Page> AMENDED AND RESTATED PARTICIPATION AGREEMENT AMONG MFS VARIABLE INSURANCE TRUST, MFS VARIABLE INSURANCE TRUST II, THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND MFS FUND DISTRIBUTORS, INC. THIS AGREEMENT, made and entered into this 1st day of...
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AMENDED AND RESTATED
AMONG
MFS VARIABLE INSURANCE TRUST,
MFS VARIABLE INSURANCE TRUST II,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AND
MFS FUND DISTRIBUTORS, INC.
THIS AGREEMENT, made and entered into this 1st day of January, 2011, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust I"), MFS VARIABLE INSURANCE TRUST II, a Massachusetts business trust
(the "Trust II") (Trust I and Trust II each referred to, individually, as the
"Trust" and, collectively, as the "Trusts"), THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY (the "Company") on its own behalf and on behalf of each of
the segregated asset accounts set forth in Schedule B hereto, as may be
amended from time to time (the "Accounts"), and MFS Fund Distributors, Inc.
("MFD"), a Delaware corporation. This Agreement shall amend and supersede the
Participation Agreement, dated June 1, 2000, as amended, by and among MFS
Variable Insurance Trust, the Company and Massachusetts Financial Services
Company ("MFS").
WHEREAS, each Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"), and its shares are registered or will be registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of each Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, certain series of shares of each Trust are divided into two
separate share classes, an Initial Class and a Service Class, and the Trust
on behalf of the Service Class has adopted a Rule 12b-1 plan under the 1940
Act pursuant to which the Service Class pays a distribution fee;
WHEREAS, the series of shares of each Trust (each, a "Portfolio," and,
collectively, the "Portfolios") and the classes of shares of those Portfolios
(the "Shares") offered by each Trust to the Company and the Accounts are set
forth on Schedule A attached hereto;
WHEREAS, MFD is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), and is a member in good standing of the
Financial Industry Regulatory Authority, Inc. (the "FINRA");
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under
the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid
variable annuity and/or variable life insurance contracts that are allocated
to the Accounts (the Policies and the Accounts covered by this Agreement, and
each corresponding Portfolio covered by this Agreement in which the Accounts
invest, is specified in Schedule A attached hereto as may be modified from
time to time);
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WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, Massachusetts Financial Services Company ("MFS") is duly
registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and any applicable state securities law, and is each
Trust's investment adviser; and
WHEREAS, Lincoln Financial Distributors, Inc. ("LFD"), the underwriter
for the Policies, is registered as a broker-dealer with the SEC under the
1934 Act and is a Connecticut Corporation; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase the Shares of the Portfolios as
specified in Schedule A attached hereto on behalf of the Accounts to fund the
Policies, and the Trusts intend to sell such Shares to the Accounts at net
asset value; and
NOW, THEREFORE, in consideration of their mutual promises, each Trust,
MFD, and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. Each Trust agrees to sell to the Company those Shares which the Accounts
order (based on orders placed by Policy holders prior to the pricing time set
forth in the applicable Portfolio's prospectus, E.G., the close of regular
trading on the New York Stock Exchange, Inc. (the "NYSE") on that Business
Day, as defined below) and which are available for purchase by such Accounts,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the Shares. For
purposes of this Section 1.1, the Company shall be the designee of each Trust
for receipt of such orders from Policy owners and receipt by such designee
shall constitute receipt by each Trust; PROVIDED that such Trust receives
notice of such orders by 9:00 a m. New York time on the next following
Business Day. "Business Day" shall mean any day on which the NYSE is open for
trading and on which the Trust calculates its net asset value pursuant to the
rules of the SEC. The Company will ensure that orders for transactions in
Shares by Policy owners comply with each Portfolio's prospectus (including
statement of additional information) restrictions with respect to purchases,
redemptions and exchanges. The Company will not engage in, authorize or
facilitate market timing or late trading in Shares and will take all
reasonable steps necessary to identify and prevent market timing and late
trading in Shares by Policyholders.
1.2. Each Trust agrees to make the Shares available indefinitely for purchase
at the applicable net asset value per share by the Company and the Accounts
on those days on which the Trust calculates its net asset value pursuant to
rules of the SEC and each Trust shall calculate such net asset value on each
day which the NYSE is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the relevant Trust (the "Board") may refuse to sell any
Shares to the Company and the Accounts, or suspend or terminate the offering
of the Shares 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 interest of the Shareholders of such
Portfolio.
1.3. Each Trust and MFD agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust and
MFD or its affiliates (the "Participating Insurance Companies") and their
separate accounts, qualified pension and retirement plans and MFD or its
affiliates, and any other person or plan permitted to hold shares of such
Trust pursuant to Treasury Regulation 1.817-5 without impairing the ability
of the Company, on behalf of its separate accounts, to consider the Shares as
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constituting investments of the separate accounts for the purpose of
satisfying the diversification requirements of Section 817(h). Each Trust and
MFD or its affiliates will not sell such Trust shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles III and VII of this Agreement is in effect
to govern such sales. The Company will not resell the Shares except to such
Trust or its agents.
1.4. Each Trust agrees to redeem for cash or, to the extent permitted by
applicable law, in-kind, on the Company's request, any full or fractional
Shares held by the Accounts (based on orders placed by Policy owners prior to
the close of regular trading on the NYSE on that Business Day), executing
such requests on a daily basis at the net asset value next computed after
receipt by such Trust or its designee of the request for redemption. For
purposes of this Section l.4, the Company shall be the designee of such Trust
for receipt of requests for redemption from Policy owners and receipt by such
designee shall constitute receipt by such Trust; provided that such Trust
receives notice of such request for redemption by 9:00 a.m. New York time on
the next following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company shall
be placed separately for each Portfolio and shall not be netted with respect
to any Portfolio. However, with respect to payment of the purchase price by
the Company and of redemption proceeds by the Trusts, the Company and the
relevant Trust shall net purchase and redemption orders with respect to each
Portfolio and shall transmit one net payment for all of the Portfolios in
accordance with Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall use its best efforts to
pay for the Shares by 2:00 p.m. New York time on the next Business Day after
an order to purchase the Shares is made in accordance with the provisions of
Section 1.1. hereof. In the event of net redemptions, each Trust shall use
its best efforts to pay the redemption proceeds by 2:00 p.m. New York time on
the next Business Day after an order to redeem the shares is made in
accordance with the provisions of Section 1.4. hereof. All such payments
shall be in federal funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from each Trust will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.8. Each Trust shall furnish same day notice (by wire or telephone followed
by written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive all
such dividends and distributions as are payable on a Portfolio's Shares in
additional Shares of that Portfolio. Each Trust shall notify the Company of
the number of Shares so issued as payment of such dividends and distributions.
