"FORM OF"
FUND PARTICIPATION AGREEMENT
BETWEEN
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
AND
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
THIS AGREEMENT, made and entered into this ____ day of March, 2003, by
and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, an open-end management
investment company organized as a Delaware business trust (the "Trust"), 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 Trust 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 Trust ("Participating
Insurance Companies"); and
WHEREAS, the Trust filed with the Securities and Exchange Commission
(the "SEC") and the SEC has declared effective a registration statement
(referred to herein as the "Trust Registration Statement" and the prospectus
contained therein, or filed pursuant to Rule 497 under the 1933 Act, referred
to herein as the "Trust Prospectus") on Form N-lA to register itself as an
open-end management investment company (File No. 811-08090) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Trust
shares (File No. 33-70742) under the Securities Act of 1933, as amended (the
"1933 Act"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund," which are set forth in Schedule
2, and representing the interest in a particular managed portfolio of
securities and other assets; and
WHEREAS, the Company has filed or will file 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 (such
policies and contracts shall be referred to herein collectively as the
"Contracts"); 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 Trust 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 Trust agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust 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 Trust 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
Trust shall use its best efforts to calculate and deliver such net asset
value by 7:00 p.m., New York time., on each such Business Day.
Notwithstanding any other provision in this Agreement to the contrary, the
Board of Directors of the Trust (the "Trust 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 Trust
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 Trust agrees to redeem, at the Company's request, any full or
fractional shares of the Trust held by the Account or the Company, executing
such requests at the net asset value on a daily basis (Company will expect
same day redemption wires unless unusual circumstances evolve which cause the
Trust 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 Trust Prospectus. Notwithstanding the foregoing, the Trust may
delay redemption of Trust shares to the extent permitted by the 1940 Act, any
rules, regulations or orders thereunder, or the then currently effective
Trust Prospectus.
1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company
shall be the agent of the Trust for the limited purpose of
receiving redemption 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 Trust
prior to
the time prescribed in the current Trust Prospectus (which as of
the date of execution of this Agreement is 4 p.m., New York time)
shall constitute receipt by the Trust on that same Business Day,
provided that the Trust receives notice of such redemption or
purchase request by 9:00 a.m., New York time 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 Trust to purchase those Trust shares
for an Account. Payment for Trust shares will be made by the
Account or the Company in Federal Funds transmitted to the Trust
by wire to be received by 11:00 a.m., New York time on the day
the Trust is properly notified of the purchase order for shares.
The Trust will confirm receipt of each trade and these
confirmations will be received by the Company via Fax or Email
by 3:00 p.m. New York time. 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 Trusts transmitted to the Company by
wire on the same day the Trust is notified of the redemption
order of shares, except that the Trust 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 Trust 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 Trust shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares will be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the
Account.
1.6. The Trust 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 Trust. 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 Trust shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.7. The Trust shall use its best efforts to make the net asset value
per share available to the Company by 7:00 p.m., New York Time 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 Trust Prospectus. The Trust
will notify Company when and if Trust does not communicate the net asset
value per share by 7:00 p.m. New York time.
1.8 If the Trust provides the Company with materially incorrect share
net asset value information through no fault of the Company, the Company on
behalf of the Separate Accounts, shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct share net asset
value. Any material error in the calculation of net asset value per share,
dividend or capital gain information shall be reported promptly upon
discovery to the Company. The Trust shall not be liable for any information
provided to the Company pursuant to this Agreement which information is based
on incorrect information supplied by the Company to the Trust. In the event
of any material error in the calculation or communication of net asset value,
dividends or capital gain information or any delay in the communication, the
responsible party or parties shall reimburse the Company for any losses or
reasonable costs incurred as a result of the error or delay, including but
not limited to, amounts needed to make Contract owners whole and reasonable
administrative costs necessary to correct the error.
