PARTICIPATION AGREEMENT
AMONG
INVESTORS FUND SERIES
XXXXXXX XXXXXX INVESTMENTS, INC.
XXXXXX DISTRIBUTORS, INC.
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 30th day of October,1998 by
and among The Lincoln National Life Insurance Company (hereinafter, the
"Company"), an Indiana insurance company, on its own behalf and on behalf of
each separate account of the Company set forth on Schedule A hereto as may be
amended from time to time (each account hereinafter referred to as an
"Account"), Investors Fund Series, a business trust organized under the laws
of the Commonwealth of Massachusetts (hereinafter, the "Fund"), Xxxxxxx
Xxxxxx Investments, Inc. (hereinafter the "Adviser"), a Delaware corporation,
and Xxxxxx Distributors, Inc. (hereinafter the "Underwriter"), a Delaware
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance and variable annuity
contracts (hereinafter the "Variable Insurance Products") offered by
insurance companies that have entered into participation agreements with the
Fund (hereinafter "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participation Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (SEC Release No. IC-17164; File No. 812-7345;
hereinafter the "Shared Funding Exemption Order");
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities laws;
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts supported wholly or partially by the
Accounts (the "Contracts") under the 1933 Act, and said Contracts are listed
in Schedule A hereto, as it may be amended from time to time by mutual
written agreement;
WHEREAS, each Account is duly established and maintained as a separate
account established by resolution of the Board of Directors of the Company,
on the date shown for such Account on Schedule A hereto, to set aside and
invests assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act;
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios listed
in Schedule A hereto, as it may be amended from time to time by mutual
written agreement ("Designated Portfolios"), on behalf of the Accounts to
fund the aforesaid Contracts, and the Underwriter is authorized to sell such
shares to unit investment trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund
("Unaffiliated Funds") on behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Underwriter agree as follows:
ARTICLE I.
SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios that the Accounts order, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of each Designated Portfolio available
for purchase at the applicable net asset value per share by the Company and
the Accounts on those days on which the Fund calculates such Designated
Portfolio's net asset value pursuant to rules of the SEC, and the Fund shall
use reasonable efforts to calculate such net asset value by 6:30 p.m. New
York time on each day when the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Fund ("Board")
may refuse to sell shares of any Designated Portfolio, or suspend or
terminate the offering of shares of any Designated 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 its
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Designated Portfolios.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies or their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The
Fund and the Underwriter will not sell shares of any Designated Portfolio to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Sections 2.1, 3.4, 3.5 and 3.6 and
Article VII of this Agreement if in effect to govern such sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value
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next computed after receipt by the Fund or its designee of the request for
redemption. The Fund will pay for net redemptions via federal funds wire
transmitted by 2:00 p.m. New York time on the same day the Fund receives
notice of redemption, except that the Fund reserves the right to suspend the
right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 1940 Act and any rules
thereunder, and in accordance with the procedures and policies of the Funds
as described in the Fund's then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Accounts and receipt by such designee shall constitute receipt by the Fund;
provided that same Business Day, provided that the Company receives the order
prior to the determination of net asset value as set forth in the Fund's then
current prospectus and the Fund receives notice of such order by 10:00 a.m.,
New York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the Fund's then current prospectus in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for shares of a Designated Portfolio on the
next Business Day after receipt of an order to purchase shares of such
Designated Portfolio. Payment shall be in federal funds transmitted by wire
by 2:00 p.m., New York time. If payment in federal funds for any purchase is
not received or is received by the Fund after 2:00 p.m. New York time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse
the Fund for any charges, costs, fees, interest or other expenses incurred by
the Fund in connection with any advances to, or borrowing or overdrafts by,
the Fund, or any similar expenses incurred by the Fund, as a result of
portfolio transactions effected by the Fund based upon such purchase request.
For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of
the company and shall become the responsibility of the Fund. The Fund will
confirm receipt of each trade and the confirmation of each trade received by
the Company via fax or e-mail by 1:00 p.m. New York time.
1.8 Issuance and transfer of the shares of a Designated Portfolio will be
by book entry only. Stock certificates will not be issued to the Company or
any Account. Shares of a Designated Portfolio ordered from the Fund will be
recorded in an appropriate title for each Account or the appropriate
subaccount of each Account.
1.9 The Fund shall furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on shares of the Designated Portfolios.
The Company hereby elects to receive all such income, dividends, and capital
gain distributions as are payable on shares of a Designated Portfolio in
additional shares of that Designated Portfolio. The Company reserves the
right to revoke this election and to receive all such income dividends in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions. The Fund shall use its best
efforts to furnish advance notice of the day such dividends and distributions
are expected to be paid.
1.10 The Fund shall make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated (normally by
6:30 p.m. New York time), and shall use its best efforts to make such net
asset value per share available by 6:30 p.m. New York time.
1.11 The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the shares of the Designated Portfolios (and
other Portfolios of the Fund) may be sold to other
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insurance companies (subject to Section 1.3 and Article VII hereof) and the
cash value of the Contracts may be invested in other investment companies.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued, offered for
sale and sold in compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing under applicable law and that it has legally
and validly established each Account prior to the issuance or sale thereof as
a separate account under the Indiana insurance laws and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as
a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a separate account for the Contracts.
2.2 The Fund represents and warrants that shares of the Designated
Portfolios sold pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sold in compliance with all applicable
federal securities laws and that the Fund is and shall remain registered
under the 0000 Xxx. The Fund shall amend the Registration Statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares of the Designated Portfolios for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund after taking into consideration any state
insurance law requirements that the Company advises the Fund may be
applicable.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
may make such payments in the future subject to applicable law.
2.4 The Fund makes no representation as to whether any aspect of its
operation, including but not limited to, investments policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states, except that the Fund represents that the investment policies,
fees and expenses of the Designated Portfolios are and shall at all times
remain in compliance with the applicable state insurance laws to the extent
required to perform this Agreement. The Company will advise the Fund in
writing as to any requirements of state insurance laws that affect the
Designated Portfolios, and the Fund will be deemed to be in compliance with
this Section 2.4 so long as the Fund complies with such advice of the Company.
2.5 The Fund represents that it is lawfully organized and validly
existing as a business trust under the laws of the Commonwealth of
Massachusetts and that it does and will comply in all material respects with
the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the shares of
the Designated Portfolios in accordance with any applicable state and federal
securities laws.
2.7 The Underwriter represents and warrants that it is and shall remain
duly registered as an investment adviser under all applicable federal and
state securities laws and that the Adviser shall perform
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its obligations for the Fund in compliance in all material respects with any
applicable federal and state securities laws.
2.8 The Fund, the Adviser and the Underwriter represent and warrant that
all their directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage for the benefit of the Fund in an amount no less than the
minimum coverage required by Rule 17g-1 of the 1940 Act or such related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.9 The Company represents and warrants that all its directors, officers,
employees, investment advisers, and other individuals or entities employed or
controlled by the Company dealing with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage in an amount
not less than $20 million. The aforesaid bond includes coverage for larceny
and embezzlement and is issued by a reputable bonding company. The Company
agrees that this bond or another bond containing these provisions will always
be in effect, and agrees to notify the Fund, the Adviser and the Underwriter
in the event that such coverage no longer applies.
2.10 The Company represents and warrants that all shares of the
Designated Portfolios purchased by the Company will be purchased on behalf of
one or more unmanaged separate accounts that offer interests therein that are
registered under the 1933 Act and upon which a registration fee has been or
will be paid; and the Company acknowledges that the Fund intends to rely upon
this representation and warranty for purposes of calculating SEC registration
fees payable with respect to such shares of the Designated Portfolios
pursuant to Instruction B.5 to Form 24F-2 or any similar form or SEC
registration fee calculation procedure that allows the Fund to exclude shares
so sold for purposes of calculating its SEC registration fee. The company
agrees to cooperate with the Fund on no less that an annual basis to certify
as to its continuing compliance with this representation and warranty.
ARTICLE III.
PROSPECTUSES, STATEMENTS OF ADDITIONAL
INFORMATION, AND PROXY STATEMENTS; VOTING
3.1 The Fund shall provide the Company with as many copies of the Fund's
current prospectus for the Designated Portfolios as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for a Designated
Portfolio is amended to) to have the prospectus for the Contracts and the for
the Designated Portfolios printed together in one document. Expenses with
respect to the foregoing shall be borne as provided under Article V.
3.2 The Fund's prospectus shall disclose that (a) the Fund is intended to
be a funding vehicle for all types of variable annuity and variable life
insurance contracts offered by Participating Insurance Companies, (b)
material irreconcilable conflicts of interest may arise, and (c) the Fund's
Board will monitor events in order to identify the existence of any material
irreconcilable conflicts and determine what actions, if any, should be taken
in response to such conflicts. The Fund hereby notifies the Company that
disclosure in the prospectus for the Contracts regarding the potential risks
of mixed and shared funding may be appropriate. Further, the Fund's
prospectus shall state that the current Statement of Additional Information
("SAI") for the Fund is available from the Company (or, in the Fund's
discretion, from the Fund), and the Fund shall provide a copy of such SAI to
any owner of a contract who requests
5
such SAI an dot the Company in such quantities as the Company may reasonably
request. Expenses with respect to the foregoing shall be borne as provided
under Article V.
3.3. The Fund shall provide to the Company with copies of its proxy
material, reports to shareholders, and other communications to shareholders
for the Designated Portfolios in such quantity as the Company shall
reasonably require for distributing to Contract owners. Expenses with respect
to the foregoing shall be borne as provided under Article V.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the shares of each Designated Portfolio in accordance with
instructions received from Contract owners; and
(iii) vote shares of each Designated Portfolio for which no instructions
have been received in the same proportion as shares of such
Designated Portfolio for which instructions have been received
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners or to
the extent otherwise required by law. The Company reserves the right to vote
shares of each Designated Portfolio held in any separate account in its own
right, to the extent permitted by law.
3.5 The Company shall be responsible for assuring that each of its
separate accounts participating in a Designated Portfolio calculates voting
privileges as required by the Shared Funding Exemption Order and consistent
with any reasonable standards that the Fund has adopted or may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well
as with Sections 16(a) and, if and when applicable, Section 16(b). Further,
the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
or trustees and with whatever rules the SEC may promulgate from time to time
with respect thereto. The Fund reserves the right, upon prior written notice
to the Company (given at the earliest practicable time), to take all actions,
including but not limited to, the dissolution, termination, merger and sale
of all assets of the Fund or any Designated Portfolio upon the sole
authorization of the Board, to the extent permitted by the laws of the
Commonwealth of Massachusetts and the 0000 Xxx.
3.7 It is understood and agreed that, except with respect to information
regarding the Fund, the Underwriter, the Adviser or Designated Portfolios
provided in writing or approved by the Fund, the Underwriter or the Adviser,
none of the Fund, the Underwriter or the Adviser is responsible for the
content of the prospectus or statement of additional information for the
Contracts.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or the Underwriter, each piece of sales literature or other promotional
material ("sales literature") that the Company develops or
6
uses in which the Fund (or a Designated Portfolio thereof) or the Adviser or
the Underwriter is named, at least eight days prior to its use. No such
material shall be used if the Fund or its designee reasonably objects to such
use within eight business days after receipt of such material. The Fund or
its designee reserves the right to reasonably object to the continued use of
such material, and no such material shall be used if the Fund or its designee
so object.
4.2 The Company shall not give any information or make any representation
or statement on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus, or SAI for the shares of
the Designated Portfolios, as such registration statement, prospectus or SAI
may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company, each piece of sales literature that the Fund or
the Underwriter develops or uses in which the Company and/or its Account is
named, at least eight days prior to its use. No such material shall be used
if the Company reasonably objects to such use within eight business days
after receipt of such material. The Company reserves the right to reasonably
object to the continued use of such material and no such material shall be
used if the Fund or its designee so object.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account or the Contracts other than the information or representations
contained in the registration statement or prospectus or statement of
additional information for the Contracts, as such registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for the Accounts
which are public domain or approved by the Company for distribution to
Contract owners, or in sales literature approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the
Designated Portfolios, reasonably promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration Statements, prospectuses, statements of additional
information, shareholder reports, solicitations for voting instructions,
sales literature, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, that relate
to the Contracts or the Accounts and their investment in the Designated
Portfolios, reasonably promptly after the filing of such document with the
SEC or other regulatory authorities.