1.9. Each Trust or its custodian shall make the net asset value per share for
each Portfolio available to the Company on each Business Day as soon as
reasonably practicable after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. New York time. In the event that such Trust is unable to meet
the 6:30 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time which such Trust takes
to make the net asset value available to the Company. If such Trust provides
materially incorrect share net asset value information, the Trust shall make
an adjustment to the number of shares purchased or redeemed for the Accounts
to reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gains information ("Pricing Error") shall be rep0l1ed promptly upon discovery
to the Company. Such Trust or MFD shall reimburse the Company for the
reasonable, documented, out-of-pocket additional costs made to adjust the
Accounts due to a Pricing Error.
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1.10 Each party or its designee shall maintain and preserve all records as
required by law to be maintained and preserved in connection with providing
the services hereunder and in making Shares available to the Policy holders.
Upon the request of MFD or a Trust, the Company shall provide copies of all
the historical records relating to transactions between the Portfolios and
the Policy holders, written communications regarding the Portfolios to or
from such Policy holders' accounts and other materials, in each case to the
extent necessary for MFD or such Trust to meet its recordkeeping obligations
under applicable law or regulation, including to comply with any request of a
governmental body or self-regulatory organization.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable state
and federal laws, including without limitation the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established the Account as a segregated asset account under
applicable law and has registered or, prior to any issuance or sale of the
Policies, will register the Accounts as unit investment trusts in accordance
with the provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Policies, and that it will maintain
such registration for so long as any Policies are outstanding. The Company
shall amend the registration statements under the 1933 Act for the Policies
and the registration statements under the 1940 Act for the Accounts from time
to time as required in order to effect the continuous offering of the
Policies or as may otherwise be required by applicable law. The Company shall
register and qualify the Policies for sales in accordance with the securities
laws of the various states only if and to the extent deemed necessary by the
Company.
2.2. The Company represents and warrants that the Policies currently are and,
at the time of issuance, will be treated as life insurance, endowment or
annuity contract under applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), that it will maintain such treatment and that
it will notify the Trust or MFD immediately upon having a reasonable basis
for believing that the Policies have ceased to be so treated or that they
might not be so treated in the future.
2.3. The Company represents and warrants that LFD, the underwriter for the
individual variable annuity and the variable life policies, is a member in
good standing of FINRA and is a registered broker-dealer with the SEC. The
Company represents and warrants that the Company and LFD will sell and
distribute such policies in accordance in all material respects with all
applicable state and federal securities laws, including, without limitation,
the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. Each Trust and MFD represent and warrant that the Shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
such Trust is and shall remain registered under the 1940 Act. Each Trust
shall amend the registration statement for its Shares under the 1933 Act and
the 1940 Act from time to time as
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required in order to effect the continuous offering of its Shares. Each Trust
shall register and qualify the Shares for sale in accordance with the laws of
the various states only if and to the extent deemed necessary by such Trust.
2.5. MFD represents and warrants that it is a member in good standing of
FINRA and is registered as a broker-dealer with the SEC. Each Trust and MFD
represent that such Trust and MFD will sell and distribute the Shares in
accordance in all material respects with all applicable state and federal
securities laws, including, without limitation, the 1933 Act, the 1934 Act,
and the 0000 Xxx.
2.6. Each Trust represents that it is lawfully organized and validly existing
under the laws of The Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act and any applicable
regulations thereunder.
2.7. MFD, on behalf of MFS, represents and warrants that MFS, as investment
adviser to the Trusts, is and shall remain duly registered under all
applicable federal securities laws and that it shall perform its obligations
for the Trusts in compliance in all material respects with any applicable
federal securities laws and with the securities laws of The Commonwealth of
Massachusetts. MFD represents and warrants that MFS is not subject to state
securities laws other than the securities laws of The Commonwealth of
Massachusetts and that it is exempt from registration as an investment
adviser under the securities laws of The Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to each Board
such reports, material or data as such Board may reasonably request so that
it may carry out fully the obligations imposed upon it by the conditions
contained in the exemptive application pursuant to which the SEC has granted
exemptive relief to permit mixed and shared funding (the "Mixed and Shared
Funding Exemptive Order").
2.9. The Company acknowledges that, with respect to Service Class Shares of a
Portfolio, it or its affiliate(s) may receive payments under a Trust's Rule
12b-1 plan. The Company, and not the relevant Trust, MFD nor MFS, is
responsible for providing any disclosures relating to this Agreement and/or
payments made to the Company to Policy owners.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, each Trust or its designee shall provide the Company,
free of charge, with as many copies of the current prospectus (describing
only the Portfolios listed in Schedule A hereto) for the Shares as the
Company may reasonably request for distribution to existing Policy owners
whose Policies are funded by such Shares. Each Trust or its designee shall
provide the Company with as many copies of the current prospectus for the
Shares as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof, a Trust
or its designee shall provide such documentation (including a "camera ready"
copy of the new prospectus as set in type or, at the request of the Company,
as a diskette in the form sent to the financial printer) and other assistance
as is reasonably necessary in order for the parties hereto once each year
(or more frequently if the prospectus for the Shares is supplemented or
amended) to have the prospectus for the Policies and the prospectus for the
Shares printed together in one document; the expenses of such printing to be
apportioned between (a) the Company and (b) the relevant Trust(s) or its
designee in proportion to the number of pages of the Policy and Shares'
prospectuses, taking account of other relevant factors affecting the expense
of printing, such as covers, columns, graphs and charts; such Trust or its
designee to bear the cost of printing the Shares' prospectus portion of such
document for distribution to owners of existing
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Policies funded by the Shares and the Company to bear the expenses of
printing the portion of such document relating to the Accounts; PROVIDED,
however, that the Company shall bear all printing expenses of such combined
documents where used for distribution to prospective purchasers or to owners
of existing Policies not funded by the Shares. In the event that the Company
requests that a Trust or its designee provides such Trust's prospectus in a
"camera ready" or electronic file format, such Trust shall be responsible for
providing the prospectus in the format in which it or MFD is accustomed to
formatting prospectuses and shall bear the expense of providing the
prospectus in such format (E.G., typesetting expenses), and the Company shall
bear the expense of adjusting or changing the format to conform with any of
its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the relevant Trust or
its designee. Each Trust or its designee, at its expense, shall print and
provide such statement of additional information to the Company (or a master
of such statement suitable for duplication by the Company) for distribution
to any owner of a Policy funded by the Shares. Each Trust or its designee,
at the Company's expense, shall print and provide such statement to the
Company (or a master of such statement suitable for duplication by the
Company) for distribution to a prospective purchaser who requests such
statement or to an owner of a Policy not funded by the Shares.
