 terminations shall
be governed by Article 8 of this Agreement.
11.3. The Company shall not redeem Trust shares attributable to the
Contracts (as distinct from Trust shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Trust, the Advisers and
the Administrator the opinion of
-17-
counsel for the Company (which counsel shall be reasonably satisfactory to
the Trust and the Advisers) to the effect that any redemption pursuant to
clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the Trust or the
Advisers 30 days notice of its intention to do so.
ARTICLE 12
NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Trust:
JPMorgan Insurance Trust
Mail Code OH1-1235
0000 Xxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxx, Xxxx 00000
Attn: Contract Administrator
If to the Administrator:
JPMorgan Funds Management, Inc.
Mail Code OH1-1235
0000 Xxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxx, Xxxx 00000
Attention: Contract Administrator
If to the Advisers:
JPMorgan Investment Advisors Inc.
Mail Code OH1-0211
0000 Xxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxx, Xxxx 00000
Attn: Contract Administrator
X.X. Xxxxxx Investment Management Inc.
Mail Code OH1-0211
0000 Xxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxx, Xxxx 00000
Attn: Contract Administrator
If to the Company:
The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx
-18-
ARTICLE 13
MISCELLANEOUS
-------------
13.1. All persons dealing with the Trust must look solely to the
property of the Trust for the enforcement of any claims against the Trust as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust. Each of the
Company, the Advisers, and the Administrator acknowledges and agrees that, as
provided by the Trust's Amended and Restated Declaration of Trust, the
shareholders, trustees, officers, employees and other agents of the Trust and
the Portfolios shall not personally be bound by or liable for matters set
forth hereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder. The Trust's Amended and
Restated Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts.
13.2. The Company will comply with all applicable laws and regulations
aimed at preventing, detecting, and reporting money laundering and suspicious
transactions. Without limiting the generality of the foregoing, the Company
shall take all necessary and appropriate steps, consistent with applicable
regulations and generally accepted industry practices, to: (i) obtain,
verify, and retain information with regard to Contract owner identification
and source of Contract owner funds, and (ii) maintain records of all Contract
owner transactions. The Company will (but only to the extent consistent with
applicable law) take all steps necessary and appropriate to provide the Trust
with any requested information about Contract owners and their accounts in
the event that the Trust shall request such information due to an inquiry or
investigation by any law enforcement, regulatory, or administrative
authority. To the extent permitted by applicable law and regulations, the
Company will notify the Trust of any concerns that the Company may have in
connection with any Contract owner in the context of relevant anti-money
laundering laws or regulations.
13.3. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.
13.4. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.6. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13.7. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the Financial Industry Regulatory
Authority and state insurance regulators) and shall permit such authorities
(and other parties hereto) reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
13.8. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.9. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Advisers may, with advance written notice
to the other parties hereto, assign this Agreement or any rights or
obligations hereunder to any affiliate of or company under common control
with the Advisers if such assignee is duly licensed and registered to perform
the obligations of the Advisers under this Agreement.
-19-
13.10. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee upon request, copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical and in any event within
90 days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory), as soon as
practical and in any event within 45 days following such period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical after
the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports
the Company filed with the Securities and Exchange Commission or any state
insurance regulator, as soon as practical after the filing thereof; and
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
13.11. The names "JPMorgan Insurance Trust" and "Trustees of JPMorgan
Insurance Trust" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated June 7, 1993 to which reference is hereby made and
a copy of which is on file at the office of the Secretary of The Commonwealth
of Massachusetts and elsewhere as required by law, and to any and all
amendments thereto so filed or hereafter filed. The obligations of "JPMorgan
Insurance Trust" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the
Trust, and all persons dealing with any series of shares of the Trust must
look solely to the assets of the Trust belonging to such series for the
enforcement of any claims against the Trust.
13.12. The Trust and the Administrator agree to consult with the Company
concerning whether any Portfolio of the Trust qualifies to provide a foreign
tax credit pursuant to Section 853 of the Code.
[SIGNATURE PAGES FOLLOW]
-20-
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
JPMORGAN INSURANCE TRUST
By: /s/ Xxxxxxx X. House
Name: Xxxxxxx X. House
Title: Assistant Treasurer
JPMORGAN INVESTMENT ADVISORS INC.