4.7 For purposes of this Agreement, the phrase "sales literature"
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, electronic media, 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, 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.
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4.8 At the request of any party to this Agreement, any other party will
make available to the requesting party's independent auditors all records,
data and access to operating procedures that may reasonably be requested in
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
ARTICLE V
FEES AND EXPENSES
5.1 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, except and as further provided in Schedule B. The
Fund shall see to it that all shares of the Designated Portfolios are
registered, duly authorized for issuance and sold in compliance with
applicable federal securities laws and, if and to the extent deemed advisable
by the Fund, in accordance with applicable state securities laws prior to
their sale.
5.2 The parties hereto shall bear the expenses of typesetting, printing
and distributing the Fund's prospectus, SAI, proxy materials and reports as
provided in Schedule B.
5.3 Administrative services to variable Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the
Fund, Underwriter or Adviser. The Fund recognizes the Company as the sole
shareholder of shares of the Designated Portfolios issued under the Agreement.
5.4 The Fund shall not pay and neither the Adviser nor the Underwriter
shall pay any fee or other compensation to the Company under this Agreement,
although the parties will bear certain expenses in accordance with Schedule B
and other provisions of this Agreement.
ARTICLE VI
DIVERSIFICATION AND QUALIFICATION
6.1 The Fund will invest the assets of each Designated Portfolio in such
a manner as to ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Internal Revenue
Code of 1986, as amended ("Code") and the regulations issued thereunder (or
any successor provisions). Without limiting the scope of the foregoing, the
Fund represents that it will, with respect to each Designated Portfolio,
comply with Section 817(h) of the Code and Treasury Regulation
Section1.817.5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts, and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a breach of this
Article VI, the Fund will take all reasonable steps (a) to notify the Company
of such breach and (b) to adequately diversify the affected Designated
Portfolio so as to achieve compliance within the grace period afforded by
Treasury Regulation Section1.817.5.
6.2 The Fund represents that each Designated Portfolio is currently
qualified (and for new Designated Portfolios, intends to qualify) as a
Regulated Investment Company under Subchapter M of the Code, and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that a Designated
Portfolio has ceased to so qualify or that a Designated Portfolio might not
so qualify in the future.
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6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make
every effort to maintain such treatment, and that it will notify the Fund,
the Adviser and the Underwriter immediately upon having a reasonable basis
for believing the Contracts have ceased to be so treated or that they might
not be so treated in the future. The Company agrees that any prospectus
offering a contract that is a "modified endowment contract" as that term is
defined in Section 7702A of the Code (or any successor or similar provision),
shall identify such contract as a modified endowment contract.
ARTICLE VII
POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, which may include: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, 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 Designated Portfolio are being
managed; (e) a difference in voting instructions given by variable annuity
and variable life insurance contract owners; (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.
7.2 The Company and the Adviser will report any potential or existing
conflicts of which each is aware to the Board. The Company will assist the
Board in carrying out its responsibilities under the Shared Funding Exemptive
Order, by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. At least annually, and more frequently
if deemed appropriate by the Board, the Company shall submit to the Adviser,
and the Adviser shall submit 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 its obligations imposed upon it by the conditions
contained in the Shared Funding Exemption Order; and said reports, materials
and data shall be submitted more frequently if reasonably deemed appropriate
by the Board. The responsibility to report such information and conflicts to
the Board will be carried out with a view only to the interests of the
contract owners.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and any other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested Board members), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Designated Portfolio and reinvesting
such assets in a different investment medium, which may include another
Designated Portfolio of the Fund, or submitting to a vote of all affected
contract owners the question whether such segregation should be implemented
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in favor
of such segregation, or offering to the affected contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
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7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in any Designated Portfolio and terminate this Agreement with
respect to such Account provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
members of the Board. The Company shall bear the cost of any remedial
action, including such withdrawal and termination. No penalty will be imposed
by the Fund upon the affected Account for withdrawing assets from the Fund in
the event of a material irreconcilable conflict. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented, and until the
effective date of such termination the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of such Designated Portfolio.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the affected Designated Portfolio and
terminate this Agreement with respect to such Account within six months after
the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested members of the Board. Until the effective date of such
termination the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Designated
Portfolios.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether or
not any proposed action adequately remedies any irreconcilable material
conflict; but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contract if an offer to
do so has been declined by a vote of a majority of affected Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw
an Account's investment in any Designated Portfolio and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable material conflict as determined by a majority of
the disinterested members of the Board.
7.7 If and to the extent the Shared Funding Exemption Order contains
terms and conditions different from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3,
7.4 and 7.5 of this Agreement, then the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with the Shared Funding Exemption Order, and Sections
3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of the Agreement shall continue in
effect only to the extent that terms and conditions substantially identical
to such Sections are contained in the Shared Funding Order or any amendment
thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1,
7.2, 7.3, 7.4 and 7.5 of this Agreement shell continue in effect only to the
10
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Underwriter and each of their officers, trustees and directors
and each person, if any, who controls the Fund, the Adviser, the Underwriter
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities, joint or several (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 or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the shares of the Designated Portfolios or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, prospectus, or statement of additional information 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 alleged omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of the Fund for use in the Registration Statement, prospectus or
statement of additional information for the Contracts or in the Contracts or
sales literature for the Contracts (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or shares of
the Designated Portfolios; or
(ii) arise out of or as a result of upon statements or
representations (other than statements or representations contained in the
Registration Statement, prospectus, SAI or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful conduct of
the Company or persons under its authorization or control, with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
prospectus, SAI or sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and in conformity with information furnished to the Fund by or
on behalf of the Company; or
(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
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in Article VI of this
Agreement);
(v) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in any Registration
Statement, prospectus, statement of additional information or sales
literature of any Unaffiliated, or arise out of or are based upon the
omission or
11
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
otherwise pertain to or arise in connection with the availability of any
Unaffiliated Fund as an underlying funding vehicle in respect of the
Contracts; or
(vi) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c).
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(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 upon any designated agent), but failure to notify the Company
of any such claim shall not relieve the Company from any liability that it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision, except to the
extent that the Company has been prejudiced by such failure to give notice.
In case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action and to settle the
claim at its own expense provided, however, that no settlement shall, without
the Indemnified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from the
Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(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 shares of the Designated Portfolios or the
Contracts or the operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER.
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its officers, trustees and directors and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section
8.2) against any and all losses, claims, damages, liabilities, joint or
several (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 or regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the shares of the Designated Portfolios
or the Contracts and:
12
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, prospectus, or SAI of the Fund or sales literature of the Fund
developed by the Underwriter (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 alleged omission was made
in reliance upon and in conformity with information furnished in writing to
the Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or its sales literature (or
any amendment or supplement) or otherwise for use in connection with the sale
of the Contracts or shares of the Designated Portfolios; or
(ii) arise out of or as a result of upon statements or
representations (other than statements or representations contained in the
Registration Statement, prospectus, SAI or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful conduct of
the Company or persons under its authorization or control, with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, prospectus, or sales literature for 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 statements therein not misleading if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c).
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Accounts, whichever is
applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service upon any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability that it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision,
except to the extent that the Underwriter has been prejudiced by such failure
to
13
give notice. In case any such action is brought against an Indemnified Party,
the Underwriter shall be entitled to participate, at its own expense, in the
defense of such action. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action
and to settle the claim at its own expense provided, however, that no
settlement shall, without the Indemnified Parties' written consent, include
any factual stipulation referring to the Indemnified Parties or their
conduct. After notice from the Underwriter to such party of the Underwriter's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the
Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) The Company agrees to promptly notify the Underwriter of the
commencement of any material litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
(a) The Fund agrees to indemnify and hold harmless the Company and
each of its officers, trustees and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities, joint or several
(including amounts paid in settlement with the written consent of the Fund)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the operation
of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c).
(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter, the
Adviser or the Accounts, whichever is applicable.
(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service upon any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability that it may have
to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except
14
to the extent that the Fund has been prejudiced by such failure to give
notice. In case any such action is brought against an Indemnified Party, the
Fund shall be entitled to participate, at its own expense, in the defense of
such action. The Fund also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action and to settle the
claim at its own expense provided, however, that no settlement shall, without
the Indemnified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from the
Fund to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
(d) The Company, the Adviser and the Underwriter agree to notify the
Fund promptly of the commencement of any litigation or proceeding against it
or any of its respective officers or directors in connection with the
Agreement, the issuance or sale of the Contracts, the operation of the
Account, or the sale or acquisition of shares of the Designated Portfolios.
ARTICLE IX
APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Shared Funding Exemption
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X
TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to any
Designated Portfolio, by six (6) months' advance written notice delivered to
the other parties; or
(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio based
upon the Company's reasonable and good faith determination that shares of
such Designated Portfolio are not reasonably available to meet the
requirements of the Contracts; or if shares of the Fund are not available
to meet the requirements of the Contracts as determined by the Company.
Prompt notice of the election to terminate for such cause shall be furnished
by the Company. Termination shall be effective ten days after the giving of
notice by the Company; or
(c) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio if the
shares of such Designated Portfolio are not registered, issued or sold in
accordance with applicable state and/or federal securities laws or such law
precludes the use of such shares to fund the Contracts issued or to be issued
by the Company; or
15
(d) termination by the Fund, the Adviser or Underwriter in the event
that formal administrative proceedings are instituted against the Company by
any affiliate of the NASD, the SEC, or the Insurance Commissioner or like
official of any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the shares of a Designated
Portfolio or the shares of any Unaffiliated Fund, provided, however, that the
Fund, the Adviser or Underwriter determines in its sole judgement exercised
in good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund, the Adviser,
Underwriter or, if applicable, a sub-adviser appointed by the Adviser to
provide such advisory services to the Fund by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, provided,
however, that the Company determines in its sole judgement exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio in the
event that such Designated Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or fail to comply with the
Section 817(h) diversification requirements specified in Article VI hereof,
or if the Company reasonably believe that such Designated Portfolio may fail
to so qualify or comply; or
(g) termination by the Fund, the Adviser or Underwriter by written
notice to the Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by any of the Fund, the Adviser or Underwriter by
written notice to the Company, if any of the Fund, the Adviser or
Underwriter, respectively, shall determine, in their sole judgement exercised
in good faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, insurance company rating or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(i) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine, in its sole
judgement exercised in good faith, that the Fund, the Adviser or the
Underwriter has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(j) at the option of Company, as one party, or the Fund, the Adviser
and the Underwriter, as one party, upon the other party's material breach of
any provision of this Agreement upon 30 days' notice and opportunity to cure.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of a Designated Portfolio
pursuant to the terms and conditions of this Agreement for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, the owners of the
Existing Contracts may in such event be permitted to reallocate investments
in the Designated Portfolio, redeem investments in the Designated Portfolios
and/or invest in the Designated Portfolios upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any termination under Article VII and the
effect
16
of such Article VII termination shall be governed by Article VII or this
Agreement. The parties further agree that this Section 10.2 shall not apply
to any termination under Section 10.1(g) of the Agreement.
10.3 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
Investor Fund Series
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
If to the Company:
The Lincoln National Life Insurance Co.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
If to the Adviser:
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
If to the Underwriter:
Xxxxxx Distributors, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
ARTICLE XII
MISCELLANEOUS
12.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
Instrument.
17
12.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.4 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish any state insurance commissioner with
any information or reports in connection with services provided under this
Agreement that such Commissioner may request in order to ascertain whether
the variable annuity operations of the Company are being conducted in a
manner consistent with state variable annuity laws and regulations and any
other applicable law or regulations.
12.5 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.6 This Agreement or any of the rights or obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.7 All persons are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which on file with
the Secretary of the Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund with
respect to a Designated Portfolio hereunder are not binding upon any of the
trustees, officers or shareholders of the Fund individually, but are binding
upon only the assets and property of such Designated Portfolio. All parties
dealing with the Fund with respect to a Designated Portfolio shall look
solely to the assets of such Designated Portfolio for the enforcement of any
claims against the Fund hereunder.