3.3. Each Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution to
Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or
of Article V below, the Company shall pay the expense of printing or
providing documents to the extent such cost is considered a distribution
expense. Distribution expenses would include by way of illustration, but are
not limited to, the printing of the Shares' prospectus or prospectuses for
distribution to prospective purchasers or to owners of existing Policies not
funded by such Shares.
3.5. Each Trust hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding.
3.6. To the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from Policy owners;
and
(c) vote the Shares for which no instructions have been received in the same
proportion as the Shares of such Portfolio for which instructions have been
received from Policy owners;
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. The
Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each
of their separate accounts holding Shares calculates voting privileges in the
manner required by the Mixed and Shared Funding Exemptive Order. Each Trust
and MFD will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to each Trust
or its designee, each piece of sales literature or other promotional material
in which such Trust, MFD, any investment adviser to such Trust, or any
affiliate of MFD are named, at least ten (10) Business Days prior to its use.
No such material shall be used if such Trust, MFD, or their respective
designees reasonably objects to such use within five (5) Business Days after
receipt of such material.
4.2. The Company shall not give any information or make any representations
or statement on behalf of any Trust, MFD, any investment adviser to any
Trust, or any affiliate of MFD or concerning such Trust or any other such
entity in connection with the sale of the Policies other than the information
or representations contained in the registration statement, prospectus or
statement of additional information for the Shares, as such registration
statement, prospectus and statement of additional information may be amended
or supplemented from time to time, or in reports or proxy statements for such
Trust, or in sales literature or other promotional material approved by such
Trust, MFD or their respective designees, except with the permission of the
Trust, MFD or their respective designees. Each Trust, MFD or their respective
designees each agrees to respond to any request for approval on a prompt and
timely basis. The Company shall adopt and implement procedures reasonably
designed to ensure that information concerning a Trust, MFD or any of their
affiliates which is intended for use only by brokers or agents selling the
Policies (I.E., information that is not intended for distribution to Policy
owners or prospective Policy owners) is so used, and neither the Trusts, MFD
nor any of their affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
4.3. Each Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or the Accounts is named,
at least ten (10) Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within
five (5) Business Days after receipt of such material.
4.4. The Trusts and MFD shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Policies in connection with the sale of the Policies other
than the information or representations contained in a registration
statement, prospectus, or statement of additional information for the
Policies, as such registration statement, prospectus and statement of
additional information may be amended or supplemented from time to time, or
in reports for the Accounts, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission
of the Company. The Company or its designee agrees to respond to any request
for approval on a prompt and timely basis. The Trust and MFD may not alter
any material so provided by the Company or its designee (including, without
limitation, presenting or delivering such material in a different medium,
E.G., electronic or internet) without the prior written consent of the
Company. The parties hereto agree that this Section 4.4. is neither intended
to designate nor otherwise imply that MFD is an underwriter or distributor of
the Policies.
4.5. The Company and each Trust (or its designee in lieu of the Company or
such Trust, as appropriate) will each provide to the other at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Policies,
or to such Trust or its Shares, prior to or contemporaneously with the filing
of such document with the SEC or other regulatory authorities. The Company
and a Trust shall also each promptly inform the other of the results of any
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examination by the SEC (or other regulatory authorities) that relates to the
Policies, such Trust or its Shares, and the party that was the subject of the
examination shall provide the other party with a copy of relevant portions of
any "deficiency letter" or other correspondence or written report regarding
any such examination.
4.6. No party shall use any other party's names, logos, trademarks or service
marks, whether registered or unregistered, without the prior written consent
of such other party, or after written consent therefore has been revoked,
provided that separate consent is not required under this Section 4.6 to the
extent that consent to use a party's name, logo, trademark or service xxxx in
connection with a particular piece of advertising or sales literature has
previously been given by a party under Sections 4.2 and 4.4 of this
Agreement. The Company shall not use in advertising, publicly or otherwise
the name of the Trusts, MFD or any of their affiliates nor any trade name,
trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trusts, MFD, or their affiliates
without the prior written consent of the Trust or MFD in each instance. The
Trusts and MFD shall not use in advertising, publicly or otherwise the name
of the Company or any of its affiliates nor any trade name, trademark, trade
device, service xxxx, symbol or any abbreviation, contraction or simulation
thereof of the Company or its affiliates without the prior written consent of
the Company in each instance.
4.7. Each Trust and MFD will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in such Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFD will
cooperate with the Company so as to enable the Company to solicit proxies
from Policy owners or to make changes to its prospectus, statement of
additional information or registration statement, in an orderly manner. Each
Trust and MFD will make reasonable efforts to attempt to have changes
affecting Policy prospectuses become effective simultaneously with the annual
updates for such prospectuses.
4.8. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), and sales literature (such as brochures, circulars,
reprints or excerpts or any other advertisement, sales literature, or
published articles), distributed or made generally available to customers or
the public, educational or training materials or communications distributed
or made generally available to some or all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. Each Trust shall pay no fee or other compensation to the Company under
this Agreement, and the Company shall pay no fee or other compensation to
either Trust, except that, to the extent a Trust or any Portfolio has adopted
and implemented a plan pursuant to Rule 12b-l under the 1940 Act to finance
distribution and for Shareholder servicing expenses, then such Trust may make
payments to the Company or to the underwriter for the Policies in accordance
with such plan. Each party, however, shall, in accordance with the allocation
of expenses specified in Articles III and V hereof, reimburse other parties
for expenses initially paid by one Party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from otherwise
agreeing to perform, and arranging for appropriate compensation for, other
services relating to such Trust and/or to the Accounts.
