FUND PARTICIPATION AGREEMENT
BETWEEN
THE LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.
THIS AGREEMENT, made and entered into this _____________ day of
_________________________, 1998, by and between Lincoln National Capital
Appreciation Fund, Inc., a corporation organized under the laws of Maryland (the
"Fund"), and LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, a New York insurance
corporation (the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement as in effect at the
time this Agreement is executed and such other separate accounts that may be
added to Schedule 1 from time to time in accordance with the provisions of
Article XI of this Agreement (each such account referred to as the "Account";
collectively, the "Accounts").
WHEREAS, the Fund is engaged in business as an open-end
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts (collectively referred to as
"Variable Insurance Products," the owners of such products being referred to as
"Product owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the Fund filed with the Securities and Exchange
Commission (the "SEC") and the SEC has declared effective a registration
statement (referred to herein as the "Fund Registration Statement" and the
prospectus contained therein, or filed pursuant to Rule 497 under the 1933 Act,
referred to herein as the "Fund Prospectus") on Form N-lA to register itself as
an open-end management investment company (File No. 811-3212) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund shares
(File No. 2-80743) under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Company has filed a registration statement with the
SEC to register under the 1933 Act (unless exempt therefrom) certain variable
annuity contracts and/or variable life insurance policies described in Schedule
2 to this Agreement as in effect at the time this Agreement is executed and such
other variable annuity contracts and variable life insurance policies which may
be added to Schedule 2 from time to time in accordance with Article XI of this
Agreement (such policies and contracts shall be referred to herein collectively
as the "Contracts," each such registration statement for a class or classes of
contracts listed on Schedule 2 being referred to as the "Contracts Registration
Statement" and the prospectus for each such class or classes being referred to
herein as the "Contracts Prospectus," and the owners of the such contracts, as
distinguished from all Product Owners, being referred to as "Contract Owners");
and
WHEREAS, each Account, a validly existing separate account, duly
authorized by the Company on the date set forth on Schedule 1, sets aside and
invests assets attributable to the Contracts; and
WHEREAS, the Company has registered or will have registered each
Account with the SEC as a unit investment trust under the 1940 Act before any
Contracts are issued by that Account; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares on behalf of each Account to
fund its Contracts and the Fund is authorized to sell such shares to unit
investment trusts such as the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company and the Fund agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares which
the Company orders on behalf of the Account, executing such orders on a daily
basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make shares available for purchase by the
Company on behalf of the Account at the then applicable net asset value per
share on Business Days as defined in Section 1.4 of this Agreement, and the Fund
shall use its best efforts to calculate and deliver such net asset value by 7:00
p.m., E.S.T., on each such Business Day. Notwithstanding any other provision in
this Agreement to the contrary, the Board of Directors of the Fund (the "Fund
Board") may suspend or terminate the offering of shares, if such action is
required by law or by regulatory authorities having jurisdiction or if, in the
sole discretion of the Fund Board acting in good faith and in light of its
fiduciary duties under Federal and any applicable state laws, suspension or
termination is necessary and in the best interests of the shareholders (it being
understood that "shareholders" for this purpose shall mean Product owners).
1.3. The Fund agrees to redeem, at the Company's request, any
full or fractional shares of the Fund held by the Account or the Company,
executing such requests at the net asset value on a daily basis (LL will expect
same day redemption wires unless unusual circumstances evolve which cause the
Fund to have to redeem securities) in accordance with Section 1.4 of this
Agreement, the applicable provisions of the 1940 Act and the then currently
effective Fund Prospectus. Notwithstanding the foregoing, the Fund may delay
redemption of Fund shares to the extent permitted by the 1940 Act, any rules,
regulations or orders thereunder, or the then currently effective Fund
Prospectus.
1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3,
the Company shall be the agent of the Fund for
the limited purpose of receiving redemption
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and purchase requests from the Account (but not from the
general account of the Company), and receipt on any Business
Day by the Company as such limited agent of the Fund prior
to the time prescribed in the current Fund Prospectus (which
as of the date of execution of this Agreement is 4 p.m.,
E.S.T.) shall constitute receipt by the Fund on that same
Business Day, provided that the Fund receives notice of such
redemption or purchase request by 9:00 a.m., E.S.T. on the
next following Business Day. For purposes of this Agreement,
"Business Day" shall mean any day on which the New York
Stock exchange is open for trading.