[SIGNATURE PAGE ON FOLLOWING PAGE]
18
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on behalf by its duly authorized officer and its
seal to be hereunder affixed hereto as of the date specified below.
COMPANY: The Lincoln National Life Insurance Company
By: /s/ Xxxxx X. Xxxxxxxxx
Title: Vice President
Date: 12/22/98
FUND: Investors Fund Series
/s/ signed but illegible
Title: Vice President
Date: 1/28/99
ADVISER Xxxxxxx Xxxxxx Investments, Inc.
/s/ signed but illegible
Title: Senior Vice President
Date: 1/19/99
UNDERWRITER Xxxxxx Distributors, Inc.
/s/ signed but illegible
Title: President
Date: 1/27/99
19
SCHEDULE A
Name of Separate Account and Date
Established by Board of Directors
Lincoln National Life Insurance Variable Annuity Account N
Contracts Funded
By Separate Account
Delaware-Lincoln ChoicePlus Variable Annuity
Designated Portfolios
Xxxxxx Small Cap Growth
Xxxxxx Government Securities
20
SCHEDULE B
EXPENSES
1. In the event the prospectus, SAI, annual report or other
communication of the Fund is combined with a document of another party,
the Fund will pay the costs based upon the relative number of pages
attributable to the Fund.
ITEM FUNCTION RESPONSIBLE PARTY
PROSPECTUS
Update Typesetting Fund (1)
New Sales: Printing Company
Distribution Company
Existing Owners: Printing Fund (1)
Distribution Fund (1)
STATEMENTS OF ADDITIONAL Same as Prospectus
INFORMATION
ANNUAL REPORTS & OTHER
COMMUNICATIONS WITH
SHAREHOLDERS OF THE FUND
All Typesetting Fund(1)
Marketing: Printing Company
Distribution Company
Existing Owners: Printing Fund (1)
Distribution Fund (1)
OPERATIONS OF FUND All operations and related Fund
expenses, including the cost
of registration and
qualification of the Fund's
shares, preparation and filing
of the Fund's prospectus and
registration statement, proxy
materials and reports, the
preparation of all statements
and notices required by any
federal or state law and all
taxes on the issuance of the
Fund's shares, and all costs
of management of the business
affairs of the Fund.
PARTICIPATION AGREEMENT
AMONG
INVESTORS FUND SERIES
21
XXXXXXX XXXXXX INVESTMENTS, INC.
XXXXXX DISTRIBUTORS, INC.
and
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 30th day of October,1998 by
and among The Lincoln National Life Insurance Company (hereinafter, the
"Company"), an Indiana insurance company, on its own behalf and on behalf of
each separate account of the Company set forth on Schedule A hereto as may be
amended from time to time (each account hereinafter referred to as an
"Account"), Investors Fund Series, a business trust organized under the laws
of the Commonwealth of
Massachusetts (hereinafter, the "Fund"), Xxxxxxx
Xxxxxx Investments, Inc. (hereinafter the "Adviser"), a Delaware corporation,
and Xxxxxx Distributors, Inc. (hereinafter the "Underwriter"), a Delaware
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance and variable annuity
contracts (hereinafter the "Variable Insurance Products") offered by
insurance companies that have entered into
participation agreements with the
Fund (hereinafter "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participation Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (SEC Release No. IC-17164; File No. 812-7345;
hereinafter the "Shared Funding Exemption Order");
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities laws;
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts supported wholly or partially by the
Accounts (the "Contracts") under the 1933 Act, and said Contracts are listed
in Schedule A hereto, as it may be amended from time to time by mutual
written agreement;
WHEREAS, each Account is duly established and maintained as a separate
account established by resolution of the Board of Directors of the Company,
on the date shown for such Account on Schedule A hereto, to set aside and
invests assets attributable to the aforesaid Contracts; and
22
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act;
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios listed
in Schedule A hereto, as it may be amended from time to time by mutual
written agreement ("Designated Portfolios"), on behalf of the Accounts to
fund the aforesaid Contracts, and the Underwriter is authorized to sell such
shares to unit investment trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund
("Unaffiliated Funds") on behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Underwriter agree as follows:
ARTICLE I.
SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios that the Accounts order, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of each Designated Portfolio available
for purchase at the applicable net asset value per share by the Company and
the Accounts on those days on which the Fund calculates such Designated
Portfolio's net asset value pursuant to rules of the SEC, and the Fund shall
use reasonable efforts to calculate such net asset value by 6:30 p.m. New
York time on each day when the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Fund ("Board")
may refuse to sell shares of any Designated Portfolio, or suspend or
terminate the offering of shares of any Designated 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 its
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Designated Portfolios.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies or their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The
Fund and the Underwriter will not sell shares of any Designated Portfolio to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Sections 2.1, 3.4, 3.5 and 3.6 and
Article VII of this Agreement if in effect to govern such sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. The Fund
will pay for net redemptions via federal funds wire transmitted by 2:00 p.m.
New York time on the same day the Fund receives notice of redemption, except
that the Fund reserves the right to suspend the right of redemption or
postpone the date of payment or satisfaction upon redemption consistent with
Section 22(e)
23
of the 1940 Act and any rules thereunder, and in accordance with the
procedures and policies of the Funds as described in the Fund's then current
prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Accounts and receipt by such designee shall constitute receipt by the Fund;
provided that same Business Day, provided that the Company receives the order
prior to the determination of net asset value as set forth in the Fund's then
current prospectus and the Fund receives notice of such order by 10:00 a.m.,
New York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the Fund's then current prospectus in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for shares of a Designated Portfolio on the
next Business Day after receipt of an order to purchase shares of such
Designated Portfolio. Payment shall be in federal funds transmitted by wire
by 2:00 p.m., New York time. If payment in federal funds for any purchase is
not received or is received by the Fund after 2:00 p.m. New York time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse
the Fund for any charges, costs, fees, interest or other expenses incurred by
the Fund in connection with any advances to, or borrowing or overdrafts by,
the Fund, or any similar expenses incurred by the Fund, as a result of
portfolio transactions effected by the Fund based upon such purchase request.
For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of
the company and shall become the responsibility of the Fund. The Fund will
confirm receipt of each trade and the confirmation of each trade received by
the Company via fax or e-mail by 1:00 p.m. New York time.
1.8 Issuance and transfer of the shares of a Designated Portfolio will be
by book entry only. Stock certificates will not be issued to the Company or
any Account. Shares of a Designated Portfolio ordered from the Fund will be
recorded in an appropriate title for each Account or the appropriate
subaccount of each Account.
1.9 The Fund shall furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on shares of the Designated Portfolios.
The Company hereby elects to receive all such income, dividends, and capital
gain distributions as are payable on shares of a Designated Portfolio in
additional shares of that Designated Portfolio. The Company reserves the
right to revoke this election and to receive all such income dividends in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions. The Fund shall use its best
efforts to furnish advance notice of the day such dividends and distributions
are expected to be paid.
1.10 The Fund shall make the net asset value per share for each
Designated Portfolio available to the Company on a daily basis as soon as
reasonably practicable after the net asset value per share is calculated
(normally by 6:30 p.m. New York time), and shall use its best efforts to make
such net asset value per share available by 6:30 p.m. New York time.
1.11 The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the shares of the Designated Portfolios (and
other Portfolios of the Fund) may be sold to other insurance companies
(subject to Section 1.3 and Article VII hereof) and the cash value of the
Contracts may be invested in other investment companies.
ARTICLE II.
24
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued, offered for
sale and sold in compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing under applicable law and that it has legally
and validly established each Account prior to the issuance or sale thereof as
a separate account under the Indiana insurance laws and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as
a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a separate account for the Contracts.
2.2 The Fund represents and warrants that shares of the Designated
Portfolios sold pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sold in compliance with all applicable
federal securities laws and that the Fund is and shall remain registered
under the 0000 Xxx. The Fund shall amend the Registration Statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares of the Designated Portfolios for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund after taking into consideration any state
insurance law requirements that the Company advises the Fund may be
applicable.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
may make such payments in the future subject to applicable law.
2.4 The Fund makes no representation as to whether any aspect of its
operation, including but not limited to, investments policies, fees and
expenses, complies with the insurance and other applicable laws of the
various states, except that the Fund represents that the investment policies,
fees and expenses of the Designated Portfolios are and shall at all times
remain in compliance with the applicable state insurance laws to the extent
required to perform this Agreement. The Company will advise the Fund in
writing as to any requirements of state insurance laws that affect the
Designated Portfolios, and the Fund will be deemed to be in compliance with
this Section 2.4 so long as the Fund complies with such advice of the Company.
2.5 The Fund represents that it is lawfully organized and validly
existing as a business trust under the laws of the Commonwealth of
Massachusetts and that it does and will comply in all material respects with
the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the shares of
the Designated Portfolios in accordance with any applicable state and federal
securities laws.
2.7 The Underwriter represents and warrants that it is and shall remain
duly registered as an investment adviser under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for
the Fund in compliance in all material respects with any applicable federal
and state securities laws.
2.8 The Fund, the Adviser and the Underwriter represent and warrant that
all their directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities
25
of the Fund are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund in an amount no
less than the minimum coverage required by Rule 17g-1 of the 1940 Act or such
related provisions as may be promulgated from time to time. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued
by a reputable bonding company.
2.9 The Company represents and warrants that all its directors, officers,
employees, investment advisers, and other individuals or entities employed or
controlled by the Company dealing with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage in an amount
not less than $20 million. The aforesaid bond includes coverage for larceny
and embezzlement and is issued by a reputable bonding company. The Company
agrees that this bond or another bond containing these provisions will always
be in effect, and agrees to notify the Fund, the Adviser and the Underwriter
in the event that such coverage no longer applies.
2.10 The Company represents and warrants that all shares of the Designated
Portfolios purchased by the Company will be purchased on behalf of one or
more unmanaged separate accounts that offer interests therein that are
registered under the 1933 Act and upon which a registration fee has been or
will be paid; and the Company acknowledges that the Fund intends to rely upon
this representation and warranty for purposes of calculating SEC registration
fees payable with respect to such shares of the Designated Portfolios
pursuant to Instruction B.5 to Form 24F-2 or any similar form or SEC
registration fee calculation procedure that allows the Fund to exclude shares
so sold for purposes of calculating its SEC registration fee. The company
agrees to cooperate with the Fund on no less that an annual basis to certify
as to its continuing compliance with this representation and warranty.
ARTICLE III.
PROSPECTUSES, STATEMENTS OF ADDITIONAL
INFORMATION, AND PROXY STATEMENTS; VOTING
3.1 The Fund shall provide the Company with as many copies of the Fund's
current prospectus for the Designated Portfolios as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for a Designated
Portfolio is amended to) to have the prospectus for the Contracts and the for
the Designated Portfolios printed together in one document. Expenses with
respect to the foregoing shall be borne as provided under Article V.
3.2 The Fund's prospectus shall disclose that (a) the Fund is intended to
be a funding vehicle for all types of variable annuity and variable life
insurance contracts offered by Participating Insurance Companies, (b)
material irreconcilable conflicts of interest may arise, and (c) the Fund's
Board will monitor events in order to identify the existence of any material
irreconcilable conflicts and determine what actions, if any, should be taken
in response to such conflicts. The Fund hereby notifies the Company that
disclosure in the prospectus for the Contracts regarding the potential risks
of mixed and shared funding may be appropriate. Further, the Fund's
prospectus shall state that the current Statement of Additional Information
("SAI") for the Fund is available from the Company (or, in the Fund's
discretion, from the Fund), and the Fund shall provide a copy of such SAI to
any owner of a contract oho requests such SAI an dot the Company in such
quantities as the Company may reasonably request. Expenses with respect to
the foregoing shall be borne as provided under Article V.
3.3. The Fund shall provide to the Company with copies of its proxy
material, reports to shareholders, and other communications to shareholders
for the Designated Portfolios in such quantity as
26
the Company shall reasonably require for distributing to Contract owners.
Expenses with respect to the foregoing shall be borne as provided under
Article V.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(iv) vote the shares of each Designated Portfolio in accordance
with instructions received from Contract owners; and
(v) vote shares of each Designated Portfolio for which no
instructions have been received in the same proportion as
shares of such Designated Portfolio for which instructions
have been received
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners or to
the extent otherwise required by law. The Company reserves the right to vote
shares of each Designated Portfolio held in any separate account in its own
right, to the extent permitted by law.