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5.2. Each Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal and
state laws, including preparation and filing of such Trust's registration
statement, and payment of filing fees and registration fees; preparation and
filing of such Trust's proxy materials and reports to Shareholders; setting
in type and printing its prospectus and statement of additional information
(to the extent provided by and as determined in accordance with Article III
above); setting in type and printing the proxy materials and reports to
Shareholders (to the extent provided by and as determined in accordance with
Article III above); such preparation of all statements and notices required
of such Trust by any federal or state law with respect to its Shares; all
taxes on the issuance or transfer of the Shares; and the costs of
distributing such Trust's prospectuses and proxy materials to owners of
Policies funded by such shares and any expenses permitted to be paid or
assumed by such Trust pursuant to a plan, if any, under Rule 12b-l under the
1940 Act. Such Trust shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies and
of distributing a Trust's Shareholder reports to Policy owners. The Company
shall bear all expenses associated with the registration, qualification, and
filing of the Policies under applicable federal securities and state
insurance laws; the cost of preparing, printing and distributing the Policy
prospectus and statement of additional information; and the cost of
preparing, printing and distributing annual individual account statements for
Policy owners as required by state insurance laws.
5.4 With respect to the Service Class Shares of a Portfolio, the relevant
Trust may make payments quarterly to MFD under a Portfolio's Rule 12b-l plan,
and MFD may in turn use these payments to pay or reimburse the Company for
expenses incurred or paid (as the case may be) by the Company attributable to
Policies offered by the Company, PROVIDED that no such payment shall be made
with respect to any quarterly period in excess of an amount determined from
time to time by such Trust's Board of Trustees and disclosed in such Trust's
prospectus. MFD shall not be required to provide any payment to the Company
with respect to any quarterly period pursuant to a Trust's Rule 12b-1 plan
unless and until MFD has received the corresponding payment from such Trust
pursuant to the Trust's Rule l2b-1 plan. MFD shall not be required to provide
any payment to the Company with respect to any quarterly period pursuant to
the Trust's Rule 12b-1 plan if (i) such Trust's Rule 12b-1 plan is no longer
in effect during such quarterly period; or (ii) regulatory changes result in
the rescission of Rule l2b-1 or otherwise prohibit the making of such
payments. Each Trust's prospectus or statement of additional information may
provide further details about such payments and the provisions and terms of
such Trust's Rule 12b-l plan, and the Company hereby agrees that neither such
Trust, MFD nor MFS has made any representations to the Company with respect
to such Trust's Rule 12b-l plan in addition to, or conflicting with, the
description set forth in such Trust's prospectus.
5.5. In calculating the payments due under this Agreement, the Company agrees
that it will permit MFD or its representatives to have reasonable access to
its employees and records for the purposes of monitoring of the quality of
the services provided hereunder, verifying the Company's compliance with the
terms of this Agreement and verifying the accuracy of any information
provided by the Company that forms the basis of the fee calculations. In
addition, if requested by MFD, the Company will provide a certification
(which may take the form of a control report or set of agreed upon standards)
satisfactory to MFD that certifies the performance of the services by the
Company and the accuracy of information provided by the Company.
<Page>
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. Each Trust and MFD represent and warrant that, subject to the Company's
compliance with Section 2.2 of this Agreement, each Portfolio of such Trust
will meet the diversification requirements of Section 817 (h)(1) of the Code
and Treas. Reg. 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, as they may be
amended from time to time (and any revenue rulings, revenue procedures,
notices, and other published announcements of the Internal Revenue Service
interpreting these sections), as if those requirements applied directly to
each such Portfolio.
6.2. Each Trust and MFD represent that each Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the Code
and that they will maintain such qualification (under Subchapter M or any
successor or similar provision).
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. Each Trust agrees that the relevant Board, constituted with a majority
of disinterested trustees, will monitor each Portfolio of such Trust for the
existence of any material irreconcilable conflict between the interests of
the variable annuity contract owners and the variable life insurance policy
owners of the Company and/or affiliated companies ("contract owners")
investing in such Trust. The relevant Board shall have the sole authority to
determine if a material irreconcilable conflict exists, and such
determination shall be binding on the Company only if approved in the form of
a resolution by a majority of the relevant Board, or a majority of the
disinterested trustees of the relevant Board. The relevant Board will give
prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board
in carrying out its responsibilities under the conditions set forth in the
Trusts' exemptive application pursuant to which the SEC has granted the Mixed
and Shared Funding Exemptive Order by providing the Board, as it may
reasonably request, with all information necessary for such Board to consider
any issues raised and agrees that it will be responsible for promptly
reporting any potential or existing conflicts of which it is aware to such
Board including, but not limited to, an obligation by the Company to inform
the Board whenever contract owner voting instructions are disregarded. The
Company also agrees that, if a material irreconcilable conflict arises, it
will at its own cost remedy such conflict up to and including (a) withdrawing
the assets allocable to some or all of the Accounts from the relevant
Trust(s) or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of a
Trust, or submitting to a vote of all affected contract owners whether to
withdraw assets from a Trust or any Portfolio and reinvesting such assets in
a different investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in favor
of such segregation, or offering to any of the affected contract owners the
option of segregating the assets attributable to their contracts or policies,
and (b) establishing a new registered management investment company and
segregating the assets underlying the Policies, unless a majority of Policy
owners materially adversely affected by the conflict have voted to decline
the offer to establish a new registered management investment company.
7.3. A majority of the disinterested trustees of the relevant Board shall
determine whether any proposed action by the Company adequately remedies any
material irreconcilable conflict. In the event that a Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the relevant Trust
each of the Accounts designated by the disinterested trustees and terminate
this Agreement within six (6) months after the relevant Board informs the
Company in writing of the foregoing determination; PROVIDED, HOWEVER, that
such withdrawal and termination shall be limited to the extent required to
<Page>
remedy any such material irreconcilable conflict as detenuined by a majority
of the disinterested trustees of the Board.