By: Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Treasurer & CFO
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Managing Director
JPMORGAN FUNDS MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
-21-
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
-------------------------------
as of April 24, 2009 which Accounts and Contracts may be changed from time to
time upon written notification to the Trust by the Company within a reasonable
time from such change
--------------------------------------------------------------------------------------------------
Name of Separate Account, Date Established by Board of Directors, Form Number
Law under which Established Funded by Separate Account
--------------------------------------------------------------------------------------------------
Lincoln Life Flexible Premium Variable Life Account Z LN 930
Established on July 30, 2003 under the laws of the State of
Indiana
--------------------------------------------------------------------------------------------------
Lincoln Life Flexible Premium Variable Life Account JF-C Form 94-01
Established on August 4, 1993 under the laws of the State of
New Hampshire
--------------------------------------------------------------------------------------------------
Lincoln Life & Annuity Flexible Premium Variable Account Z Not yet approved
Established on _____ __, _____ under the laws of the State of
New York
--------------------------------------------------------------------------------------------------
-22-
SCHEDULE B
----------
PORTFOLIOS OF THE TRUST
-----------------------
JPMorgan Insurance Trust Balanced Portfolio Class 1
JPMorgan Insurance Trust Core Bond Portfolio Class 1
JPMorgan Insurance Trust U.S. Equity Portfolio Class 1
JPMorgan Insurance Trust Diversified Mid Cap Growth Portfolio Class 1
JPMorgan Insurance Trust Mid Cap Value Portfolio Class 1
JPMorgan Insurance Trust Equity Index Portfolio Class 1
JPMorgan Insurance Trust International Equity Portfolio Class 1
JPMorgan Insurance Trust Intrepid Growth Portfolio Class 1
JPMorgan Insurance Trust Intrepid Mid Cap Portfolio Class 1
JPMorgan Insurance Trust Small Cap Core Portfolio Class 1
-23-
2ND AMENDMENT TO
FUND PARTICIPATION AGREEMENT
WHEREAS, Lincoln National Life Insurance Company, Lincoln Life and Annuity
Company of New York (collectively referred to as the "Company"), JPMorgan
Insurance Trust ("Trust"), X.X. Xxxxxx Investment Management Inc (the
"Adviser"), and JPMorgan Funds Management, Inc. (the "Administrator") entered
into a
Fund Participation Agreement dated April 24, 2009, as amended April 15,
2011 (the "Agreement"); and
WHEREAS, the parties desire to amend Schedule B of the Agreement effective April
1, 2013;
NOW THEREFORE, the agreement is amended as follows:
Schedule B is deleted in its entirely and replaced with the Schedule B attached
hereto. Except to the extent modified by this Amendment, the remaining
provisions of the Agreement shall remain in full force and effect. In the event
of a conflict between the provisions of the Agreement and those of this
Amendment, the Amendment shall control.
IN WITNESS WHEREOF, the undersigned have executed this Amendment by their duly
authorized officers effective as April 1, 2013.
LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
Date: April 26, 2013
LINCOLN NATIONAL LIFE AND ANNUITY COMPANY OF NEW YORK
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
Date: April 26, 2013
(ADDITIONAL SIGNATURES ON FOLLOWING PAGE)
JPMORGAN INSURANCE TRUST
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Assistant Treasurer
Date: May 3, 2013
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Managing Director
Date: May 1, 2013
JPMORGAN FUNDS MANAGEMENT, INC,
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Executive Director
Date: April 30, 2013
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
Accounts and contracts may be changed from time to time upon written
notification to the Trust by the Company with in a reasonable time from such
change.
----------------------------------------------------------------------------------------------------
NAME OF THE SEPARATE ACCOUNT, DATE FORM NUMBER FUNDED BY SEPARATE ACCOUNT
ESTABLISHED BY THE BOARD OF DIRECTORS, LAW
UNDER WHICH ESTABLISHED
----------------------------------------------------------------------------------------------------
Lincoln Life Flexible Premium Variable Life LN 930, LN 940 (1-10)
Account Z, Established on July 30, 2003 under
the laws of the State of Indiana
----------------------------------------------------------------------------------------------------
Lincoln Life Flexible Premium Variable Life Form 94-01
Account JF-C, established on August 4, 1993
under the laws of the State of New Hampshire
----------------------------------------------------------------------------------------------------
Lincoln Life & Annuity Flexible Premium LN 000 00-00
Variable Account Z, established on June
26, 2012 under the laws of the State of New York.
----------------------------------------------------------------------------------------------------
Lincoln Life Flexible Premium Variable Life Account S, LN 939 (5-10), LN939 (8-05), LN935, LN920
established on November 2, 1998 under the laws of the and LN921
State of Indiana.
----------------------------------------------------------------------------------------------------