1.9. The Company may withdraw the Account's investment in the Trust
only: (i) as necessary to facilitate Contract owner requests; (ii) upon a
determination by a majority of the Trust Board, or a majority of
disinterested Trust 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 Trust; (iii) upon
requisite vote of the Contractowners having an interest in the Trust 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 0000 Xxx.
1.10. The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive and that the Trust shares may be sold to
other insurance companies (subject to Section 1.12 hereof) and the cash value
of the Contracts may be invested in other investment companies.
1.11. The Company shall not, without prior notice to the Trust (unless
otherwise required by applicable law), take any action to operate the
Accounts as management investment companies under the 0000 Xxx.
1.12. The Trust agrees that Trust shares will be sold only to
Participating Insurance Companies and their separate accounts. The Trust
will not sell Trust 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 Trust 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 27-1-5-1 of the Indiana Insurance Code, 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.
2.2. The Trust represents and warrants that Trust 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 Trust is and
shall remain registered under the 1940 Act for so long as the Trust shares
are sold. The Trust further represents and warrants that it is a corporation
duly organized and in good standing under the laws of Delaware.
2.3. The Trust 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 Trust 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 Trust 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 Trust immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.6. The Trust represents that the Trust'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; and with any state-mandated investment restrictions
set forth on Schedule 3, as amended from time to time by the Company in
accordance with Section 6.6. The Trust, 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 Trust of any investment restrictions imposed by state insurance
law and applicable to the Trust.
2.7. The Trust represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Trust
will immediately notify the Company in the event the fidelity bond coverage
should lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL AND OTHER
INFORMATION
3.1. The Trust shall provide the Company with as many copies of the
current Trust Prospectus as the Company may reasonably request. If requested
by the Company in lieu thereof, the Trust at its expense shall provide to the
Company a camera-ready copy, and electronic version, of the current Trust
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 Trust Prospectus in one document. See Article V for a
detailed explanation of the responsibility for the cost of printing and
distributing Trust prospectuses.
3.2. The Trust Prospectus shall state that the Statement of Additional
Information for the Trust is available from the Trust and the Trust 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 Trust at its expense shall provide to the Company a
camera-ready copy of the Trust'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 Trust shall be responsible for the costs of
printing and distributing these materials to Contract owners.
(b) The Trust at its expense shall be responsible for preparing,
printing and distributing its proxy material. The Company will
provide the appropriate Contractowner names and addresses to the
Trust for this purpose.
3.4. The Company shall furnish to the Trust, prior to its use, each
piece of sales literature or other promotional material in which the Trust is
named. No such material shall be used, except with the prior written
permission of the Trust. The Trust agrees to respond to any request for
approval on a prompt and timely basis. Failure of the Trust 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 Trust.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
other than the information or representations contained in the Trust
Registration Statement or Trust Prospectus, as such Registration Statement
and Prospectus may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales literature or other
promotional material approved by the Trust, except with the prior written
permission of the Trust. The Trust agrees to respond to any request for
permission on a prompt and timely basis. If the Trust 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
Trust.
3.6. The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Account or the Contracts other than the
information or representations contained in the 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 Trust, then the Trust is
relieved of the obligation to obtain the prior written permission of the
Company.
3.7. The Trust will provide to the Company at least one complete copy
of all Trust Registration Statements, Trust 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 Trust or
Trust 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 Trust 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.