7.4. 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 Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, then (a) the Trusts and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-2 and 6e-3(T), as amended; and Rule 6e-3, as
adopted, to the extent such rules are applicable; and (b) Sections 3.5,
3.6, 7.1, 7.2, 7.3 and 7.4 of this Agreement shall 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
8.1. INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each Trust, MFD, any
affiliates of MFD, and each of their respective directors/trustees, officers
and each person, if any, who controls the Trust or MFD within the meaning of
Section 15 of the 1933 Act, and any agents or employees of the foregoing
(each an "Indemnified Party," or collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or expenses (including reasonable counsel fees) to which any
indemnified Party may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Shares or the Policies and:
(a) 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 Policies or
contained in the Policies or sales literature or other promotional material
for the Policies (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, PROVIDED that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished to the Company or
its designee by or on behalf of the relevant Trust or MFD for use in the
registration statement, prospectus or statement of additional information for
the Policies or in the Policies or sales literature or other promotional
material (or any amendment or supplement) or otherwise for use in connection
with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the relevant Trust not supplied by the Company or its
designee, or persons under its control and on which the Company has
reasonably relied) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Policies or Shares;
or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus, statement
of additional information, or sales literature or other promotional
literature of the relevant Trust, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was made in
reliance upon information furnished to the Trust by or on behalf of the
Company; or
<Page>
(d) 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; or
(e) arise as a result of any failure by the Company to provide the services
and furnish the materials under the terms of this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. INDEMNIFICATION BY THE TRUSTS
Each Trust agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act, and any agents or employees
of the foregoing (each an "Indemnified Party," or collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of such Trust) or expenses (including reasonable
counsel fees) to which any Indemnified Party may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of such Trust (or any amendment or supplement to any of
the foregoing) or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, PROVIDED that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished to such
Trust, MFD, MFS or their respective designees by or on behalf of the Company
for use in the registration statement, prospectus or statement of additional
information for such Trust or in sales literature or other promotional
material for such Trust (or any amendment or supplement) or otherwise for use
in connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus, statement of additional information or sales literature or other
promotional material for the Policies not supplied by such Trust, MFD, MFS or
any of their respective designees or persons under their respective control
and on which any such entity has reasonably relied) or wrongful conduct of
such Trust or persons under its control, with respect to the sale or
distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus, statement
of additional information, or sales literature or other promotional
literature of the Accounts or relating to the Policies, or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by or
on behalf of such Trust, MFD or MFS; or
(d) arise out of or result from any material breach of any representation
and/or warranty made by such Trust in this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of this Agreement) or
arise out of or result from any other material breach of this Agreement by
such Trust; or
(e) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share or dividend
or capital gain distribution rate; or
<Page>
(f) arise as a result of any failure by such Trust to provide the services
and furnish the materials under the terms of the Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall any Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including
without limitation, the Company, or any Participating Insurance Company or
any Policy holder, with respect to any losses, claims, damages, liabilities
or expenses that arise out of or result from (i) a breach of any
representation, warranty, and/or covenant made by the Company hereunder or by
any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain its
segregated asset account (which invests in any Portfolio) as a legally and
validly established segregated asset account under applicable state law and
as a duly registered unit investment trust under the provisions of the 1940
Act (unless exempt therefrom); or (iii) the failure by the Company or any
Participating Insurance Company to maintain its variable annuity and/or
variable life insurance contracts (with respect to which any Portfolio serves
as an underlying funding vehicle) as life insurance, endowment or annuity
contracts under applicable provisions of the Code.
8.4. Neither the Company nor any Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, willful misconduct, or 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.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5.
of notice of commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under
this section, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any Indemnified Party otherwise than under
this section. In case any such action is brought against any Indemnified
Xxxxx, and it notified the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the indemnifying
party of its intention to assume the defense of an action, the Indemnified
Party shall bear the expenses of any additional counsel obtained by it, and
the indemnifying party shall not be liable to such Indemnified Party under
this section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
<Page>
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 and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
Each Trust, MFD, and the Company agree that each such party shall promptly
notify the other parties to thiis Agreement, in writing, of the institution
of any formal proceedings brought against such party or its designees by the
FINRA, the SEC, or any insurance department or any other regulatory body
regarding such party's duties under this Agreement or related to the sale of
the Policies, the operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. CONTROLS AND PROCEDURES
11.1. The Company has implemented controls and procedures that are reasonably
designed to ensure compliance with applicable laws and regulations, as well
as the terms of this Agreement. Without limiting the foregoing, these
controls and are reasonably designed to ensure, and MFD or the Trust may
request certifications on an annual basis with respect to, each of the
following:
(a) Orders for Shares received by the Company for each Portfolio
comply with the Portfolio's restrictions with respect to purchases,
transfers, redemptions and exchanges as set forth in each Portfolio's
prospectus and statement of additional information;
(b) Orders for Shares received by the Company prior to the Portfolio's
pricing time set forth in its prospectus (E.G., the close of the New York
Stock Exchange - normally 4:00 p.m. Eastern time) are segregated from
those received by the Company at or after such time, and are properly
transmitted to the Portfolios (or their agents) for execution at the
current day's net asset value ("NAV"); and orders received by the Company
at or after such time are properly transmitted to the Portfolios (or
their agents) for execution at the next day's NAV;
(c) Market timing and late trading in Shares by Policy holders is identified
and prevented;
(d) Compliance with applicable state securities laws, including without
limitation "bluesky" laws and related rules and regulations;
(e) Compliance with all applicable federal, state and foreign laws, rules and
regulations regarding the detection and prevention of money laundering
activity; and
(f) Effective business continuity and disaster recovery systems with respect
to the services contemplated by the Agreement.
11.2 The Company shall ensure that any other party to whom the Company
assigns or delegates any services hereunder is responsible for, and has
controls and procedures that are reasonably designed to ensure, each of the
items set forth in Section 11.1 above.
ARTICLE XII. TERMINATION
12.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance written notice to
the other parties; or
(b) at the option of the Company to the extent that the Shares of Portfolios
are not reasonably available to meet the requirements of the Policies or
are not "appropriate funding vehicles" for the Policies, as reasonably
determined by the Company. Without limiting the generality of the
foregoing, the Shares of a Portfolio would not be "appropriate funding
vehicles" if, for example, such Shares did not meet the diversification
or other requirements referred to in Article VI hereof; or if the Company
would be permitted to disregard Policy owner voting instructions pursuant
to Rule 6e-2 or Rule 6e-3(T) under the 1940 Act. Prompt notice of the
election to terminate for such cause and an explanation of such cause
shall be furnished to the relevant Trust(s) by the Company; or
<Page>
(c) at the option of a Trust or MFD upon institution of formal proceedings
against the Company by FINRA, the SEC, or any insurance department or any
other regulatory body regarding the Company's duties under this Agreement
or related to the sale of the Policies, the operation of the Accounts, or
the purchase of the Shares; or
(d) at the option of the Company upon institution of formal proceedings
against a Trust by FINRA, the SEC, or any state securities or insurance
department or any other regulatory body regarding such Trust's or MFD's
duties under this Agreement or related to the sale of the Shares; or
(e) at the option of the Company, a Trust or MFD upon receipt of any
necessary regulatory approvals and/or the vote of the Policy owners
having an interest in the Accounts (or any subaccounts) to substitute the
shares of another investment company for the corresponding Portfolio
Shares in accordance with the terms of the Policies for which those
Portfolio Shares had been selected to serve as the underlying investment
media. The Company will give thirty (30) days' prior written notice to
the relevant Trust(s) of the Date of any proposed vote or other action
taken to replace the Shares; or
(f) termination by either a Trust or MFD by written notice to the Company, if
either one or both of such Trust or MFD respectively, shall determine, in
their sole judgment exercised in good faith, that the Company 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
(g) termination by the Company by written notice to a Trust and MFD, if the
Company shall determine, in its sole judgment exercised in good faith,
that such Trust or MFD has suffered a material adverse change in this
business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written consent
of the parties hereto.