(b) The Company shall pay for the shares on the same
day that it places an order with the Fund to purchase those
Fund shares for an Account. Payment for Fund shares will be
made by the Account or the Company in Federal Funds
transmitted to the Fund by wire to be received by 11:00
a.m., E.S.T. on the day the Fund is properly notified of the
purchase order for shares. The Fund will confirm receipt of
each trade and these confirmations will be received by the
Company via Fax or E-mail by 3:00 p.m. E.S.T. If Federal
Funds are not received on time, such funds will be invested,
and shares purchased thereby will be issued, as soon as
practicable.
(c) Payment for shares redeemed by the Account or the
Company will be made in Federal Funds transmitted to the
Company by wire on the same day the Fund is notified of the
redemption order of shares, except that the Fund reserves
the right to delay payment of redemption proceeds, but in no
event may such payment be delayed longer than the period
permitted under Section 22(e) of the 0000 Xxx. The Fund
shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds if
securities must be redeemed; the Company alone shall be
responsible for such action.
1.5. Issuance and transfer of Fund shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.6. The Fund shall furnish notice as soon as reasonably
practicable to the Company of any income dividends or capital gain distributions
payable on any shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions as are payable on
any shares in the form of additional shares of that Fund. The Company reserves
the right, on its behalf and on behalf of the Account, to revoke this election
and to receive all such dividends in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and distributions.
1.7. The Fund shall use its best efforts to make the net asset
value per share available to the Company by 7:00 p.m., E.S.T. each Business Day,
and in any event, as soon as reasonably practicable after the net asset value
per share is calculated, and shall calculate such net asset value in accordance
with the then currently effective Fund Prospectus. The Fund shall not be liable
for
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any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company to the
Fund.
1.8. (a) The Company may withdraw the Account's investment in the
Fund only: (i) as necessary to facilitate Contract owner
requests; (ii) upon a determination by a majority of the
Fund Board, or a majority of disinterested Fund Board
members, that an irreconcilable material conflict exists
among the interests of (x) any Product Owners or (y) the
interests of the Participating Insurance Companies investing
in the Fund; (iii) upon requisite vote of the Contract
owners having an interest in the Fund to substitute the
shares of another investment company for shares in
accordance with the terms of the Contracts; (iv) as required
by state and/or federal laws or regulations or judicial or
other legal precedent of general application; or (v) at the
Company's sole discretion, pursuant to an order of the SEC
under Section 26(b) of the 1940 Act.
(b) The parties hereto acknowledge that the
arrangement contemplated by this Agreement is not exclusive
and that the Fund shares may be sold to other insurance
companies (subject to Section 1.9 hereof) and the cash value
of the Contracts may be invested in other investment
companies.
(c) The Company shall not, without prior notice to
the Fund (unless otherwise required by applicable law), take
any action to operate the Accounts as management investment
companies under the 0000 Xxx.
1.9. The Fund agrees that Fund shares will be sold only to
Participating Insurance Companies and their separate accounts. The Fund will not
sell Fund shares to any insurance company or separate account unless an
agreement complying with Article VII of this Agreement is in effect to govern
such sales. No Fund shares will be sold to the general public.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants (a) that the Contracts
are registered under the 1933 Act or will be so registered before the issuance
thereof, (b) that the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws and (c) that the Company
will require of every person distributing the Contracts that the Contracts be
offered and sold in compliance in all material respects with all applicable
Federal and state laws. The Company further represents and warrants that it
is an insurance company duly organized and validly existing under applicable law
and that it has legally and validly authorized each Account as a separate
account under Section 4240 of the New York Insurance Law and has registered or,
prior to the issuance of any Contracts, will register each Account (unless
exempt therefrom) as a unit investment trust in accordance with the provisions
of the 1940 Act to serve as a separate account for its Contracts, and that it
will maintain such registrations for so long as any Contracts issued under
them are outstanding.