3.8 The Company shall be responsible for assuring that each of its
separate accounts participating in a Designated Portfolio calculates voting
privileges as required by the Shared Funding Exemption Order and consistent
with any reasonable standards that the Fund has adopted or may adopt.
3.9 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well
as with Sections 16(a) and, if and when applicable, Section 16(b). Further,
the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
or trustees and with whatever rules the SEC may promulgate from time to time
with respect thereto. The Fund reserves the right, upon prior written notice
to the Company (given at the earliest practicable time), to take all actions,
including but not limited to, the dissolution, termination, merger and sale
of all assets of the Fund or any Designated Portfolio upon the sole
authorization of the Board, to the extent permitted by the laws of the
Commonwealth of
Massachusetts and the 0000 Xxx.
3.10 It is understood and agreed that, except with respect to information
regarding the Fund, the Underwriter, the Adviser or Designated Portfolios
provided in writing or approved by the Fund, the Underwriter or the Adviser,
none of the Fund, the Underwriter or the Adviser is responsible for the
content of the prospectus or statement of additional information for the
Contracts.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or the Underwriter, each piece of sales literature or other promotional
material ("sales literature") that the Company develops or uses in which the
Fund (or a Designated Portfolio thereof) or the Adviser or the Underwriter is
named, at least eight days prior to its use. No such material shall be used
if the Fund or its designee reasonably objects to such use within eight
business days after receipt of such material. The Fund or its designee
reserves the right to reasonably object to the continued use of such
material, and no such material shall be used if the Fund or its designee so
object.
27
4.2 The Company shall not give any information or make any representation
or statement on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus, or SAI for the shares of
the Designated Portfolios, as such registration statement, prospectus or SAI
may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company, each piece of sales literature that the Fund or
the Underwriter develops or uses in which the Company and/or its Account is
named, at least eight days prior to its use. No such material shall be used
if the Company reasonably objects to such use within eight business days
after receipt of such material. The Company reserves the right to reasonably
object to the continued use of such material and no such material shall be
used if the Fund or its designee so object.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account or the Contracts other than the information or representations
contained in the registration statement or prospectus or statement of
additional information for the Contracts, as such registration statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in published reports for the Accounts
which are public domain or approved by the Company for distribution to
Contract owners, or in sales literature approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the
Designated Portfolios, reasonably promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration Statements, prospectuses, statements of additional
information, shareholder reports, solicitations for voting instructions,
sales literature, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, that relate
to the Contracts or the Accounts and their investment in the Designated
Portfolios, reasonably promptly after the filing of such document with the
SEC or other regulatory authorities.
4.7 For purposes of this Agreement, the phrase "sales literature"
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, electronic media, 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, 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 At the request of any party to this Agreement, any other party will
make available to the requesting party's independent auditors all records,
data and access to operating procedures that may reasonably be requested in
connection with compliance and regulatory requirements related to this
Agreement or any party's obligations under this Agreement.
28
ARTICLE V
FEES AND EXPENSES
5.1 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, except and as further provided in Schedule B. The
Fund shall see to it that all shares of the Designated Portfolios are
registered, duly authorized for issuance and sold in compliance with
applicable federal securities laws and, if and to the extent deemed advisable
by the Fund, in accordance with applicable state securities laws prior to
their sale.
5.2 The parties hereto shall bear the expenses of typesetting, printing
and distributing the Fund's prospectus, SAI, proxy materials and reports as
provided in Schedule B.
5.3 Administrative services to variable Contract owners shall be the
responsibility of the Company and shall not be the responsibility of the
Fund, Underwriter or Adviser. The Fund recognizes the Company as the sole
shareholder of shares of the Designated Portfolios issued under the Agreement.
5.4 The Fund shall not pay and neither the Adviser nor the Underwriter
shall pay any fee or other compensation to the Company under this Agreement,
although the parties will bear certain expenses in accordance with Schedule B
and other provisions of this Agreement.
ARTICLE VI
DIVERSIFICATION AND QUALIFICATION
6.1 The Fund will invest the assets of each Designated Portfolio in such
a manner as to ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Internal Revenue
Code of 1986, as amended ("Code") and the regulations issued thereunder (or
any successor provisions). Without limiting the scope of the foregoing, the
Fund represents that it will, with respect to each Designated Portfolio,
comply with Section 817(h) of the Code and Treasury Regulation
Section1.817.5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts, and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a breach of this
Article VI, the Fund will take all reasonable steps (a) to notify the Company
of such breach and (b) to adequately diversify the affected Designated
Portfolio so as to achieve compliance within the grace period afforded by
Treasury Regulation Section1.817.5.
6.2 The Fund represents that each Designated Portfolio is currently
qualified (and for new Designated Portfolios, intends to qualify) as a
Regulated Investment Company under Subchapter M of the Code, and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that a Designated
Portfolio has ceased to so qualify or that a Designated Portfolio might not
so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make
every effort to maintain such treatment, and that it will notify the Fund,
the Adviser and the Underwriter immediately upon having a reasonable basis
for believing the Contracts have ceased to be so treated or that they might
not be so treated in the future. The Company agrees that any prospectus
offering
29
a contract that is a "modified endowment contract" as that term is defined in
Section 7702A of the Code (or any successor or similar provision), shall
identify such contract as a modified endowment contract.
ARTICLE VII
POTENTIAL CONFLICTS
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, which may include: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, 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 Designated Portfolio are being
managed; (e) a difference in voting instructions given by variable annuity
and variable life insurance contract owners; (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.
7.2 The Company and the Adviser will report any potential or existing
conflicts of which each is aware to the Board. The Company will assist the
Board in carrying out its responsibilities under the Shared Funding Exemptive
Order, by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. At least annually, and more frequently
if deemed appropriate by the Board, the Company shall submit to the Adviser,
and the Adviser shall submit 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 its obligations imposed upon it by the conditions
contained in the Shared Funding Exemption Order; and said reports, materials
and data shall be submitted more frequently if reasonably deemed appropriate
by the Board. The responsibility to report such information and conflicts to
the Board will be carried out with a view only to the interests of the
contract owners.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and any other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested Board members), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and
including: (a) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Designated Portfolio and reinvesting
such assets in a different investment medium, which may include another
Designated Portfolio of the Fund, or submitting to a vote of all affected
contract owners the question whether such segregation should be implemented
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in favor
of such segregation, or offering to the affected contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in any Designated Portfolio and terminate this Agreement with
respect to such Account provided, however, that such withdrawal and
termination shall be limited to the extent required by the
30
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. The Company shall bear the cost of any
remedial action, including such withdrawal and termination. No penalty will
be imposed by the Fund upon the affected Account for withdrawing assets from
the Fund in the event of a material irreconcilable conflict. Any such
withdrawal and termination must take place within six (6) months after the
Fund gives written notice that this provision is being implemented, and until
the effective date of such termination the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of such Designated Portfolio.
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the affected Designated Portfolio and
terminate this Agreement with respect to such Account within six months after
the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested members of the Board. Until the effective date of such
termination the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Designated
Portfolios.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether or
not any proposed action adequately remedies any irreconcilable material
conflict; but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contract if an offer to
do so has been declined by a vote of a majority of affected Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw
an Account's investment in any Designated Portfolio and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable material conflict as determined by a majority of
the disinterested members of the Board.
7.7 If and to the extent the Shared Funding Exemption Order contains
terms and conditions different from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3,
7.4 and 7.5 of this Agreement, then the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with the Shared Funding Exemption Order, and Sections
3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of the Agreement shall continue in
effect only to the extent that terms and conditions substantially identical
to such Sections are contained in the Shared Funding Order or any amendment
thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1,
7.2, 7.3, 7.4 and 7.5 of this Agreement shell continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII
INDEMNIFICATION
31
8.1 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Fund,
the Adviser, the Underwriter and each of their officers, trustees and
directors and each person, if any, who controls the Fund, the Adviser, the
Underwriter within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.1) against any and
all losses, claims, damages, liabilities, joint or several (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 or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the shares of the Designated Portfolios or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, prospectus, or statement of additional information 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 alleged omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of the Fund for use in the Registration Statement, prospectus or
statement of additional information for the Contracts or in the Contracts or
sales literature for the Contracts (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or shares of
the Designated Portfolios; or
(ii) arise out of or as a result of upon statements or
representations (other than statements or representations contained in the
Registration Statement, prospectus, SAI or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful conduct of
the Company or persons under its authorization or control, with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, prospectus, SAI or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made
in reliance upon and in conformity with information furnished to the Fund by
or on behalf of the Company; or
(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
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in Article VI of this
Agreement);
(v) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in any Registration
Statement, prospectus, statement of additional information or sales
literature of any Unaffiliated, or arise out of or are based upon 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, or
otherwise pertain to or arise in connection with the availability of any
Unaffiliated Fund as an underlying funding vehicle in respect of the
Contracts; or
32
(vi) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Company;
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c).
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(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 upon any designated agent), but failure to notify the Company
of any such claim shall not relieve the Company from any liability that it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision, except to the
extent that the Company has been prejudiced by such failure to give notice.
In case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action and to settle the
claim at its own expense provided, however, that no settlement shall, without
the Indemnified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from the
Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(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 shares of the Designated Portfolios or the
Contracts or the operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER.
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its officers, trustees and directors and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section
8.2) against any and all losses, claims, damages, liabilities, joint or
several (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 or regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the shares of the Designated Portfolios
or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, prospectus, or SAI of the Fund or sales literature of the Fund
developed by the Underwriter (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
33
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 alleged omission was made in reliance upon and in
conformity with information furnished in writing to the Underwriter or Fund
by or on behalf of the Company for use in the Registration Statement or
prospectus for the Fund or its sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts
or shares of the Designated Portfolios; or
(ii) arise out of or as a result of upon statements or
representations (other than statements or representations contained in the
Registration Statement, prospectus, SAI or sales literature of the Fund not
supplied by the Company or persons under its control) or wrongful conduct of
the Company or persons under its authorization or control, with respect to
the sale or distribution of the Contracts or shares of the Designated
Portfolios; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, prospectus, or sales literature for 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 statements therein not misleading if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c).
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Accounts, whichever is
applicable.
(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service upon any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability that it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision,
except to the extent that the Underwriter has been prejudiced by such failure
to give notice. In case any such action is brought against an Indemnified
Party, the Underwriter shall be entitled to participate, at its own expense,
in the defense of such action. The Underwriter also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action and to settle the claim at its own expense provided, however, that
no settlement shall, without the Indemnified
34
Parties' written consent, include any factual stipulation referring to the
Indemnified Parties or their conduct. After notice from the Underwriter to
such party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other than
reasonable costs of investigation.
(d) The Company agrees to promptly notify the Underwriter of the
commencement of any material litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
(a) The Fund agrees to indemnify and hold harmless the Company and
each of its officers, trustees and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities, joint or several
(including amounts paid in settlement with the written consent of the Fund)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the operation
of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c).
(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Fund, the Underwriter, the
Adviser or the Accounts, whichever is applicable.
(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service upon any designated agent), but failure to notify the Fund of
any such claim shall not relieve the Fund from any liability that it may have
to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
Fund has been prejudiced by such failure to give notice. In case any such
action is brought against an Indemnified Party, the Fund shall be entitled to
participate, at its own expense, in the defense of such action. The Fund also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action and to settle the claim at its own expense
provided, however,
35
that no settlement shall, without the Indemnified Parties' written consent,
include any factual stipulation referring to the Indemnified Parties or their
conduct. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
(d) The Company, the Adviser and the Underwriter agree to notify the
Fund promptly of the commencement of any litigation or proceeding against it
or any of its respective officers or directors in connection with the
Agreement, the issuance or sale of the Contracts, the operation of the
Account, or the sale or acquisition of shares of the Designated Portfolios.
ARTICLE IX
APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to, the Shared Funding Exemption
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X
TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to any
Designated Portfolio, by six (6) months' advance written notice delivered to
the other parties; or
(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio based
upon the Company's reasonable and good faith determination that shares of
such Designated Portfolio are not reasonably available to meet the
requirements of the Contracts; or if shares of the Fund are not available
to meet the requirements of the Contracts as determined by the Company.