12.2. The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
12.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 12.1(a) may be exercised for
cause or for no cause.
12.4. Except as necessary to implement Policy owner initiated transactions,
or as required by state insurance laws or regulations, the Company shall not
redeem the Shares attributable to the Policies (as opposed to the Shares
attributable to the Company's assets held in the Accounts), and the Company
shall not prevent Policy owners from allocating payments to a Portfolio that
was otherwise available under the Policies, until thirty (30) days after the
Company shall have notified the relevant Trust of its intention to do so.
12.5. Notwithstanding any termination of this Agreement, each Trust and MFD
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this
Agreement, for all Policies in effect on the effective date of termination of
this Agreement (the "Existing Policies"), except as otherwise provided under
Article VII of this Agreement. Specifically, without limitation, the owners
of the Existing Policies shall be permitted to transfer or reallocate
investment under the Policies, redeem investments in any Portfolio and/or
invest in each Trust upon the making of additional purchase payments under
the Existing Policies.
<Page>
ARTICLE XIII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier or facsimile 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 Trust I:
MFS VARIABLE INSURANCE TRUST
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Assistant Secretary
If to Trust II:
MFS VARIABLE INSURANCE TRUST II
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Assistant Secretary
If to the Company:
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
C/O THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx
If to MFS:
MFS FUND DISTRIBUTORS, INC.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.:
Attn:
ARTICLE XIV. MISCELLANEOUS
14.1. Subject to the requirement of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of
the owners of the Policies and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement or as otherwise required by applicable law or regulation,
shall not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of the
affected party until such time as it may come into the public domain.
14.2. 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.
14.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
14.4. 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.
<Page>
14.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
14.6. Each party hereto shall cooperate with each other party in connection
with inquiries by appropriate governmental authorities (including without
limitation the SEC, FINRA, and state insurance regulators) relating to this
Agreement or the transactions contemplated hereby.
14.7. 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.
14.8. A copy of each Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument are
not binding upon any of each Trust's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and
property of the relevant Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and liabilities
of each Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or
property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and the Company agrees not to proceed
against any Portfolio for the obligations of another Portfolio.
<Page>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
Vice President
MFS VARIABLE INSURANCE TRUST,
ON BEHALF OF THE PORTFOLIOS
By its authorized officer and not individually,
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Assistant Secretary
MFS VARIABLE INSURANCE TRUST II,
ON BEHALF OF THE PORTFOLIOS
By its authorized officer and not individually,
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Assistant Secretary
MFS FUND DISTRIBUTORS, INC.
By its authorized officer,
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
President
<Page>
As of January 1,2011
SCHEDULE A
ACCOUNTS, POLICIES, AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
And any other Portfolios or series of shares of the Trusts that are available
and open to new investors on or after the effective date of this Agreement.
<Table>
<Caption>
NAME OF SEPARATE ACCOUNT AND DATE SHARE CLASS PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS (INITIAL OR SERVICE CLASS) APPLICABLE TO POLICIES
--------------------------------- ------------------------ ----------------------
<S> <C> <C>
Lincoln National Variable Annuity Account C Initial and Service (1)
Lincoln National Variable Annuity Account L Initial (1)
Lincoln Life Flexible Premium Variable Life Account M Initial (1)
Lincoln Life Variable Annuity Account N Initial and Service (1)
Lincoln Life Variable Annuity Account Q Initial (1)
Lincoln Life Flexible Premium Variable Life Separate Account R Initial (1)
Lincoln Life Flexible Premium Variable Life Account S Initial (1)
Lincoln Life Variable Annuity Account T Service (1)
Lincoln Life Variable Annuity Account W Service (1)
Lincoln Life Flexible Premium Variable Life Account Z Initial (1)
Lincoln National Life Insurance Company Separate Account 65 Initial (1)
Lincoln National Life Insurance Company Separate Account 67 Initial (1)
Lincoln Life Separate Account 4k Service (1)
Lincoln Life Flexible Premium Variable Life Account JF-A Initial (1)
Lincoln Life Flexible Premium Variable Life Account JF-C Initial (1)
Lincoln Life Variable Annuity Account JF-I Initial (1)
Lincoln Life Variable Annuity Account JL-A Initial (1)
Lincoln Life Variable Annuity Account JF-II Initial (1)
</Table>
(1) Portfolios Applicable to Policies:
VIT I
-----
MFS Core Equity Series
MFS Global Equity Series
MFS Growth Series
MFS High Income Series
MFS Investors Growth Stock Series
MFS Investors Trust Series
MFS Mid Cap Growth Series
MFS New Discovery Series
MFS Research Bond Series
MFS Research International Series
MFS Research Series
MFS Strategic Income Series
MFS Total Return Series
MFS Utilities Series
MFS Value Series
VIT II
------
MFS Blended Research Core Equity Portfolio
MFS Blended Research Growth Portfolio
MFS Blended Research Value Portfolio
MFS Emerging Markets Equity Portfolio
MFS Global Growth Portfolio
MFS Global Research Portfolio
MFS Global Total Return Portfolio
MFS International Growth Portfolio
MFS International Value Portfolio
MFS Research International Portfolio
MFS Technology Portfolio
<Page>
FUND/SERV AND NETWORKING SUPPLEMENT TO
BY AND AMONG
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
MFS VARIABLE INSURANCE TRUST
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
This Fund/SERV and Networking Supplement, dated as of January 1, 2011
(the "Supplement"), to the Amended and Restated Participation Agreement,
dated as of January 1, 2011 and as amended by and among The Lincoln National
Life Insurance Company (the "Company"), MFS Variable Insurance Trust (the
"Trust"), and Massachusetts Financial Services Company ("MFS") (the
"Agreement").