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2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Fund is
and shall remain registered under the 1940 Act for so long as the Fund shares
are sold. The Fund further represents and warrants that it is a corporation duly
organized and in good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). The Fund further represents and warrants
that it will make every effort to continue to qualify and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Fund represents and warrants that it will comply with
Section 817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and
at the time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code. The
Company shall make every effort to maintain such treatment and shall notify the
Fund immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the future.
2.6. The Fund represents that the Fund's investment policies,
fees and expenses, and operations are and shall at all times remain in material
compliance with the laws of the state of Maryland, to the extent required to
perform this Agreement. The Fund, however, makes no representation as to whether
any aspect of its operations (including, but not limited to, fees and expenses
and investment policies) otherwise complies with the insurance laws or
regulations of any state. The Company alone shall be responsible for informing
the Fund of any investment restrictions imposed by state insurance law and
applicable to the Fund.
2.7. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Fund shall provide the Company with as many copies of
the current Fund Prospectus as the Company may reasonably request. If requested
by the Company in lieu thereof, the Fund at its expense shall provide to the
Company a camera-ready copy, and electronic version, of the current Fund
Prospectus suitable for printing and other assistance as is reasonably necessary
in order for the Company to have a new Contracts Prospectus printed together
with the Fund Prospectus in one document. See Article V for a detailed
explanation of the responsibility for the cost of printing and distributing Fund
prospectuses.
3.2. The Fund Prospectus shall state that the Statement of
Additional Information for the Fund is available from the Fund and the Fund
shall provide such Statement free of charge to the Company and to any
outstanding or prospective Contract owner who requests such Statement.
3.3. (a) The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and
other communications to shareholders (except proxy
material), in each case in a form suitable for printing, as
determined by the Company. The Fund shall be responsible for
the costs of printing and distributing these materials to
Contract owners.
(b) The Fund at its expense shall be responsible for
preparing, printing and distributing its proxy material. The
Company will provide the appropriate Contract owner names
and addresses to the Fund for this purpose.
3.4. The Company shall furnish to the Fund, prior to its use,
each piece of sales literature or other promotional material in which the Fund
is named. No such material shall be used, except with the prior written
permission of the Fund. The Fund agrees to respond to any request for approval
on a prompt and timely basis. Failure of the Fund to respond within 10 days of
the request by the Company shall relieve the Company of the obligation to obtain
the prior written permission of the Fund.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund other
than the information or representations contained in the Fund Registration
Statement or Fund Prospectus, as such Registration Statement and Prospectus may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature or other promotional material approved by
the Fund, except with the prior written permission of the Fund. The Fund agrees
to respond to any request for permission on a prompt and timely basis. If the
Fund does not respond within 10 days of a request by the Company, then the
Company shall be relieved of the obligation to obtain the prior written
permission of the Fund.
3.6. The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information
6
or representations contained in the Contracts Registration Statement or
Contracts Prospectus, as such Registration Statement and Prospectus may be
amended or supplemented from time to time, or in published reports of the
Account which are in the public domain or approved in writing by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved in writing by the Company, except with the prior written
permission of the Company. The Company agrees to respond to any request for
permission on a prompt and timely basis. If the Company fails to respond within
10 days of a request by the Fund, then the Fund is relieved of the obligation to
obtain the prior written permission of the Company.
3.7. The Fund will provide to the Company at least one complete
copy of all Fund Registration Statements, Fund Prospectuses, Statements of
Additional Information, annual and semi-annual reports and other reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments or supplements to
any of the above, that relate to the Fund or Fund shares, within 20 days after
the filing of such document with the SEC or other regulatory authorities.
3.8. The Company will provide to the Fund at least one complete
copy of all Contracts Registration Statements, Contracts Prospectuses,
Statements of Additional Information, Annual and Semi-annual Reports, sales
literature and other promotional materials, and all amendments or supplements to
any of the above, that relate to the Contracts, within 20 days after the filing
of such document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft
versions of any registration statements, prospectuses, statements of additional
information, reports, proxy statements, solicitations for voting instructions,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
3.10. For purposes of this Article III, 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, computer net site, signs or billboards, motion pictures or
other public media), sales literature (I.E., any written communication
distributed or made generally available to customers or the public, in print or
electronically, including brochures, circulars, research reports, market
letters, form letters, seminar texts, or reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
Statements of Additional Information, shareholder reports and proxy materials,
and any other material constituting sales literature or advertising under NASD
rules, the 1940 Act or the 1933 Act.