ARTICLE IV. VOTING
4.1 Subject to applicable law and the requirements of Article VII, the
Trust shall solicit voting instructions from Contract owners;
4.2 Subject to applicable law and the requirements of Article VII, the
Company shall:
(a) vote Trust shares attributable to Contract owners in
accordance with instructions or proxies received in timely
fashion from such Contract owners;
(b) vote Trust shares attributable to Contract owners for which
no instructions have been received in the same proportion as
Trust shares of such Series for which instructions have been
received in timely fashion; and
(c) vote Trust 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 Trust 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 Trust under this Agreement
(including expenses expressly assumed by the Trust pursuant to this
Agreement) shall be paid by the Trust 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 Trust shares under Federal and any
state securities law, preparation and filing of the Trust Prospectus and
Trust 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 Trust shares, and any expenses permitted to be paid or assumed by
the Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
The Trust is responsible for the cost of printing and distributing Trust
Prospectuses and SAIs to existing Contractowners. (If for this purpose the
Company decided to print the Trust Prospectuses and SAIs in a booklet or
separate booklets containing disclosure for the Contracts and for underlying
funds other than those of the Trust, then the Trust 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
Trust 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
6.1. The Trust 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 Trust shall amend the Trust Registration Statement under the
1933 Act and the 1940 Act from time to time as required in order to effect
for so long as Trust shares are sold the continuous offering of Trust shares
as described in the then currently effective Trust Prospectus. The Trust
shall register and qualify Trust 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 Trust undertakes to have a Trust Board of
Directors, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
6.6. (a) When appropriate in order to inform the Trust of any
applicable state-mandated investment restrictions with which the
Trust must comply, the Company shall arrange with the Trust to
amend Schedule 3, pursuant to the requirements of Article XI.
(b) Should the Trust become aware of any restrictions which may
be appropriate for inclusion in Schedule 3, the Company shall be
informed immediately of the substance of those restrictions.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Company agrees to report to the Board of Directors of the
Trust (the "Board") any potential or existing conflicts between the interests
of Product Owners of all separate accounts investing in the Trust, 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 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 Trust 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 Contractowners and, as appropriate, segregating the
assets of any particular group (i.e., variable annuity
Contractowners, variable life insurance policyowners, or
variable Contractowners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering
to the affected Contractowners 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 Trust and to seek reimbursement from the
Trust 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 Contractowners.
(c) As between the Company and the Trust, 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 Trust or another was
responsible for the conflict, then the Board shall notify the
Company immediately of that determination. The Trust shall
assure the Company that it (the Trust) or that 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 Contractowner 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 Trust, if the Trust 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 Trust 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 Contractowners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Trust and each person who controls or is associated
with the Trust (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 Trust (or a person authorized in writing to do so
on behalf of the Trust) for use in the Contracts Registration
Statement, Contracts Prospectus or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(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 Trust Registration Statement, Trust Prospectus or sales
literature or other promotional material of the Trust 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
Trust shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Trust Registration
Statement, Trust Prospectus or sales literature or other
promotional material of the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading 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 Trust 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 Trust 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 Trust with
inaccurate information, which causes the Trust 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 TRUST. The Trust 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
Trust 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
Trust Registration Statement, Trust Prospectus (or any amendment
or supplement thereto) or sales literature or other promotional
material of the Trust, 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 Trust for use in the Trust Registration
Statement, Trust Prospectus (or any amendment or supplement
thereto) or sales literature for the Trust or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact made by the Trust
(other than statements or representations contained in the Trust
Registration Statement, Trust Prospectus or sales literature or
other promotional material of the Trust not supplied by the
Distributor or the Trust or persons under their control) or
wrongful conduct of the Trust or persons under its control with
respect to the sale or distribution of the Contracts or Trust
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 Trust to the Company (or
a person authorized in writing to do so on
behalf of the Trust); or
(d) arise as a result of any failure by the Trust 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 Trust of this
Agreement.
This indemnification will be in addition to any liability which the Trust 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 ("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 Indiana,
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
(b) at the option of the Company if shares of the Trust 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 Trust 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 Trust shares;
(d) at the option of the Company upon institution of formal
proceedings against the Trust, 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 Trust (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 Trust in accordance with the terms of the
Contracts; or
(f) at the option of the Trust 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 Trust upon a
determination by a majority of the Trust Board, or a majority of
disinterested Trust 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 Trust; or
(h) at the option of the Company if the Trust 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 Trust may fail to so qualify; or
(i) at the option of the Company if the Trust 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 Trust if the Contracts cease to
qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if the Trust reasonably believes
that the Contracts may fail to so qualify; or
(k) at the option of the Trust if the Trust 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 Trust; or
(l) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good faith, that:
(1) the Trust shall have suffered a material adverse change in
its business or financial condition; or (2) the Trust 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 Trust, 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 Trust will, at the option
of the Company, continue to make available additional Trust
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 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 Trust 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 Trust, redeem investments in the Trust and/or invest in
the Trust upon the making of additional purchase payments under
the Existing Contracts.