WHEREAS, MFS Fund Distributors, Inc. ("MFD"), a wholly-owned subsidiary
of MFS, is registered as a broker-dealer with the Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934 (the "1934
Act"), and is a member in good standing of the Financial Industry Regulatory
Authority;
WHEREAS, MFD serves as the Distributor of the Trust pursuant to a
Distribution Agreement between MFD and the Trust;
WHEREAS, MFD and the Company are members in good standing of the
National Securities Clearing Corporation (the "NSCC") or otherwise have
access to the facilities of the NSCC;
WHEREAS, the parties to the Agreement wish to supplement the Agreement
to permit the transmission of transaction, registration and other data via
NSCC Facilities, which may include Fund/SERV, Networking, the Mutual Fund
Profile Service (the "MFPS") and the Defined Contribution Clearing and
Settlement Service;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, which consideration is full and complete, the Company, the Trust
and MFS hereby agree to supplement and amend the Agreement as follows:
1. JOINDER OF ADDITIONAL PARTY. The parties to the Agreement agree to the
joinder of MFD as a party to the Agreement, as supplemented and amended. MFD
shall be entitled to all of the rights and benefits, and subject to all of
the obligations, of the Agreement, as modified by this Supplement. The
respective obligations of MFD, the Trust and MFS shall be several and not
joint.
2. TRANSACTIONS SUBJECT TO FUND/SERV AND NETWORKING. (a) On each business
day that the New York Stock Exchange is open for business on which the
Portfolios determine their per share net asset values (each, a "Business
Day"), MFD or its designee shall accept, and effect changes in its records
upon
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receipt of, purchase, redemption, exchange, and registration instructions
from the Company electronically through Fund/SERV 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 or Trust Networking Agreement, as applicable, as filed with the NSCC
(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) In the event that any party is unable to communicate process or
settle Share transactions via Fund/SERV or Networking, the original
provisions contained in the Agreement regarding process or settlement of
Share transactions shall apply. At any time, any party to this Agreement may
send written notice to the other parties that it chooses to end the use of
the NSCC Fund/SERV and Networking systems and return to manual handling of
share transactions.
3. PROCEDURES FOR ORDER AND SETTLEMENT. (a) MFD shall, subject to
availability, furnish the Company, for each Portfolio, by 6:30 p.m. Eastern
Time, the following: (1) net asset value information as of the close of
trading (currently 4:00 p.m. Eastern Time, the "Close of Trading") on each
Business Day or at such other time as the net asset value of a Portfolio is
calculated; and (2) as applicable, the daily accrual or distribution rate
factor as it becomes available. Net asset value information will be
communicated via email and or fax. Daily accrual or distribution rate factor
information will be communicated via email and or fax.
(b) Upon receipt of purchase and redemption instructions from the
Policy holders for acceptance as of the Close of Trading on each Business Day
("Instructions"), the Company shall calculate the net purchase or redemption
order for each Portfolio. Orders for net purchases and/or net redemptions
received by the Company prior to the Close of Trading on any given Business
Day shall be transmitted to the NSCC by 8:30 a.m. Eastern Time on the next
Business Day. Any trade that does not make the 6:30 a.m. Eastern Time NSCC
window will require an explanation by Company as to the cause of the late
submission for trade remediation purposes only. Subject to the Company's
compliance with the foregoing, MFD hereby appoints the Company as its limited
purpose agent for the purpose of receiving Instructions from Policy holders,
and the Business Day on which Instructions are received by the Company in
proper form prior to the Close of Trading shall be the date as of which
shares of the Portfolios are deemed purchased or redeemed pursuant to such
Instructions. Instructions received in proper form by the Company after the
Close of Trading on any given Business Day shall be treated as if received on
the next following Business Day. Dividends and capital gains distributions
shall be automatically reinvested at net asset value in accordance with the
Portfolios' then current prospectuses.
Orders for net purchases and/or net redemptions received by the Company prior
to the Close of trading on any given Business Day and transmitted to the NSCC
after 8:30 a.m. Eastern Time on the next Business Day, will be price
protected until 10:00 a.m. Eastern Time; however, settlement will not occur
until T +2 through the NSCC.
(c) The Company and MFD shall settle net purchase and redemption
transactions pursuant to, and in accordance with, NSCC rules and procedures.
4. DIVIDENDS AND DISTRIBUTIONS. Upon the declaration of each dividend and
each capital gain distribution by the Trustees of the Trust with respect to
shares of the Portfolios, MFD shall furnish, or cause to be furnished to, the
Company information setting forth the date of the declaration of such
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dividend or distribution, the ex-dividend date, the date of payment thereof,
the record date as of which shareholders are entitled to payment, the amount
payable per share to the shareholders of record as of that date, and the
total amount payable on the payment date. All such notifications will be
communicated via email and or fax.
5. VERIFICATION. Each party shall notify the other of any errors, omissions
or interruptions in, or delay or unavailability of, any such transmission as
promptly as possible.
6. TRADE CORRECTIONS. Processing errors which result from any delay or
error caused by the Company may be adjusted through Fund/SERV by the Company
by the necessary transactions on an as-of basis and the cost to the Portfolio
or MFD of such transactions shall be borne by the Company; provided however,
prior authorization must be obtained from MFD if the transaction is back
dated more than five days or to a previous calendar year.
7. REPRESENTATIONS AND WARRANTIES. MFD and the Company each represents,
warrants, and covenants 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; (b) the then current prospectuses and statements
of additional information of the Trust's Portfolios;
(ii) it shall maintain facilities, equipment and skilled personnel
sufficient to perform the foregoing activities and to otherwise comply with
the terms of this Agreement; and
(iii) all trades, confirmations and other information provided by one
party to the other party through Fund/SERV and pursuant to this Agreement
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 to limit the
access to, and the inputting of data into, Fund/SERV to persons specifically
authorized by such party.
8. INDEMNIFICATION. (a) MFD shall indemnify and hold harmless the Company,
and each of the Company's divisions, subsidiaries, directors, officers,
agents, employees and assigns of each of the foregoing (collectively,
"Indemnified Company Parties"), against and from any and all demands,
damages, liabilities, and losses, or any pending or completed actions,
claims, suits, complaints, proceedings, or investigations (including
reasonable attorneys fees and other costs, including all expenses of
litigation or arbitration, judgments, fines or amounts paid in any settlement
consented to by MFD) to which any of them may be or become subject to as a
result or arising out of (i) any negligent act or omission by MFD relating
to Fund/SERV provided the Company has not acted negligently; (ii) any breach
of MFD's representations or warranties contained in this Supplement; or (iii)
MFD' s failure to comply with any of the terms of this Supplement.