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ARTICLE IV. Voting
4.1 Subject to applicable law and the requirements of Article
VII, the Fund shall solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the requirements of Article
VII, the Company shall:
(a) vote Fund shares attributable to Contract owners
in accordance with instructions or proxies received in
timely fashion from such Contract owners;
(b) vote Fund shares attributable to Contract owners
for which no instructions have been received in the same
proportion as Fund shares of such Series for which
instructions have been received in timely fashion; and
(c) vote Fund shares held by the Company on its own
behalf or on behalf of the Account that are not attributable
to Contract owners in the same proportion as Fund shares of
such Series for which instructions have been received in
timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. FEES AND EXPENSES
All expenses incident to performance by the Fund under this
Agreement (including expenses expressly assumed by the Fund pursuant to this
Agreement) shall be paid by the Fund to the extent permitted by law. Except as
may otherwise be provided in Section 1.4 and Article VII of this Agreement, the
Company shall not bear any of the expenses for the cost of registration and
qualification of the Fund shares under Federal and any state securities law,
preparation and filing of the Fund Prospectus and Fund Registration Statement,
the preparation of all statements and notices required by any Federal or state
securities law, all taxes on the issuance or transfer of Fund shares, and any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act.
The Fund is responsible for the cost of printing and distributing
Fund Prospectuses and SAIs to existing Contractowners. (If for this purpose the
Company decided to print the Fund Prospectuses and SAIs in a booklet or separate
booklets containing disclosure for the Contracts and for underlying funds other
than those of the Fund, then the Fund shall pay only its proportionate share of
the total cost to distribute the booklet to existing Contractowners.)
The Company is responsible for the cost of printing and
distributing Fund prospectuses and SAIs for new sales; and Account Prospectuses
and SAIs for existing Contractowners. The Company shall have the final decision
on choice of printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
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6.1. The Fund undertakes to comply with Subchapter M and Section
817(h) of the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration
Statements under the 1933 Act and the Account's Registration Statement under the
1940 Act from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale to the extent required
by applicable securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under
the 1933 Act and the 1940 Act from time to time as required in order to effect
for so long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by applicable
securities laws of the various states.
6.4. The Company shall be responsible for assuring that any
prospectus offering a Contract that is a life insurance contract where it is
reasonably possible that such Contract would be deemed a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will describe
the circumstances under which a Contract could be treated as a modified
endowment contract (or policy).
6.5. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of
Directors, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Company agrees to report to the Board of Directors of
the Fund (the "Board") any potential or existing conflicts between the interests
of Product Owners of all separate accounts investing in the Fund, and to assist
the Board in carrying out its responsibilities under Section 6e-3(T) of the 1940
Act, by providing all information reasonably necessary for the Board to consider
any issues raised, including information as to a decision to disregard voting
instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested
Board Members, determines that a material irreconcilable conflict exists, the
Board shall give prompt notice to all Participating Insurance Companies.
(a) If a majority of the whole Board, after notice to
the Company and a reasonable opportunity for the Company to
appear before it and present its case, determines that the
Company is responsible for said conflict, and if the Company
agrees with that determination, the Company shall, at its
sole cost and expense, take
9
whatever steps are necessary to remedy the material
irreconcilable conflict. These steps could include: (i)
withdrawing the assets allocable to some or all of the
affected Accounts from the Fund and reinvesting such assets
in a different investment vehicle, or submitting the
question of whether such segregation should be implemented
to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any particular group
(i.e., variable annuity Contract owners, variable life
insurance policy owners, or variable Contract owners of one
or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (ii)
establishing a new registered mutual fund or management
separate account; or (iii) taking such other action as is
necessary to remedy or eliminate the material irreconcilable
conflict.