(b) If Trust 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
Trust 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
Trust, 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 Trust. 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 Trust:
Lincoln Variable Insurance Products Trust
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Secretary
If to the Company:
Lincoln Life & Annuity Company of New York
c/o The Lincoln National Life Insurance Company.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Rise X. X. Xxxxxx
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 Company
and the Trust.
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 VARIABLE INSURANCE PRODUCTS TRUST (Trust)
Signature:_________________________________
Name:______________________________________
Title:_____________________________________
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK (Company)
Signature:_________________________________
Name:______________________________________
Title:_____________________________________
SCHEDULE 1
----------
Lincoln Variable Insurance Products Trust
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Trust
Lincoln Life & Annuity Variable Annuity Account L
Lincoln Life & Annuity Flexible Premium Variable Life Account M
Lincoln New York Account N for Variable Annuities
LLANY Account Q for Variable Annuities
LLANY Separate Account R for Flexible Premium Variable Life Insurance
LLANY Separate Account S for Flexible Premium Variable Life Insurance
SCHEDULE 2
----------
FUNDS
-----
Aggressive Growth Fund
Bond Fund
Capital Appreciation Fund
Equity-Income Fund
Global Asset Allocation Fund
Growth and Income Fund
International Fund
Managed Fund
Money Market Fund
Social Awareness Fund
Special Opportunities Fund
SCHEDULE 3
----------
Lincoln Variable Insurance Products Trust
State-mandated Investment Restrictions
Applicable to the Trust
As of July 1, 1998
The California Department of Insurance has established the following
Guidelines for an underlying portfolio of a Separate Account:
BORROWING. The borrowing limit for any fund is 331/3 percent of total assets.
Entering into a reverse repurchase agreement shall be considered "borrowing"
as that term is used herein.
FOREIGN INVESTMENTS - DIVERSIFICATION
The diversification guidelines to be followed by international and global
FUNDS are as follows:
a. An international FUND or a global FUND is sufficiently diversified if it
is invested in a minimum of three different countries at all times, and
has invested no more than 50 percent of total assets in any one
second-tier country and no more than 25 percent of total assets in any
one third-tier country. First-tier countries are: Germany, the United
Kingdom, Japan, the United States, France, Canada, and Australia.
Second-tier countries are all countries not in the first or third tier.
Third-tier countries are countries identified as "emerging" or
"developing" by the International Bank for Reconstruction and
Development ("World Bank") or International Finance Corporation.
b. A regional FUND is sufficiently diversified if it is invested in a minimum
of three countries. The name of the FUND must accurately describe the
FUND.
c. The name of the single country FUND must accurately describe the FUND.
d. An index FUND must substantially mirror the index.
AMENDMENT NO. 1 TO
SCHEDULE 1
Lincoln Variable Insurance Products Trust
Separate Accounts of Lincoln Life & Annuity Company of New York
Investing in the Trust
As of May 1, 2004
Lincoln Life & Annuity Variable Annuity Account L
Lincoln Life & Annuity Flexible Premium Variable Life Account M
Lincoln New York Account N for Variable Annuities
LLANY Account Q for Variable Annuities
LLANY Separate Account R for Flexible Premium Variable Life Insurance
LLANY Separate Account S for Flexible Premium Variable Life Insurance
LNY Separate Account 401 for Group Annuities
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
Schedule 1 to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
Date: 11/8/04 By: /s/ Xxxxx X. Xxxxxxxxx
--------------------- ----------------------------------
Xxxxx X. Xxxxxxxxx
President
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Date: 11/8/04 By: /s/ Rise X. X. Xxxxxx
--------------------- ----------------------------------
Rise X. X. Xxxxxx
Second Vice President