(b) The Company shall indemnify and hold harmless the Trust, MFS, MFD,
the Trust's custodian, the Trust's shareholder servicing agent, each of their
affiliated companies, and all of the divisions, subsidiaries, directors,
trustees, officers, agents, employees and assigns of each of the foregoing
(collectively, "Indemnified MFS Parties"), against and from any and all
demands, damages, liabilities, and losses, or any pending or completed
actions, claims, snits, complaints, proceedings, or investigations (including
reasonable attorneys fees and other costs, including all expenses of
litigation or arbitration, judgments, fines or amounts paid in any settlement
consented to by the Company) to which any of them may be or become subject to
as a result or arising out of (i) any negligent act or omission by the
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Company, or its agents relating to Fund/SERV provided MFD has not acted
negligently; (ii) any breach of the Company's representations or warranties
in this Supplement; (iii) the failure of the Company or its agents to comply
with any of the terms of this Supplement; or (iv) MFD's acceptance of any
transaction or account maintenance information from the Company through
Fund/SERV including any fraudulent or unauthorized transaction.
(c) If any action, suit, proceeding, or investigation is initiated, or
any claim or demand is made, against any party indemnified hereto with
respect to which such party ("Indemnified Party") may make a claim against
any other party hereto ("Indemnifying Party") pursuant to this Section 8,
then the Indemnified Party shall give prompt written notice of such action,
suit, proceeding, investigation, claim or demand to the Indemnifying Party in
accordance with the provisions set forth in the Agreement.
9. SCOPE OF TRUST'S OBLIGATIONS. A copy of the Declaration of Trust as
amended from time to time of the Trust is on file with the Secretary of State
of The Commonwealth of Massachusetts. The Company acknowledges that the
obligations of or arising out of this instrument are not binding upon any of
the Trust's trustees, officers, employees, agents or shareholders
individually, but are binding solely upon the assets and property of the
Trust in accordance with its proportionate interest hereunder. If this
instrument is executed by the Trust on behalf of one or more series of the
Trust, the Company further acknowledges that the assets and liabilities of
each series of the Trust are separate and distinct and that the obligations
of or arising out of this instrument are binding solely upon the assets or
property of the series on whose behalf the Trust has executed this
instrument. If the Trust has executed this instrument on behalf of more than
one series of the Trust, the Company also agrees that the obligations of each
series hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and the Company agrees not to proceed
against any series for the obligations of another series.
10. COMPANY'S AGENT(S). MFD acknowledges that the Company may engage one or
more agents to fulfill some or all of the Company's responsibilities
hereunder and that said agent(s) shall be authorized to act on the Company's
behalf and shall be entitled to collect, receive and transmit information
directly to and from MFD on the Company's behalf. As between MFD and the
Company, the Company represents and warrants that such agents have
appropriate agreements in place with the Company and if required, with the
NSCC, to assume such delegated responsibilities. Notwithstanding any such
delegation of its responsibilities to any agent(s), the Company shall remain
fully responsible for fulfilling its obligations and honoring its warranties
under this Supplement and the Agreement, including those of section 8, to the
same extent as it would be absent any such delegation.
11. CONFIDENTIALITY. Subject to the requirement of legal process and
regulatory authority, and the Agreement, each party hereto shall treat as
confidential the names and addresses of the owners of the Policies and all
information reasonably identified as confidential in writing by any other
party hereto and, except as permitted by this Supplement and the Agreement
or' as otherwise required by applicable law or regulation, shall not
disclose, disseminate or' utilize such names and addresses and other
confidential information without the express written consent of the affected
party until such time as it may come into the public domain. Notwithstanding
any delegation by the Company to such agent(s) pursuant to the above
provision 10, such agent(s) will be bound to the obligations and
responsibilities under this provision.
Except as expressly amended and supplemented hereby, the Agreement shall
continue in full force and effect and unamended. All capitalized terms not
defined in this Supplement shall have the meanings ascribed to them in the
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their duly authorized officers as of the date first listed above.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
MFS VARIABLE INSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
MFS FUND DISTRIBUTORS, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
President
<Page>
AMENDMENT TO PARTICIPATION AGREEMENT BY AND AMONG
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, MFS VARIABLE INSURANCE
TRUST, MFS VARIABLE INSURANCE TRUST II AND
MFS FUND DISTRIBUTORS, INC.
THIS AMENDMENT, made and entered into as of this first day of September,
2014, is to the Participation Agreement dated January 1, 2011 by and among THE
LINCOLN NATIONAL LIFE INSURANCE COMPANY (hereinafter "Company"), on its own
behalf and on behalf of its separate accounts identified on Schedule A of the
Participation Agreement and incorporated herein by reference, MFS VARIABLE
INSURANCE TRUST, a Massachusetts business trust ("Trust I"), MFS VARIABLE
INSURANCE TRUST II, a Massachusetts business trust ("Trust II") (Trust I and
Trust II collectively referred to hereinafter as the "Funds" or the "Trusts"),
and MFS FUND DISTRIBUTORS, INC., a corporation organized under the laws of
Delaware (hereinafter "MFD"). The separate accounts identified on Schedule A are
individually and collectively referred to herein as the "Account(s)."
WHEREAS, the parties now desire to amend the Participation Agreement;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trusts and MFD agree to amend the Participation Agreement as follows:
1. The following new Section 6.1.1 is hereby added:
6.1.1. In the event any Trust does not meet the diversification
requirements described in the preceding section, MFD agrees to notify Company to
the extent, and in the same manner, that it notifies all other issuers of
variable annuity and/or variable life insurance contracts that offer the
Portfolios through their segregated asset accounts.
2. Article XIII, "Notices," is hereby restated in its entirety as follows:
ARTICLE XIII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight courier, email or facsimile 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 Trusts:
MFS Variable Insurance Trust I and MFS Variable Insurance Trust II
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
email: XXXXXXxxxxxXxx@XXX.xxx
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Assistant Secretary
If to Company:
The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
e-mail: Xxxxx.Xxxxxxx@xxx.xxx
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If to MFD:
MFS Fund Distributors, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
email: XXXXXXxxxxxXxx@XXX.xxx
Attn: General Counsel
3. All other provisions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
THE LINCOLN NATIONAL LIFE MFS VARIABLE INSURANCE TRUST AND
INSURANCE COMPANY MFS VARIABLE INSURANCE TRUST II
By its authorized officer, ON BEHALF OF THEIR PORTFOLIOS
By their authorized officer and not individually,
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -----------------------
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxx
Vice President Assistant Secretary
MFS FUND DISTRIBUTORS, INC.
By its authorized officer,
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx
President