(b) If the Company disagrees with the Board's
determination, the Company shall file a written protest with
the Board, reserving its right to dispute the determination
as between just the Company and the Fund and to seek
reimbursement from the Fund for the reasonable costs and
expenses of resolving the conflict . After reserving that
right the Company, although disagreeing with the Board that
it (the Company) was responsible for the conflict, shall
take the necessary steps, under protest, to remedy the
conflict, substantially in accordance with paragraph (a)
just above, for the protection of Contract owners.
(c) As between the Company and the Fund, if within 45
days after the Board's determination the Company elects to
press the dispute, it shall so notify the Board in writing.
The parties shall then attempt to resolve the matter
amicably through negotiation by individuals from each party
who are authorized to settle the matter. If the matter has
not been amicably resolved within 60 days from the date of
the Company's notice of its intent to press the dispute,
then before either party shall undertake to litigate the
dispute it shall be submitted to non-binding arbitration
conducted expeditiously in accordance with the CPR Rules for
Non-Administered Arbitration of Business Disputes, by a sole
arbitrator; PROVIDED, HOWEVER, that if one party has
requested the other party to seek an amicable resolution and
the other party has failed to participate, the requesting
party may initiate arbitration before expiration of the
60-day period set out just above.
If within 45 days of the commencement of the process to
select an arbitrator the parties cannot agree upon the
arbitrator, then he or she will be selected from the CPR
Panels of Neutrals. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place
of arbitration shall be Fort Xxxxx, Indiana. The Arbitrator is
not empowered to award damages in excess of compensatory
damages.
(d) If the Board shall determine that the Fund or
another was responsible for the conflict, then the Board
shall notify the Company immediately of that determination.
The Fund shall assure the Company that it (the Fund) or that
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other Participating Insurance Company as applicable, shall,
at its sole cost and expense, take whatever steps are
necessary to eliminate the conflict.
(e) Nothing in Sections 7.2(b) or 7.2(c) shall
constitute a waiver of any right of action which the Company
may have against other Participating Insurance Companies for
reimbursement of all or part of the costs and expenses of
resolving the conflict.
7.3. If a material irreconcilable conflict arises because of the
Company's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company shall withdraw (without charge or penalty) the Account's investment in
the Fund, if the Fund so elects.
7.4. For purposes of this Article, a majority of the
disinterested members of the Board shall determine whether or not any proposed
action adequately remedies any irreconcilable conflict. However, in no event
will the Fund be required to establish a new funding medium for any variable
contract, nor will the Company be required to establish a new funding medium for
any Contract, if in either case an offer to do so has been declined by a vote of
a majority of affected Contract owners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Fund and each person who controls or is
associated with the Fund (other than another Participating Insurance Company)
within the meaning of such terms under the federal securities laws and any
officer, trustee, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid with the prior written consent of the Company in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Contracts Registration Statement, Contracts
Prospectus, sales literature or other promotional material
for the Contracts or the Contracts themselves (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 in light of the circumstances in which they
were made; provided that this obligation to indemnify shall
not apply if such statement or omission or such alleged
statement or alleged omission was made in reliance upon and
in conformity with information furnished in writing to the
Company by the Fund (or a person authorized in writing to do
so on behalf of the Fund) for use in the Contracts
Registration Statement, Contracts Prospectus or in
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the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact by
or on behalf of the Company (other than statements or
representations contained in the Fund Registration
Statement, Fund Prospectus or sales literature or other
promotional material of the Fund not supplied by the Company
or persons under its control) or wrongful conduct of the
Company or persons under its control with respect to the
sale or distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged
untrue statement of a material fact contained in the Fund
Registration Statement, Fund Prospectus or sales literature
or other promotional material of the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made, if such statement or omission was made in
reliance upon and in conformity with information furnished
to the Fund by or on behalf of the Company; or
(d) arise as a result of any failure by the Company
to provide the services and furnish the materials or to make
any payments under the terms of this Agreement; or
(e) arise out of any material breach by the Company
of this Agreement, including but not limited to any failure
to transmit a request for redemption or purchase of Fund
shares on a timely basis in accordance with the procedures
set forth in Article I; or
(f) arise as a result of the Company's providing the
Fund with inaccurate information, which causes the Fund to
calculate its Net Asset Values incorrectly.