Prompt notice of the election to terminate for such cause shall be furnished
by the Company. Termination shall be effective ten days after the giving of
notice by the Company; or
(c) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio if the
shares of such Designated Portfolio are not registered, issued or sold in
accordance with applicable state and/or federal securities laws or such law
precludes the use of such shares to fund the Contracts issued or to be issued
by the Company; or
(d) termination by the Fund, the Adviser or Underwriter in the event
that formal administrative proceedings are instituted against the Company by
any affiliate of the NASD, the SEC, or the Insurance Commissioner or like
official of any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the shares of a Designated
Portfolio or the shares of any Unaffiliated Fund,
36
provided, however, that the Fund, the Adviser or Underwriter determines in
its sole judgement exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund, the Adviser,
Underwriter or, if applicable, a sub-adviser appointed by the Adviser to
provide such advisory services to the Fund by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, provided,
however, that the Company determines in its sole judgement exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Fund or Underwriter to perform its obligations
under this Agreement; or
(f) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Designated Portfolio in the
event that such Designated Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or fail to comply with the
Section 817(h) diversification requirements specified in Article VI hereof,
or if the Company reasonably believe that such Designated Portfolio may fail
to so qualify or comply; or
(g) termination by the Fund, the Adviser or Underwriter by written
notice to the Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by any of the Fund, the Adviser or Underwriter by
written notice to the Company, if any of the Fund, the Adviser or
Underwriter, respectively, shall determine, in their sole judgement exercised
in good faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, insurance company rating or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(i) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine, in its sole
judgement exercised in good faith, that the Fund, the Adviser or the
Underwriter has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(j) at the option of Company, as one party, or the Fund, the Adviser
and the Underwriter, as one party, upon the other party's material breach of
any provision of this Agreement upon 30 days' notice and opportunity to cure.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of a Designated Portfolio
pursuant to the terms and conditions of this Agreement for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, the owners of the
Existing Contracts may in such event be permitted to reallocate investments
in the Designated Portfolio, redeem investments in the Designated Portfolios
and/or invest in the Designated Portfolios upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any termination under Article VII and the
effect of such Article VII termination shall be governed by Article VII or
this Agreement. The parties further agree that this Section 10.2 shall not
apply to any termination under Section 10.1(g) of the Agreement.
10.3 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
37
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
Investor Fund Series
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
If to the Company:
The Lincoln National Life Insurance Co.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
If to the Adviser:
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
If to the Underwriter:
Xxxxxx Distributors, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Secretary
ARTICLE XII
MISCELLANEOUS
12.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
Instrument.
12.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.4 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or
38
inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish any state insurance commissioner with any information or
reports in connection with services provided under this Agreement that such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with
state variable annuity laws and regulations and any other applicable law or
regulations.
12.5 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.6 This Agreement or any of the rights or obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.7 All persons are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which on file with
the Secretary of the Commonwealth of
Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund with
respect to a Designated Portfolio hereunder are not binding upon any of the
trustees, officers or shareholders of the Fund individually, but are binding
upon only the assets and property of such Designated Portfolio. All parties
dealing with the Fund with respect to a Designated Portfolio shall look
solely to the assets of such Designated Portfolio for the enforcement of any
claims against the Fund hereunder.
[SIGNATURE PAGE ON FOLLOWING PAGE]
39
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on behalf by its duly authorized officer and its
seal to be hereunder affixed hereto as of the date specified below.
COMPANY: The Lincoln National Life Insurance Company
By: /s/ Xxxxx X. Xxxxxxxxx
Title: Vice President
Date: 12/22/98
FUND: Investors Fund Series
/s/ signed but illegible
Title: Vice President
Date: 1/28/99
ADVISER Xxxxxxx Xxxxxx Investments, Inc.
/s/ signed but illegible
Title: Senior Vice President
Date: 1/19/99
UNDERWRITER Xxxxxx Distributors, Inc.
/s/ signed but illegible
Title: President
Date: 1/27/99
40
SCHEDULE A
Name of Separate Account and Date
Established by Board of Directors
Lincoln National Life Insurance Variable Annuity Account N
Contracts Funded
By Separate Account
Delaware-Lincoln ChoicePlus Variable Annuity
Designated Portfolios
Xxxxxx Small Cap Growth
Xxxxxx Government Securities
41
SCHEDULE B
EXPENSES
1. In the event the prospectus, SAI, annual report or other
communication of the Fund is combined with a document of another
party, the Fund will pay the costs based upon the relative number of
pages attributable to the Fund.
ITEM FUNCTION RESPONSIBLE PARTY
PROSPECTUS
Update Typesetting Fund (1)
New Sales: Printing Company
Distribution Company
Existing Owners: Printing Fund (1)
Distribution Fund (1)
STATEMENTS OF ADDITIONAL Same as Prospectus
INFORMATION
ANNUAL REPORTS & OTHER
COMMUNICATIONS WITH SHAREHOLDERS
OF THE FUND
All Typesetting Fund (1)
Marketing: Printing Company
Distribution Company
Existing Owners: Printing Fund (1)
Distribution Fund (1)
OPERATIONS OF FUND All operations and related Fund
expenses, including the cost
of registration and
qualification of the Fund's
shares, preparation and filing
of the Fund's prospectus and
registration statement, proxy
materials and reports, the
preparation of all statements
and notices required by any
federal or state law and all
taxes on the issuance of the
Fund's shares, and all costs of
management of the business
affairs of the Fund.
42
SUPPLEMENT TO
PARTICIPATION AGREEMENT
DATED AS OF OCTOBER 30TH, 1998
(as amended and supplemented from time to time)
AMONG
DWS VARIABLE SERIES II (formerly Investors Fund Series)
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
(formerly Xxxxxxx Xxxxxx Investments, Inc.)
DWS INVESTMENTS DISTRIBUTORS, INC.
(formerly Xxxxxx Distributors, Inc.)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Company")
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
A New York insurance company
(Both The Lincoln National Life Insurance Company and Lincoln Life & annutiy
Company of New York herein referred to collectively as the "Companies")
WHEREAS, pursuant to a
Participation Agreement ( the "Agreement') dated
October 30, 1998, the DWS Variable Series II, Deutsche Investment Management
Americas Inc., DWS Investment Distributors, Inc., The Lincoln National Life
Insurance Company and/or their predecessors in interest agreed to certain
rights and responsibilities relative to the offering of fund shares; and
WHEREAS, the parties desire to offer fund shares to be purchased by certain
Separate Accounts sponsored by Lincoln Life & Annuity Company of New York on
behalf of owners of certain variable annuity contracts; and
WHEREAS, the parties desire amend the Agreement to add an additional
Designated Portfolio to be available for purchase by the Companies on behalf
of the sponsored Separate Accounts and variable annuity contracts;
NOW, THEREFORE, in consideration of mutual promises and representations it is
agreed as follows:
1. The parties agree that effective December 15, 2008, Lincoln Life &
Annuity Company of New York is added as a party to the Agreement, with the
same rights and responsibilities under the Agreement as The Lincoln National
Life Insurance Company.
2. Schedule A of the Agreement is amended and replaced with the new Schedule
A which is attached to this Agreement.
Except as amended hereby, the Agreement remains in full force and effect in
accordance with its terms.
[Signatures Follow]
43
IN WITNESS WHEREOF, each of the parties has caused this Supplement to be
executed in its name and on its behalf by its duly authorized representative
as of December 15, 2008.
COMPANIES The Lincoln National Life Insurance Company
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
Lincoln Life & Annuity Company of New York
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
FUND DWS Variable Series II
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
ADVISER Deutsche Investment Management Americas Inc.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Operating Officer
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Director
UNDERWRITER DWS Investments Distributors, Inc.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Managing Director, Chairman of the Board
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxx Xxxxxxx
Title: Managing Director & President
44
SCHEDULE A
NAME OF SEPARATE ACCOUNTS AND
DATE ESTABLISHED BY BOARD OF DIRECTORS
Lincoln National Variable Annuity Account C June 3, 1981
Lincoln Life Variable Annuity Account L April 29, 1996
Lincoln Life & Annuity Variable Annuity Account L July 24, 1996
Lincoln Life Variable Annuity Account N November 3, 1997
Lincoln New York Account N for Variable Annuities March 11, 1999
Lincoln Life Variable Annuity Account Q November 3, 1997
Lincoln Life Variable Life Account M December 17, 1997
Lincoln Life Variable Life Account R December 23, 1997
Lincoln Life Variable Life Account S December 24, 1999
Lincoln Life Variable Life Account Z July 30, 2003
Lincoln Life & Annuity Variable Life Account M December 17, 1997
Lincoln Life & Annuity Variable Life Account Z June 21, 2006
LLANY Variable Life Account R February 11, 1998
LLANY Variable Life Account S March 12, 1999
CONTRACTS FUNDED BY SEPARATE ACCOUNT
Lincoln ChoicePlus MultiFund(R) 1-4 Individual Variable Annuity
Lincoln ChoicePlus Access MultiFund(R) 5 Individual Variable Annuity
Lincoln ChoicePlus Bonus MultiFund(R) Select Individual Variable Annuity
Lincoln ChoicePlus II MultiFund(R) Group Variable Annuity
Lincoln ChoicePlus II Access Group Variable Annuity (GVA)
Lincoln ChoicePlus II Bonus
Lincoln ChoicePlus II Advance
Lincoln ChoicePlus Assurance (A Share/Class) Lincoln VULcv-IV
Lincoln ChoicePlus Assurance (A Share/Class) Lincoln VULdb-IV
i4LIFE(R)Advantage Lincoln AssetEdge(sm) VUL
Lincoln ChoicePlus Assurance (B Share) Lincoln VULone2007
Lincoln ChoicePlus Assurance (B Class) Lincoln SVULone2007
Lincoln ChoicePlus Assurance (B Share/Class) Lincoln VULone
i4LIFE(R)Advantage Xxxxxxx XXXxxx0000
Lincoln ChoicePlus Assurance (C Share) Lincoln SVUL-IV
Lincoln ChoicePlus Assurance (L Share) Lincoln PreservationEdge(sm) SVUL
Lincoln ChoicePlus Assurance (Bonus) Lincoln SVULone
Lincoln ChoicePlus Design Lincoln Corporate Variable 5
Lincoln ChoicePlus Design i4LIFE(R)Advantage Lincoln Corporate Commitment VUL
Private Placement VUL
DESIGNATED PORTFOLIOS
Class
DWS Alternative Asset Allocation Plus VIP A
DWS Alternative Asset Allocation Plus VIP B
45
SUPPLEMENT TO
PARTICIPATION AGREEMENT
DATED AS OF OCTOBER 30TH, 1998
(as amended and supplemented from time to time)
AMONG
DWS VARIABLE SERIES II (formerly Investors Fund Series)
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
(formerly Xxxxxxx Xxxxxx Investments, Inc.)
DWS INVESTMENTS DISTRIBUTORS, INC. (formerly Xxxxxx Distributors, Inc.)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Company")
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
A New York insurance company
(Both The Lincoln National Life Insurance Company and Lincoln Life & annutiy
Company of New York herein referred to collectively as the "Companies")
WHEREAS, pursuant to a
Participation Agreement ( the "Agreement') dated
October 30, 1998, the DWS Variable Series II, Deutsche Investment Management
Americas Inc., DWS Investment Distributors, Inc., The Lincoln National Life
Insurance Company and/or their predecessors in interest agreed to certain
rights and responsibilities relative to the offering of fund shares; and
WHEREAS, the parties desire to offer fund shares to be purchased by certain
Separate Accounts sponsored by Lincoln Life & Annuity Company of New York on
behalf of owners of certain variable annuity contracts; and
WHEREAS, the parties desire amend the Agreement to add an additional
Designated Portfolio to be available for purchase by the Companies on behalf
of the sponsored Separate Accounts and variable annuity contracts;
NOW, THEREFORE, in consideration of mutual promises and representations it is
agreed as follows:
1. The parties agree that effective December 15, 2008, Lincoln Life &
Annuity Company of New York is added as a party to the Agreement, with the
same rights and responsibilities under the Agreement as The Lincoln National
Life Insurance Company.
