Exhibit 3(b)
AMENDMENT TO THE PRINCIPAL UNDERWRITING AGREEMENT
This amendment, dated as of January 14, 1998 (this "Amendment"), to a certain
Principal Underwriting Agreement effective on the 12th day of July, 1989 (the
"Original Agreement") as amended April 30, 1997, is executed by and between
LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Lincoln National"), a life insurance
company organized under the laws of the State of Indiana, on behalf of itself
and SEPARATE ACCOUNT H OF THE LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Separate
Account"), a separate account established by Lincoln National pursuant to the
Indiana Insurance Code, and AMERICAN FUNDS DISTRIBUTORS, INC. ("AFD"), a
corporation organized under the laws of the State of California (collectively,
the "Parties"). Unless otherwise specifically provided, this Amendment shall be
effective as of September 1, 1997.
WITNESSETH:
WHEREAS, the Original Agreement, as amended, provides for AFD to serve as
principal underwriter for certain variable annuity contracts defined more fully
therein and marketed under the name "American Legacy II" and "American Legacy
III" (the "Contracts"); and
WHEREAS, the Original Agreement contains certain exclusivity provisions in
Section 17 that the Parties desire to eliminate; and
NOW THEREFORE, in consideration of the foregoing, and of the mutual covenants
and conditions contained in the Original Agreement, as amended as well as herein
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Lincoln National, the Separate Account and AFD hereby
agree as follows:
A. Section 17. Section 17 of the Original Agreement is hereby replaced and
Section 5 of the Original Agreement is hereby modified by the "Non-Exclusivity
Provisions" set forth below. All other terms and conditions of the Original
Agreement as previously amended, are hereby ratified and confirmed with respect
to the Contracts.
Non-Exclusivity Provisions. AFD may act as principal underwriter, sponsor,
distributor or dealer for issuers other than Lincoln National or its affiliates
in connection with mutual funds or insurance products. American Variable
Insurance Series (the "Series") may be sold to fund insurance contracts,
including those other than the Contracts, of issuers other than Lincoln National
or its affiliates or to other shareholders in accordance with Internal Revenue
Code Section 817(h) and the regulations thereunder. Lincoln National may issue
through any broker-dealer any insurance contracts; however, Lincoln National
will not enter into any agreement with any other organization for the purpose of
distributing the Contracts. The foregoing is subject to the covenants and
conditions set forth below:
1. Appointment Fees. The Original Agreement in the last sentence of
Section 5 provides that AFD will be responsible for all state insurance
appointing fees and associated insurance license renewal fees incurred to
enable members to sell the Contracts ("appointment fees"). This sentence in
Section 5 is hereby eliminated and it is agreed that Lincoln National will
be responsible for any and all appointment fees as of September 1,
1997. Lincoln National will also assume the responsibility for deciding
whether to pay appointment fees with respect to "non-producers." In the
event Lincoln National determines to stop paying the appointment fees for
any non-producer, AFD shall be given the option to pay such fees.
2. Persistency Risk Sharing Agreement ("PRSA"). A new PRSA for the
Contracts which shall supersede all persistency risk sharing understandings
and proposals between the Parties, including the letters dated September
28, 1994 regarding "Death Benefit Adjustment Cost Sharing" and May 15, 1997
regarding a proposed American Legacy III Persistency Risk Sharing
Agreement, will be executed. The new PRSA will clarify that AFD will share
the persistency risk for experience only in the event that one or more of
the following occurs:
a. AFD has elected to terminate the Original Agreement, as amended
and is not providing wholesaler support for American Legacy III or a
successor contract, or
b. Capital Research and Management Company (or an affiliated
company) has elected to terminate the Investment Advisory and Service
Agreement in effect with respect to the Series, or
c. American Variable Insurance Series has elected to terminate any
Fund Participation Agreement with respect to the Contracts.