This indemnification will be in addition to any liability which the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.2. INDEMNIFICATION BY THE FUND. The Fund agrees to indemnify
and hold harmless the Company and each person who controls or is associated with
the Company within the meaning of such terms under the federal securities laws
and any officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid with the prior written consent of the Fund in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
12
(a) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Fund Registration Statement, Fund
Prospectus (or any amendment or supplement thereto) or sales
literature or other promotional material of the Fund, 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 in light of the circumstances in which they
were made; provided that this obligation to indemnify shall
not apply if such statement or omission or alleged statement
or alleged omission was made in reliance upon and in
conformity with information furnished in writing by the
Company to the Fund for use in the Fund Registration
Statement, Fund Prospectus (or any amendment or supplement
thereto) or sales literature for the Fund or otherwise for
use in connection with the sale of the Contracts or Fund
shares; or
(b) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact
made by the Fund (other than statements or representations
contained in the Fund Registration Statement, Fund
Prospectus or sales literature or other promotional material
of the Fund not supplied by the Distributor or the Fund or
persons under their control) or wrongful conduct of the Fund
or persons under its control with respect to the sale or
distribution of the Contracts or Fund shares; or
(c) arise out of any untrue statement or alleged
untrue statement of a material fact contained in the
Contract's Registration Statement, Contracts Prospectus or
sales literature or other promotional material for the
Contracts (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in
writing by the Fund to the Company (or a person authorized
in writing to do so on behalf of the Fund); or
(d) arise as a result of any failure by the Fund to
provide the services and furnish the materials under the
terms of this Agreement (including, but not by way of
limitation, a failure, whether unintentional or in good
faith or otherwise: (i) to comply with the diversification
requirements specified in Sections 2.4 and 6.1 in Article VI
of this Agreement; and (ii) to provide the Company with
accurate information sufficient for it to calculate its
accumulation and/or annuity unit values in timely fashion as
required by law and by the Contracts Prospectuses); or
(e) arise out of any material breach by the Fund of
this Agreement.
This indemnification will be in addition to any liability which the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. INDEMNIFICATION PROCEDURES. After receipt by a party
entitled to indemnification
13
("indemnified party") under this Article VIII of notice of the commencement of
any action, if a claim in respect thereof is to be made by the indemnified party
against any person obligated to provide indemnification under this Article VIII
("indemnifying party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof as soon as practicable thereafter,
provided that the omission to so notify the indemnifying party will not relieve
it from any liability under this Article VIII, except to the extent that the
omission results in a failure of actual notice to the indemnifying party and
such indemnifying party is damaged solely as a result of the failure to give
such notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
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.
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 state of Maryland,
without giving effect to the principles of conflicts of law.
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 limited, interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon 120 days advance
written notice to the other parties; or
14
(b) at the option of the Company if shares of the
Fund are not available to meet the requirements of the
Contracts as determined by the Company. Prompt notice of the
election to terminate for such cause shall be furnished by
the Company. Termination shall be effective ten days after
the giving of notice by the Company; or
(c) at the option of the Fund upon institution of
formal proceedings against the Company by the NASD, the SEC,
the insurance commission of any state or any other
regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of the Account, the administration of the
Contracts or the purchase of Fund shares;
(d) at the option of the Company upon institution of
formal proceedings against the Fund, the investment advisor
or any sub- investment advisor, by the NASD, the SEC, or any
state securities or insurance commission or any other
regulatory body; or
(e) upon requisite vote of the Contract owners having
an interest in the Fund (unless otherwise required by
applicable law) and written approval of the Company, to
substitute the shares of another investment company for the
corresponding shares of the Fund in accordance with the
terms of the Contracts; or
(f) at the option of the Fund in the event any of the
Contracts are not registered, issued or sold in accordance
with applicable Federal and/or state law; or
(g) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority
of disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of (i) any
Product owners or (ii) the interests of the Participating