2. Schedule A of the Agreement is amended and replaced with the new Schedule
A which is attached to this Agreement.
Except as amended hereby, the Agreement remains in full force and effect in
accordance with its terms.
[Signatures Follow]
IN WITNESS WHEREOF, each of the parties has caused this Supplement to be
executed in its name and on its behalf by its duly authorized representative
as of December 15, 2008.
COMPANIES The Lincoln National Life Insurance Company
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
Lincoln Life & Annuity Company of New York
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
FUND DWS Variable Series II
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
ADVISER Deutsche Investment Management Americas Inc.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Operating Officer
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Director
UNDERWRITER DWS Investments Distributors, Inc.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Managing Director, Chairman of the Board
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxx Xxxxxxx
Title: Managing Director & President
2
SCHEDULE A
NAME OF SEPARATE ACCOUNTS AND
DATE ESTABLISHED BY BOARD OF DIRECTORS
Lincoln National Variable Annuity Account C June 3, 1981
Lincoln Life Variable Annuity Account L April 29, 1996
Lincoln Life & Annuity Variable Annuity Account L July 24, 1996
Lincoln Life Variable Annuity Account N November 3, 1997
Lincoln New York Account N for Variable Annuities March 11, 1999
Lincoln Life Variable Annuity Account Q November 3, 1997
Lincoln Life Variable Life Account M December 17, 1997
Lincoln Life Variable Life Account R December 23, 1997
Lincoln Life Variable Life Account S December 24, 1999
Lincoln Life Variable Life Account Z July 30, 2003
Lincoln Life & Annuity Variable Life Account M December 17, 1997
Lincoln Life & Annuity Variable Life Account Z June 21, 2006
LLANY Variable Life Account R February 11, 1998
LLANY Variable Life Account S March 12, 1999
CONTRACTS FUNDED BY SEPARATE ACCOUNT
Lincoln ChoicePlus
Lincoln ChoicePlus Access
Lincoln ChoicePlus Bonus
Lincoln ChoicePlus II
Lincoln ChoicePlus II Access
Lincoln ChoicePlus II Bonus
Lincoln ChoicePlus II Advance
Lincoln ChoicePlus Assurance (A Share/Class)
Lincoln ChoicePlus Assurance (A Share/Class)
i4LIFE(R)Advantage
Lincoln ChoicePlus Assurance (B Share)
Lincoln ChoicePlus Assurance (B Class)
Lincoln ChoicePlus Assurance (B Share/Class)
i4LIFE(R)Advantage
Lincoln ChoicePlus Assurance (C Share)
Lincoln ChoicePlus Assurance (L Share)
Lincoln ChoicePlus Assurance (Bonus)
Lincoln ChoicePlus Design
Lincoln ChoicePlus Design
i4LIFE(R)Advantage
MultiFund(R) 1-4 Individual Variable Annuity
MultiFund(R) 5 Individual Variable Annuity
MultiFund(R) Select Individual Variable Annuity
MultiFund(R) Group Variable Annuity
Group Variable Annuity (GVA)
Lincoln VULcv-IV
Lincoln VULdb-IV
Lincoln AssetEdge(sm) VUL
Lincoln VULone2007
Lincoln SVULone2007
Lincoln VULone
Lincoln VULone2005
Lincoln SVUL-IV
Lincoln PreservationEdge(sm) SVUL
Lincoln SVULone
Lincoln Corporate Variable 5
Lincoln Corporate Commitment VUL
Private Placement VUL
3
DESIGNATED PORTFOLIOS
Class
DWS Alternative Asset Allocation Plus VIP A
DWS Alternative Asset Allocation Plus VIP B
SUPPLEMENT NO. 2 TO
PARTICIPATION AGREEMENT
DATED AS OF OCTOBER 30TH, 1998
(as amended and supplemented from time to time)
AMONG
DWS VARIABLE SERIES II (formerly Investors Fund Series)
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
(formerly Xxxxxxx Xxxxxx Investments, Inc.)
DWS INVESTMENTS DISTRIBUTORS, INC. (formerly Xxxxxx Distributors, Inc.)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Company")
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
A New York insurance company
(Both The Lincoln National Life Insurance Company and Lincoln Life & Annuity
Company of New York herein referred to collectively as the "Companies")
WHEREAS, pursuant to a
Participation Agreement ( the "Agreement') dated
October 30, 1998, the DWS Variable Series II, Deutsche Investment Management
Americas Inc., DWS Investment Distributors, Inc., The Lincoln National Life
Insurance Company and/or their predecessors in interest agreed to certain
rights and responsibilities relative to the offering of fund shares; and
WHEREAS, the parties desire to offer fund shares to be purchased by certain
Separate Accounts sponsored by The Lincoln National Life Insurance Company
and Lincoln Life & Annuity Company of New York on behalf of owners of certain
variable annuity contracts; and
WHEREAS, the parties desire amend the Agreement to add an additional
Contracts to be available for purchase by the Companies on behalf of the
sponsored Separate Accounts and Variable Annuity Contracts;
NOW, THEREFORE, in consideration of mutual promises and representations it is
agreed as follows:
1. Schedule A of the Agreement is amended and replaced with the new Schedule
A which is attached to this Agreement.
Except as amended hereby, the Agreement remains in full force and effect in
accordance with its terms.
[Signatures Follow]
5
IN WITNESS WHEREOF, each of the parties has caused this Supplement to be
executed in its name and on its behalf by its duly authorized representative
as of May 1, 2011.
COMPANIES The Lincoln National Life Insurance Company
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Lincoln Life & Annuity Company of New York
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
FUND DWS Variable Series II
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Assistant Secretary
ADVISER Deutsche Investment Management Americas Inc.
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: COO
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: CEO
UNDERWRITER DWS Investments Distributors, Inc.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: CEO
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: COO
6
SCHEDULE A
NAME OF SEPARATE ACCOUNTS AND
DATE ESTABLISHED BY BOARD OF DIRECTORS
Lincoln National Variable Annuity Account C June 3, 1981
Lincoln Life Variable Annuity Account L April 29, 1996
Lincoln Life & Annuity Variable Annuity Account L July 24, 1996
Lincoln Life Variable Annuity Account N November 3, 1997
Lincoln New York Account N for Variable Annuities March 11, 1999
Lincoln Life Variable Annuity Account Q November 3, 1997
Lincoln Life Variable Life Account M December 17, 1997
Lincoln Life Variable Life Account R December 23, 1997
Lincoln Life Variable Life Account S December 24, 1999
Lincoln Life Variable Life Account Z July 30, 2003
Lincoln Life & Annuity Variable Life Account M December 17, 1997
Lincoln Life & Annuity Variable Life Account Z June 21, 2006
LLANY Variable Life Account R February 11, 1998
LLANY Variable Life Account S March 12, 1999
CONTRACTS FUNDED BY SEPARATE ACCOUNT
Lincoln ChoicePlus
Lincoln ChoicePlus Access
Lincoln ChoicePlus Bonus
Lincoln ChoicePlus II
Lincoln ChoicePlus II Access
Lincoln ChoicePlus II Bonus
Lincoln ChoicePlus II Advance
Lincoln ChoicePlus Assurance (A Share/Class)
Lincoln ChoicePlus Assurance (B Share/Class)
Lincoln ChoicePlus Assurance (C Share)
Lincoln ChoicePlus Assurance (L Share)
Lincoln ChoicePlus Assurance (Bonus)
Lincoln ChoicePlus Design
Lincoln ChoicePlus Rollover
Lincoln ChoicePlus Signature
MultiFund(R) 1-4 Individual Variable Annuity
MultiFund(R) 5 Individual Variable Annuity
MultiFund(R) Select Individual Variable Annuity
MultiFund(R) Group Variable Annuity
Group Variable Annuity (GVA)
Lincoln VULcv-IV
Lincoln VULdb-IV
Lincoln AssetEdge(sm) VUL
Lincoln VULone2007
Lincoln SVULone2007
Lincoln VULone
Lincoln VULone2005
Lincoln VULone 2010
Lincoln SVUL-IV
Lincoln PreservationEdge(sm) SVUL
Lincoln SVULone
Lincoln Corporate Variable 5
Lincoln Corporate Commitment VUL
Private Placement VUL
7
DESIGNATED PORTFOLIOS
Class
DWS Alternative Asset Allocation Plus VIP A
DWS Alternative Asset Allocation Plus VIP B
SUPPLEMENT NO. 3 TO PARTICIPATION AGREEMENT
DATED AS OF OCTOBER 30TH, 1998
(as amended and supplemented from time to time)
AMONG
DWS VARIABLE SERIES II (formerly Investors Fund Series)
DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC.
(formerly Xxxxxxx Xxxxxx Investments, Inc.)
DWS INVESTMENTS DISTRIBUTORS, INC. (formerly Xxxxxx Distributors, Inc.)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Company")
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
A New York insurance company
(Both The Lincoln National Life Insurance Company and Lincoln Life & Annuity
Company of New York herein referred to collectively as the "Companies")
WHEREAS, pursuant to a Participation Agreement ( the "Agreement') dated
October 30, 1998, the DWS Variable Series II, Deutsche Investment Management
Americas Inc., DWS Investment Distributors, Inc., The Lincoln National Life
Insurance Company and/or their predecessors in interest agreed to certain
rights and responsibilities relative to the offering of fund shares; and
WHEREAS, the parties desire to offer fund shares to be purchased by certain
Separate Accounts sponsored by The Lincoln National Life Insurance Company
and Lincoln Life & Annuity Company of New York on behalf of owners of certain
variable annuity contracts; and
WHEREAS, the parties desire amend the Agreement to add an additional
Contracts to be available for purchase by the Companies on behalf of the
sponsored Separate Accounts and Variable Annuity Contracts;
NOW, THEREFORE, in consideration of mutual promises and representations it is
agreed as follows:
1. Schedule A of the Agreement is amended and replaced with the new Schedule
A which is attached to this Agreement.
Except as amended hereby, the Agreement remains in full force and effect in
accordance with its terms.
[Signatures Follow]
9
IN WITNESS WHEREOF, each of the parties has caused this Supplement to be
executed in its name and on its behalf by its duly authorized representative
as of August 1, 2011.
COMPANIES The Lincoln National Life Insurance Company
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Lincoln Life & Annuity Company of New York
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
FUND DWS Variable Series II
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Assistant Secretary
ADVISER Deutsche Investment Management Americas Inc.
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: COO
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: MD
UNDERWRITER DWS Investments Distributors, Inc.