3. Lincoln Financial Advisors ("LFA"). Schedule A - III dated August 30,
1997 is hereby amended to provide that sales through LFA (referred to in
Schedule A - III by its predecessor company's name Lincoln National Sales
Corporation or "LNSC") shall be at full reallowance to AFD and subject to
standard Selling Group Agreement terms and conditions including
remuneration for all new sales. New sales is defined as Contracts
established on or after January 1, 1998. AFD undertakes to provide
wholesaler support commensurate with LFA's high American Legacy sales
ranking. This item will be implemented on January 1, 1998. For purposes of
the marketing reallowance and for other purposes as appropriate, LFA shall
include the Lincoln-owned CIGNA Financial Advisors ("CFA"), effective
January 1, 1998.
4. Best Deal Provision. Lincoln National shall make available to AFD for
distribution through an AFD-formed selling group, at AFD's option, any
variable contract type or variable contract feature issued by Lincoln
National through broker-dealers on the same terms and conditions. Lincoln
National shall make available to AFD any proposed variable contract type to
be issued through broker-dealers prior to introduction. AFD shall use its
best efforts to provide wholesaler support for American Legacy III and
successor contracts as long as the Original Agreement, as amended or
similar agreement is in effect that is at least comparable to the level of
support provided by AFD for non-Lincoln contracts. AFD will recommend to
the Series' Board of Trustees that Lincoln National may use at its option
any fund of the Series in any of its contracts.
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5. 1035 Exchanges. Lincoln National and AFD each agree not to seek or
encourage exchanges between the Contracts and either any non-Lincoln
National contract or other Lincoln National contract. Both parties will
give their respective "best efforts" to discourage such exchanges. The
payment of compensation in connection with such an exchange will not be a
violation of this agreement; however, either Party may, if necessary, cause
commissions not to be paid on exchanges of this type that do occur.
6. Names. Lincoln National agrees that it will not issue any insurance
contract using names that include any following terms unless AFD is serving
as principal underwriter for such contract: "American" or "Capital" or
"Legacy" or "Estate Builder" or "Personal Defined Benefit Plan" or
"Shareholder Advantage."
7. Bank Wholesaling. Lincoln National agrees to provide funding to AFD to
stimulate sales of American Legacy III or a successor contract ("American
Legacy") within the "banking distribution channel" ("banks"). AFD agrees to
focus its wholesaling efforts on banks in exchange for receiving such
funding.
Lincoln National will provide AFD with an increase in its deposit-based
marketing allowance based on the level of American Legacy sales in banks.
The level of American Legacy Sales that will obligate Lincoln National to
provide the funding and the amounts of such funding will be determined from
the table below.
The definition of "banks" will be by mutual agreement of the parties.
Lincoln National and AFD agree to meet at least once a year during the
period Lincoln National is providing funding to review this arrangement.
AFD will share at least annually with LNL in writing an advance
recommendation as to how the funding for bank wholesaling will be spent.
Year LNL will pay AFD this Up to a If at least this percent of average monthly
percentage of deposits of maximum American Legacy sales for the previous
the prior year: deposit level of: year are attributable to banks:
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1998 .066% $1,500,000,000 0%
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1999 .05% $2,000,000,000 3%
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2000-2004 .05% $2,000,000,000 At least 6%, but not more than 10%
$3,000,000,000 At least 10%, but not more than 20%
$4,000,000,000 At least 20%, but not more than 25%
$5,000,000,000 At least 25%
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B. Counterparts. This Amendment may be executed in two or more counterparts,
each of which when so executed, shall be deemed to be an original, but such
counterparts taken together shall constitute but one and the same contract.
IN WITNESS WHEREOF, the undersigned parties have caused the Amendment to be duly
executed and attested as follows:
The Lincoln National Life Insurance
Company for itself and Separate Account H
Of the Lincoln National Life Insurance
Attest: /s/ Xxxxx X. Xxxxxxxxx Company
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By: /s/ Xxxxxxx X. Xxxxxxxxx
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Attest: /s/ Xxxxxxx X. Xxxxxx American Funds Distributors, Inc.
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Xxxxxxx X. Xxxxxx
Counsel and Secretary By: /s/ J. Xxxxxxxx Xxxxxx
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J. Xxxxxxxx Xxxxxx
Senior Vice President
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