Insurance Companies investing in the Fund; or
(h) at the option of the Company if the Fund ceases
to qualify as a Regulated Investment Company under
Subchapter M of the Code, or under any successor or similar
provision, or if the Company reasonably believes, based on
an opinion of its counsel, that the Fund may fail to so
qualify; or
(i) at the option of the Company if the Fund fails to
meet the diversification requirements specified in Section
817(h) of the Code and any regulations thereunder; or
(j) at the option of the Fund if the Contracts cease
to qualify as annuity
15
contracts or life insurance policies, as applicable, under
the Code, or if the Fund reasonably believes that the
Contracts may fail to so qualify; or
(k) at the option of the Fund if the Fund shall
determine, in its sole judgment exercised in good faith,
that either (1) the Company shall have suffered a material
adverse change in its business or financial condition; or
(2) the Company shall have been the subject of material
adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Fund; or
(l) at the option of the Company, if the Company
shall determine, in its sole judgment exercised in good
faith, that: (1) the Fund shall have suffered a material
adverse change in its business or financial condition; or
(2) the Fund shall have been the subject of material adverse
publicity which is likely to have a material adverse impact
upon the business and operations of the Company; or
(m) automatically upon the assignment of this
Agreement (including, without limitation, any transfer of
the Contracts or the Accounts to another insurance company
pursuant to an assumption reinsurance agreement) unless the
non-assigning party consents thereto or unless this
Agreement is assigned to an affiliate of the Company or the
Fund, as the case may be.
10.2. NOTICE REQUIREMENT. Except as otherwise provided in Section 10.1, no
termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to the other party of its
intent to terminate, which notice shall set forth the basis for such
termination. Furthermore:
(a) In the event that any termination is based upon
the provisions of Article VII or the provisions of Section
10.1(a) of this Agreement, such prior written notice shall
be given in advance of the effective date of termination as
required by such provisions; and
(b) in the event that any termination is based upon
the provisions of Section 10.1(c) or 10.1(d) of this
Agreement, such prior written notice shall be given at least
ninety (90) days before the effective date of termination,
or sooner if required by law or regulation.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, the Fund will,
at the option of the Company, continue to make available
additional Fund shares for so long after the termination of
this Agreement as the Company desires, pursuant to the terms
and conditions of this Agreement as provided in paragraph
(b) below, for all Contracts in effect on
16
the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the Company so elects
to make additional Fund shares available, the owners of the
Existing Contracts or the Company, whichever shall have
legal authority to do so, shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts.
(b) If Fund shares continue to be made available
after such termination, the provisions of this Agreement
shall remain in effect except for Section 10.1(a) and
thereafter either the Fund or the Company may terminate the
Agreement, as so continued pursuant to this Section 10.3,
upon prior written notice to the other party, such notice to
be for a period that is reasonable under the circumstances
but, if given by the Fund, need not be for more than six
months.
(c) The parties agree that this Section 10.3 shall
not apply to any termination made pursuant to Article VII,
and the effect of such Article VII termination shall be
governed by the provisions set forth or incorporated by
reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the Contracts
and to add new classes of variable annuity contracts and variable life insurance
policies to be issued by the Company through new or existing Separate Accounts
investing in the Fund. The provisions of this Agreement shall be equally
applicable to each such separate account and each such class of contracts or
policies, unless the context otherwise requires. Any such amendment must be
signed by the parties and must bear an effective date for that amendment.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party(ies) at the address of such party(ies) set
forth below or at such other address as such party(ies) may from time to time
specify in writing to the other party.
If to the Fund:
Lincoln National Capital Appreciation Fund, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
17
If to the Company:
Lincoln Life & Annuity Company of New York
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
ARTICLE XIII. MISCELLANEOUS
13.1. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
13.3. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.4. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
13.5. Each party represents that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as applicable,
by such party, and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
ARTICLE XIV. PRIOR AGREEMENTS
This Fund Participation Agreement, as of its effective date, hereby
supersedes any and all prior agreements to purchase shares between Lincoln Life
& Annuity Company of New York and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.