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: CEO
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: COO
10
SCHEDULE A
NAME OF SEPARATE ACCOUNTS AND
DATE ESTABLISHED BY BOARD OF DIRECTORS
Lincoln National Variable Annuity Account C June 3, 1981
Lincoln Life Variable Annuity Account L April 29, 1996
Lincoln Life & Annuity Variable Annuity Account L July 24, 1996
Lincoln Life Variable Annuity Account N November 3, 1997
Lincoln New York Account N for Variable Annuities March 11, 1999
Lincoln Life Variable Annuity Account Q November 3, 1997
Lincoln Life Variable Life Account M December 17, 1997
Lincoln Life Variable Life Account R December 23, 1997
Lincoln Life Variable Life Account S December 24, 1999
Lincoln Life Variable Life Account Z July 30, 2003
Lincoln Life & Annuity Variable Life Account M December 17, 1997
Lincoln Life & Annuity Variable Life Account Z June 21, 2006
LLANY Variable Life Account R February 11, 1998
LLANY Variable Life Account S March 12, 1999
CONTRACTS FUNDED BY SEPARATE ACCOUNT
Lincoln ChoicePlus
Lincoln ChoicePlus Access
Lincoln ChoicePlus Bonus
Lincoln ChoicePlus II
Lincoln ChoicePlus II Access
Lincoln ChoicePlus II Bonus
Lincoln ChoicePlus II Advance
Lincoln ChoicePlus Assurance (A Share/Class)
Lincoln ChoicePlus Assurance (B Share/Class)
Lincoln ChoicePlus Assurance (C Share)
Lincoln ChoicePlus Assurance (L Share)
Lincoln ChoicePlus Assurance (Bonus)
Lincoln ChoicePlus Design
Lincoln ChoicePlus Fusion
Lincoln ChoicePlus Rollover
Lincoln ChoicePlus Signature
Lincoln InvestmentSolutions
MultiFund(R) 1-4 Individual Variable Annuity
MultiFund(R) 5 Individual Variable Annuity
MultiFund(R) Select Individual Variable Annuity
MultiFund(R) Group Variable Annuity
Group Variable Annuity (GVA)
Lincoln VULcv-IV
Lincoln VULdb-IV
Lincoln AssetEdge(sm) VUL
Lincoln VULone2007
Lincoln SVULone2007
Lincoln VULone
Lincoln VULone2005
Lincoln VULone 2010
Lincoln SVUL-IV
Lincoln PreservationEdge(sm) SVUL
Lincoln SVULone
Lincoln Corporate Variable 5
Lincoln Corporate Commitment VUL
Private Placement VUL
DESIGNATED PORTFOLIOS
Class
DWS Alternative Asset Allocation Plus VIP A
DWS Alternative Asset Allocation Plus VIP B
11
FUND/SERV AND NETWORKING SUPPLEMENT TO PARTICIPATION AGREEMENT
THIS FUND/SERV AND NETWORKING SUPPLEMENT (the "Supplement") is made and
entered into this 1st day of November, 2012, by and between DWS Investments
Service Company ("DWS-ISC"), the transfer agent of the DWS Variable Series I,
DWS Variable Series II and DWS Investments VIT Funds (each, and collectively,
the "Fund"), and The Lincoln National Life Insurance Company and Lincoln
Life & Annuity Company of New York(each, and collectively, "Insurance
Company"), on its own behalf and on behalf of each separate account of the
Insurance Company (each, an "Account") identified in the Participation
Agreement (as defined below).
WHEREAS, Insurance Company and the Fund (along with other parties) have
entered into various Participation Agreements, dated as of May 11, 1998 and
October 30, 1998, each as amended from time-to-time (each a "Participation
Agreement" and together the "Participation Agreements"), each of which
provides that the Fund will make available shares of certain portfolios
("Portfolios") for purchase, exchange and redemption by the Insurance
Company, on behalf of the Accounts, in order to fund variable annuity
contracts and/or variable life insurance contracts ("Contracts") purchased by
its customers ("Contract Holders"); and
WHEREAS, Insurance Company and DWS-ISC (the "Fund Agent"), or their
respective affiliates, are members in good standing of the National
Securities Clearing Corporation ("NSCC") or otherwise have access to the
NSCC's Fund/SERV system, which permits the transmission of trade and
registration data between Insurance Company and the Fund; and
WHEREAS, the parties wish to supplement the Participation Agreements as
necessary to permit the transmission of purchase, exchange and redemption
orders of Fund shares using the NSCC Fund/SERV system; and
WHEREAS, any party may decide to not use or to stop using NSCC Fund/SERV or
Networking and to instead use manual processing. This supplement is only in
effect when both parties agree to use NSCC.
WHEREAS, it is intended that the parties will participate with each other in
NSCC's Networking system ("NETWORKING") to enable the transmission of
shareholder data between Fund Agent and Insurance Company with respect to the
Fund, pursuant to certain matrix levels as described in the standard
Networking agreement ("Standard Networking Agreement") on file with the NSCC
and incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, which consideration is full and complete, Fund Agent and Insurance
Company hereby agree to supplement each Participation Agreement as follows:
1. TRANSACTIONS SUBJECT TO FUND/SERV AND NETWORKING.
1
(a) On each business day that the New York Stock Exchange is open for
business and on which the Fund's Portfolios determine their per share net
asset values ("Business Day"), Fund Agent shall accept, and effect changes in
its records upon receipt of purchase, redemption, exchanges, and registration
instructions from Insurance Company electronically through Fund/SERV
("Instructions"), without supporting documentation.
(b) Each party hereby agrees to participate in NETWORKING with the other
party pursuant to a mutually agreeable matrix or trust level established by
the NSCC, in accordance with the terms and conditions of the Standard
NETWORKING Agreement, as amended by this Supplement. In the event of any
conflict between the terms of the Standard NETWORKING Agreement and the terms
of this Supplement, the terms of this Supplement shall govern.
(c) Fund Agent acknowledges that Insurance Company may engage one or more
agents to fulfill some or all of Insurance Company's responsibilities
hereunder and that said agent(s) shall be authorized to act on Insurance
Company's behalf and shall be entitled to collect, receive and transmit
information directly to and from Fund Agent on Insurance Company's behalf.
As between the Fund Agent and Insurance Company, Insurance Company represents
and warrants that such agents have appropriate agreements in place with
Insurance Company and, if required, with the NSCC, to assume such delegated
responsibilities.
2. OPERATING PROCEDURES.
The Operating Procedures governing the responsibilities of the Fund and the
Company under the Participation Agreement and this Supplement with respect to
the purchase and redemption of Fund Portfolio shares and share price
communications are hereby incorporated into the Participation Agreement, as
Schedule A thereto. In the event that the NSCC's Fund/SERV system is not
available, the parties agree that orders will be processed in accordance with
the Manual Procedures set forth in Schedule A.
3. AS OF TRANSACTIONS.
Processing errors which result from any delay or error caused by Insurance
Company may be adjusted through Fund/SERV by Insurance Company by the
necessary corrective transactions on an as-of basis ("As Of Trade");
provided, however, that prior authorization must be obtained from Fund Agent
for any As Of Trade and any such request must be received by Fund Agent by
10:30 a.m. Central Time in order to receive same day processing. Insurance
Company shall promptly pay each Fund Portfolio for any loss incurred by the
Fund Portfolio as a result of the As of Trade that results from a delay or
error caused by the Insurance Company. Fund Agent shall have complete and
sole discretion as to whether or not to accept an As Of Trade. If an As Of
Trade is allowed by Fund Agent to be processed as of a particular trade date,
Insurance Company warrants that the trade relates only to Instructions
received by Insurance Company by the Close of Trading on such trade date.
Fund Agent reserves the right to process any As of Trade outside of
Fund/SERV.
4. TRADE CONFIRMATION.
2
Any information provided by Fund Agent to Insurance Company electronically
through Fund/SERV and pursuant to this Supplement, shall satisfy the
confirmation delivery obligations as outlined by SEC Rule 10b-10. Insurance
Company hereby provides its informed consent to suppress the delivery of this
information using paper-media. Insurance Company will promptly verify the
accuracy of confirmations of transactions and records received by Fund Agent
through Fund/SERV.
5. OVERPAYMENTS
(a). OVERPAYMENTS TO INSURANCE COMPANY. In the event of overpayment to
Insurance Company upon a redemption, where such overpayment is caused by Fund
Agent's error, Insurance Company agrees to use commercially reasonable
efforts to collect such overpayment from the Contract Holder. If, after such
efforts, Insurance Company is not able to recover all of such overpayment,
Insurance Company will cooperate with the attempts of Fund Agent or the
relevant Fund Portfolio to recover any portion of the overpayment, including
as permitted by applicable law providing Fund Agent or a Fund Portfolio with
information reasonably available to Insurance Company as to the identity of
the Contract Holder(s) from whom such remainder has not been recovered. If
the overpayment proceeds are still in the custody of Insurance Company or the
Contract Holder's account with Insurance Company, or if the overpayment is
caused by Insurance Company's error, Insurance Company shall promptly repay
such overpayment to Fund Agent after Insurance Company receives notice of
such overpayment.
(b) OVERPAYMENTS TO FUND AGENT. In the event any overpayment is made to
Fund Agent by Insurance Company, Fund Agent shall promptly repay such
overpayment to Insurance Company after Fund Agent receives notice of such
overpayment.
(c) ERRORS AND DELAYS. In the event of any error or delay with respect to
information regarding the pricing, purchase, redemption, transfer or
registration of Fund Portfolio shares (including As of Trades), the parties
agree that each is obligated to make the Accounts and the Fund Portfolio,
respectively, whole for any error or delay that it causes or that has been
caused in connection with any transactions or trade it has transmitted or
submitted, subject in each case to the Fund's policies on materiality of
pricing errors, if applicable. In addition, each party agrees that neither
will receive compensation from the other for the costs of any reprocessing
necessary as a result of an error or delay of the type referred to in this
paragraph. Finally, each party agrees to provide the other with prompt
notice of any errors or delays of the type referred to in this Section 5.
6. NETWORKING
This section 6 shall apply only between parties using the NSCC's NETWORKING
service with each other from time to time:
3
(a) Each party represents to the other that it, its affiliate or its
agent has executed and filed with the NSCC, and has not terminated, the
Standard Networking Agreement and that it, its affiliate or its agent is
eligible to use the NSCC's NETWORKING service. Each party agrees to
participate in NETWORKING with the other under the terms of the networking
Agreement and in accordance with the rules, standards and procedures of the
NSCC as in effect from time-to-time.
(b) The terms of the NETWORKING Agreement, as supplemented by this
Section 6, shall be incorporated by reference herein. The term "Fund Agent"
has the meaning assigned thereto in the NETWORKING Agreement; the term "Firm"
as used therein shall be deemed to refer to the Insurance Company or its
agent. The provisions of Article III of the NETWORKING Agreement as
incorporated by reference herein shall survive termination of this Agreement
with respect to acts or omissions occurring prior to such termination and
actions, claims, suits, complaints, proceedings or investigations resulting
from or arising out such acts or omissions.
(c) Insurance Company shall be responsible for obtaining and maintaining
all documentation and information (together, "Information"), and any changes
to such Information, necessary to ensure that all Networking accounts are
established and maintained in compliance with applicable laws and
regulations, including, without limitation, tax laws and regulations.
Insurance Company represents and warrants that (i) all such Information is,
and shall remain, true and correct; (ii) each taxpayer identification number
provided by Insurance Company to the Fund or Fund Agent has been certified,
under penalties of perjury, by the Shareholder on the appropriate Internal
Revenue Service form or a legally acceptable substitute; and (iii) Insurance
Company shall hold available for provision to, or inspection by, regulatory
authority, all Information required by law or regulation to be so held.
7. REPRESENTATIONS AND WARRANTIES
(a) Fund Agent and Insurance Company each represents, warrants, and
covenants to the other that:
(i) it shall perform any and all duties, functions, procedures and
responsibilities assigned to it under this Supplement and as otherwise
established by the NSCC in a competent manner and in compliance with (a)
all applicable laws, rules and regulations, including NSCC rules and
procedures relating to Fund/SERV and NETWORKING; and (b) the then
current prospectuses and statements of additional information of the
Fund;
(ii) it shall maintain facilities, equipment and skilled personnel
sufficient to perform the foregoing activities and to otherwise comply
with the terms of this Supplement;
(iii) all trades, confirmations and other information provided by one
party to the other party through the NSCC and pursuant to this
Supplement shall be accurate, complete and, in the format prescribed by
the NSCC. Each party shall adopt, implement and maintain procedures
reasonably designed to ensure the accuracy of all transmissions through
Fund/SERV and NETWORKING and to limit the access to, and the inputting
of data into, Fund/SERV and NETWORKING to persons specifically
authorized by such party; and
4
(iv) it or its affiliate has duly executed and delivered the
Networking Agreement, and has filed such Agreement with the NSCC.
(b) To the extent Insurance Company has engaged one or more third parties
(including affiliates of Insurance Company) to act as subcontractor(s) or
agent(s) ("Agents") to perform services that Insurance Company is responsible
for performing under this Supplement, Insurance Company has determined that
each such Agent is capable of performing such services and shall take
measures as may be necessary to ensure that such Agents perform such services
in accordance with the terms of this Supplement and applicable law.
Insurance Company shall be responsible for, and assume all liability for
(including any obligation for indemnification) the actions and inactions of
such Agents as if such services had been provided by Insurance Company.
8. TERMINATION; AMENDMENT.
This Supplement shall continue in effect until terminated, but shall
terminate automatically if the Participation Agreement is terminated. Fund
Agent or Insurance Company may terminate this Supplement at any time by
written notice to the other at least thirty (30) days prior to the
termination date, but such termination shall not affect the payment or
repayment of fees on transactions, if any, prior to the termination date, or
the Participation Agreement. This Supplement may be amended at any time by
mutual written agreement of both parties.