18
Signature: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
---------------------------------------------
Title: President
--------------------------------------------
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Signature: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
---------------------------------------------
Title: President, Treasurer & Director, Lincoln
--------------------------------------------
Life & Annuity Company of New York
--------------------------------------------
#78989
SCHEDULE 1
Lincoln National Capital Appreciation Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of________________
LLANY ACCOUNT Q VARIABLE ANNUITY
SCHEDULE 2
Lincoln National Capital Appreciation Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of________________
VUL I
GROUP MULTI FUND
19
AMENDMENT TO
SCHEDULE 1
Lincoln National Capital Appreciation Fund, Inc.
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Fund
As of October 15, 1999
LLANY ACCOUNT Q VARIABLE ANNUITY
LLANY SEPARATE ACCOUNT R
AMENDMENT TO
SCHEDULE 2
Lincoln National Capital Appreciation Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of October 15, 1999
VUL I
GROUP MULTI FUND
LLANY FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE - SVUL
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.
Signature:
---------------------------------------
Name: Xxxxx X. Xxxxxxxxx
------------------------------------------
Title: President
------------------------------------------
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Sgnature
-----------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Amendment to
SCHEDULE I
Lincoln National Capital Appreciation Fund, Inc.
Separate Accounts of Lincoln National Life Insurance Company
Investing in the Fund
As of May 1, 2000
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT K
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT L
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT Q
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT R
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT S
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT 53
Amendment to
SCHEDULE 2
Lincoln National Capital Appreciation Fund, Inc.
Variable Annuity Contracts
and Variable Life Insurance Policies
Supported by Separate Accounts
Listed on Schedule 1
As of May 1, 2000
MULTI FUND INDIVIDUAL VARIABLE ANNUITY
eANNUILY
MULTI FUND VARIABLE LIFE
GROUP MULTI FUND
LINCOLN VUL
LINCOLN VUL-DB-
LINCOLN SVUL
LINCOLN SVUL II
LINCOLN CVUL
LINCOLN CVUL SERIES III
MULTI FUND - NON-REGISTERED
GROUP VARIABLE ANNUITY (GVA) I, II, III
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedules 1 and 2 to be executed in its name and behalf by its duly authorized
officer on the date specified below.
LINCOLN NATIONAL CAPITAL
APPRECIATION FUND, INC.
Date: By: Xxxxx X. Xxxxxxxxx
------------------------ ---------------------
Xxxxx X. Xxxxxxxxx
President and Chairman
LINCOLN NATIONAL LIFE
INSURANCE COMPANY
Date: By: /s/ Xxxxxx X. Xxxxxxx
------------------------ ---------------------
Xxxxxx X. Xxxxxxx
Second Vice President
The Fund Participation Agreement (the "Agreement"), dated November 2, 1998,
by and among Lincoln Life & Annuity Company of New York and Lincoln National
Capital Appreciation Fund, Inc. is hereby amended as follows:
Page 2, the second paragraph is replaced in its entirety with the following:
"WHEREAS, the Company has registered or will have registered each Account
with the SEC (unless exempt therefrom) as a unit investment trust under the 1940
Act before any Contracts are issued by that Account; and"
Page 4, Article 2.1 is replaced in its entirety with the following:
"The Company represents and warrants (a) that the Contracts are registered
under the 1933 Act or will be so registered before the issuance thereof
(unless exempt therefrom), (b) that the Contracts will be issued in
compliance in all material respects with all applicable Federal and state
laws and (c) that the Company will require of every person distributing the
Contracts that the Contracts be offered and sold in compliance in all
material respects with all applicable Federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and validly existing under applicable law and that it has legally
and validly authorized each Account as a separate account under Section
4240 of the New York Insurance Law, and has registered or, prior to the
issuance of any Contracts, will register each Account (unless exempt
therefrom) as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a separate account for its Contracts, and that it
will maintain such registrations for so long as any Contracts issued under
them are outstanding."
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to the
Fund Participation Agreement to be executed in its name and behalf by its duly
authorized officer on the date specified below.
LINCOLN NATIONAL CAPITAL
APPRECIATION FUND, INC.
Date: By: /s/ XxxxX X. Xxxxxxxxx
Name: XxxxX X. Xxxxxxxxx
-----------------------
Title: President
-----------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Date: By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
-----------------------
Title: President
-----------------------