9. CONFLICTING AGREEMENTS.
Except for the Participation Agreement and the Standard Networking Agreement,
this Supplement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, among the
parties. In the event there is any conflict between this Supplement and the
Standard Networking Agreement, the terms and conditions of this Supplement
shall control. In the event there is any conflict between this Supplement
and the applicable Participation Agreement, the terms and conditions of the
Participation Agreement shall control.
10. ASSIGNMENT.
Neither Fund Agent nor Insurance Company may assign this Supplement without
the prior written consent of the other party, and any attempted assignment
without such consent shall be null and void; provided, however, a change in
control of either party shall not constitute an assignment of this
Supplement. Fund Agent acknowledges that Insurance Company may engage one
or more agents to fulfill some or all of Insurance Company's responsibilities
hereunder, which shall not constitute an assignment for the purposes of this
Supplement.
11. SEVERABILITY.
If any provision of this Supplement is held to be invalid, the remaining
provisions of the Supplement shall continue to be valid and enforceable.
12. NOTICE.
Any notice or amendment required or permitted hereunder shall be in writing
and shall be given by personal service, mail, or facsimile to the other party
at the address set forth below (or such other address as the parties may
specify by written notice). Notice shall be effective upon receipt
5
if by mail, on the date of personal delivery (by private messenger, courier
service or otherwise), or upon receipt of facsimile (upon oral confirmation
of receipt), whichever occurs first at:
Fund Agent:
DWS INVESTMENTS SERVICE COMPANY
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, TA Oversight
With a copy to: Deutsche Asset Management
Legal Dept. (U.S. Retail Division)
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
And a copy to:
DST SYSTEMS
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: DWS Investments Account
Insurance Company:
The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Lincoln Life & Annuity Company of New York
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
13. WAIVER.
The failure of a party to insist upon strict adherence to any provision of
this Supplement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that provision or any other provision of this Supplement.
6
IN WITNESS WHEREOF, the undersigned have caused this Supplement to be
executed as of the date first above written.
DWS INVESTMENTS SERVICE COMPANY
By: /s/ Xxxxxxx Xxxxx
-------------------------
Name: Xxxxxxx Xxxxx
Title: President
By: /s/ Xxxx Xxxxxxx
-------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
7
SCHEDULE A
OPERATING PROCEDURES
Unless otherwise defined below, all capitalized terms have the meanings
specified in the Supplement and/or the Participation Agreement, each of which
this Exhibit is a part.
I. FUND/SERV AND NETWORKING PROCEDURES
A. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each
Portfolio, the Fund or its transfer agent will provide the Company with (i)
the Share Price determined as of the Close of Trading on each Business Day;
(ii) dividend and capital gains distribution information on ex-date; and
(iii) in the case of fixed income and money market Portfolios which declare
dividends daily, the daily accrual interest rate factor. The Fund will use
commercially reasonable efforts to communicate, or have its transfer agent
communicate, such information to the Company or its designee via automated
feed and email by 7:00 p.m. Eastern Time each Business Day.
B. TRANSMITTAL OF ORDERS. The Company agrees that, unless otherwise
agreed to in writing with the Fund, orders for the purchase, exchange or
redemption of Fund Portfolio shares ("Instructions") received by the Company
prior to the Close of Trading on any Business Day ("Day 1") will be
transmitted to Fund/SERV by 9:30 a.m. Eastern Time on the following Business
Day ("Day 2") (such orders are referred to as "Day 1 Trades"). Each
transmission by the Company or its designee of a purchase, exchange or
redemption order relating to a Business Day ("Order") will constitute a
representation by the Company that such Order was based on Instructions that
the Company received and accepted as being in good order prior to the Close
of Trading on that Business Day, and that the Order included all purchase,
exchange and redemption Instructions so received by the Company.
In the event that Orders for any Business Day are not transmitted to
Fund/SERV by 9:30 a.m. Eastern Time on Day 2, the Company or its designee
shall transmit such Orders to the Fund in accordance with the Manual
Procedures below. If such Orders are not transmitted to the Fund in
accordance with the Manual Procedures, the Fund reserves the right, in its
sole discretion, to reject, reverse or re-price the Orders (notwithstanding
that the Company may have received Fund/SERV confirmation of the Orders) and
the Company will be responsible for reimbursement of any loss sustained by
the Fund that may arise out of the improper transmittal of such Orders.
All Orders transmitted to the Fund via Fund/SERV will be communicated in
accordance with Fund/SERV rules, guidelines and procedures. The Company
acknowledges that certain cash flows may be known on or before a trade date,
and the Company agrees to use its reasonable efforts to notify the Fund of
such cash flows before such trade date.
C. FUND/SERV CONFIRMATION. The Fund, acting through the Fund's transfer
agent, has established one or more master accounts on its mutual fund
shareholder account recordkeeping system (each, a "T/A Account") reflecting
the aggregate ownership of shares of each Portfolio of the Fund and all
transactions involving such shares by the Company on behalf of the Accounts.
The Fund's transfer agent will transmit a confirmation via Fund/SERV that
will
8
set forth the number of Portfolio shares purchased, exchanged and redeemed,
the beginning and ending share balances, and the net asset value per share.
D. PRICING OF ORDERS. Day 1 Trades communicated to the Fund as
provided under Section C of these Fund/SERV Procedures will be effected at
the Share Price for the applicable Portfolio on Day 1.
E. SETTLEMENT. Day 1 Trades confirmed by the Fund via Fund/SERV will
settle in U.S. dollars in accordance with the Fund's profile within Fund/SERV
applicable to the Company. Settlement shall occur via the NSCC in accordance
with NSCC procedures.
F. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or its transfer agent
will furnish the Company or its designee written notice of any dividends or
other distributions payable on the shares of each Portfolio, via email, which
email addresses shall be provided by the Company and updated by the Company
as necessary. Dividends and distributions with respect to a Portfolio will
be automatically reinvested in additional shares of the Portfolio held by the
T/A Account(s) and the Fund or its transfer agent will notify the Company or
its agent, via Networking, as to the number of shares so issued.
G. ACTIVITY REPORTING AND VERIFICATION. The Fund or its transfer agent
will transmit or make available to the Company, via Networking (including DST
Vision), a report containing any transactions or other activity occurring in
a T/A Account on a Business Day, including any Fund/SERV transactions, and
the share balance for each T/A Account in accordance with Fund/SERV's
Networking guidelines. The Company will promptly review and verify this
information and immediately advise the Fund or its transfer agent in writing
of any discrepancies between the Company's records and the balance in the T/A
Account(s).
The Company will, immediately on receipt of any activity or position
file concerning an Account, verify the information contained therein against
the information contained on the Company's record-keeping system and
immediately advise the Fund in writing of any discrepancies between such
information.
The Fund and the Company will cooperate to resolve any such
discrepancies as soon as reasonably practicable.
H. PROCESSING ADJUSTMENTS. In the event of any error or delay with
respect to these Fund/SERV and Networking Procedures that is caused by the
Fund or its transfer agent, the Fund will make any adjustments on its (or its
transfer agent's) accounting system necessary to correct such error or delay.
The Company will make the corresponding adjustments on its record-keeping
system. The Company and the Fund will each provide the other with prompt
notice of any errors or delays of the type referred to in these Fund/SERV and
Networking Procedures.
I. FUND/SERV UNAVAILABILITY. If the Fund/SERV and Networking systems
are unavailable for any reason, or if it is otherwise impracticable to
operate in accordance with these Fund/SERV and Networking Procedures,
transactions shall be processed in accordance with the Manual Procedures
outlined below.
9
II. MANUAL PROCEDURES
A. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each
Portfolio, the Fund or its transfer agent will provide the Company with (i)
the Share Price determined as of the Close of Trading on each Business Day;
(ii) dividend and capital gains distribution information on ex-date; and
(iii) in the case of fixed income and money market Portfolios which declare
dividends daily, the daily accrual interest rate factor. The Fund will use
commercially reasonable efforts to communicate, or have its transfer agent
communicate, such information to the Company or its designee via automated
feed and email by 7:00 p.m. Eastern Time each Business Day.
B. TRANSMITTAL OF ORDERS. The Company agrees that, unless otherwise
agreed to in writing with the Fund, Instructions received by the Company
prior to the Close of Trading on any Business Day ("Day 1") will be
transmitted to the Fund by facsimile no later than 10:00 a.m. Eastern Time on
the following Business Day ("Day 2") (such Orders are referred to as "Day 1
Trades"). Each transmission by the Company or its designee of a purchase,
exchange or redemption order relating to a Business Day ("Order") will
constitute a representation by the Company that such Order was based on
Instructions that the Company received and accepted as being in good order
prior to the Close of Trading on that Business Day, and that the Order
included all purchase, exchange and redemption Instructions so received by
the Company.
All Orders transmitted to the Fund will be communicated in U.S. dollars
and will indicate the date of the transaction. On Business Days where there
are no Orders, or where the net dollar amount for purchases and redemptions
for an Account equals zero, the communication will so indicate. The Company
acknowledges that certain cash flows may be known on or before a trade date,
and the Company agrees to use its reasonable efforts to notify the Fund of
such cash flows before such trade date.
C. CONFIRMATION. All Orders transmitted in accordance with Section B of
these Manual Procedures are subject to acceptance by the Fund and shall
become effective only upon confirmation by the Fund, which confirmation shall
be sent to the Company or its designee.
D. PRICING OF ORDERS. Day 1 Trades communicated to the Fund by 10:00
a.m. Eastern Time on Day 2 will be effected at the Share Price for the
applicable Portfolio on Day 1.
E. SETTLEMENT.
1. PURCHASE ORDERS. In the case of Day 1 Trades that constitute a
net purchase (including exchanges) Order, the Company or its designee will
arrange for a federal funds wire transfer of the net purchase amount to a
custodial account designated by the Fund as designated in the applicable
Portfolio's Prospectus.
2. REDEMPTION ORDERS. In the case of Day 1 Trades that constitute a
net redemption (including exchanges) Order, the Fund or its transfer agent
will arrange for a federal funds wire transfer of the net redemption amount
to a bank account designated by the Company on Day 2, in no instance later
than the time provided for in the applicable Portfolio's Prospectus.
3. GENERALLY. Settlements will be in U.S. dollars. On any Business
Day when the Federal Reserve Wire Transfer System is closed, all
communication and processing
10
rules will be suspended for the settlement of Orders. Orders will be settled
on the next Business Day on which the Federal Reserve Wire Transfer System is
open. Transactions that are the subject of such Orders will be processed at
the Share Price for the applicable Portfolio on the Business Day to which the
Orders originally relate.
F. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or its transfer agent
will furnish the Company or its designee written notice of any dividends or
other distributions payable on the shares of each Portfolio, via email, which
email addresses shall be provided by the Company and updated by the Company
as necessary. Dividends and distributions with respect to a Portfolio will
be automatically reinvested in additional shares of the Portfolio held by the
T/A Account(s) and the Fund or its transfer agent will notify the Company or
its designee as to the number of shares so issued.
G. ACTIVITY REPORTING AND VERIFICATION. The Fund or its transfer agent
will deliver to the Company or its designee in writing, via facsimile or
other method agreed upon by the parties (e.g., DST Vision) a statement for
the preceding calendar month reflecting the shares of each Portfolio held by
the T/A Account(s) as of the end of such preceding month and all purchases,
exchanges and redemptions by the Company of shares of a Portfolio during such
preceding month. The Company will, immediately upon receipt of any activity
or position file concerning a T/A Account, verify the information contained
therein against the information contained on the Company's record-keeping
system and immediately advise the Fund or its transfer agent, in writing, of
any discrepancies between such information. The Fund and the Company will
cooperate to resolve any such discrepancies as soon as reasonably
practicable.
H. PROCESSING ADJUSTMENTS. In the event of any error or delay with
respect to these Manual Procedures that is caused by the Fund or its transfer
agent, the Fund will make any adjustments on its (or its transfer agent's)
recordkeeping system necessary to correct such error or delay. The Company
will make the corresponding adjustments on its record-keeping system. The
Company and the Fund will each provide the other with prompt notice of any
errors or delays of the type referred to in these Manual Procedures.
11
