PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
And
OCC DISTRIBUTORS
THIS AGREEMENT, made and entered into this 15 day of May 1998 by and among
The Lincoln National Life Insurance Company, an Indiana Corporation
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule I to this Agreement, as may be
amended from time to time (each account referred to as the "Account"), OCC
ACCUMULATION TRUST, an open-end diversified management investment company
organized under the laws of the State of Massachusetts (hereinafter the
"Fund") and OCC DISTRIBUTORS, a Delaware general partnership (hereinafter the
"Underwriter")
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company and was established for the purpose of serving
as the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies which have entered into participation agreements substantially
identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (alternatively referred to as the "SEC" or the "Commission"),
dated February 22, 1995 (File No. 812-9290), granting Participating Insurance
Companies and variable annuity separate accounts and variable life insurance
separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a),
and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the
" 1940 Act") and Rules 6e-2(b)(1 5) and 6e-3 (T)(b)(1 5) thereunder, to the
extent necessary to permit shares of the Fund to be sold to and held by
variable annuity separate accounts and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance
Companies and qualified pension and 'retirement plans (hereinafter the "Mixed
and Shared Funding Exemptive Order");and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the " 193 3 Act"); and
WHEREAS, the Company has registered or will register certain variable annuity
contracts and variable life insurance policies (the "Contracts") under the
1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the
insurance laws of the State of Indiana, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC under
the Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"),
and is a member in good standing of the National Association of Securities
Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios named
in Schedule 2 on behalf of the Accounts named in Schedule 2 to fund the
Contracts and the Underwriter 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, the
Fund and the Underwriter agree as follows:
ARTICLE 1. SALE AND REDEMPTION OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which the Company orders on behalf of each Account, executing such orders on
a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the order for the shares of the Fund.
For purposes of this Section 1.1, the Company shall be the designee of the
Fund for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such order by
10:00 a.m. Eastern Time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open for trading
and on which the Fund calculates its net asset value pursuant to the rules of
the SEC.
1.2. The Company shall pay for Fund shares on the next Business Day after it
places an order to purchase Fund shares in accordance with Section 1. 1
hereof Payment shall be in federal -funds transmitted by wire.
1.3. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by Participating Insurance
Companies and their separate accounts on those days on which the Fund
calculates its net asset value pursuant to rules of the SEC; provided,
however) that the Board of Trustees of the Fund (hereinafter the "Directors")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Directors, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of any Portfolio.
1.4. THE FUND AND THE UNDERWRITER AGREE THAT shares OF THE FUND WILL BE sold
only to Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are permitted
under applicable provisions of the Internal Revenue Code of 1986, as amended,
(the "Internal Revenue Code"), and regulations promulgated
thereunder, the sale to which will not impair the tax treatment currently
afforded the contracts. No shares of any Portfolio will be sold to the
general public.
1. 5. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles 1, 111, V, and VII of this
Agreement are in effect to govern such sales. The Fund shall make available
upon written request from the Company (i) a list of all other Participating
Insurance Companies and (ii) a copy of the Participation Agreement executed
by any other Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
and acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.6, the Company shall be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided the Fund receives
notice of request for redemption by 10:00 a.m. Eastern Time on the next
following Business Day. Payment shall be in federal funds transmitted by wire
to the Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the redemption
order from the Company, except that the Fund reserves the right to delay
payment of redemption proceeds in the
event that portfolio holdings other than cash equivalents must be liquidated
to pay the redemption proceeds, but in no event may such payment be delayed
longer than the period permitted under Section 22(e) of the 1940 Act. Neither
the Fund nor the Underwriter shall bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds; the Company alone
shall be responsible for such action. If notification of redemption is
received after 10:00 a.m. Eastern Time, payment for redeemed shares will be
made on the next following Business Day.
1.7. The Company agrees to purchase and redeem the shares of the Portfolios
named in Schedule 2 offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Purchase
and redemption orders for Fund shares will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends or capital gain distributions payable on the
Fund's shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to revoke
this election and to receive all such dividends and distributions in cash.
The Fund shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make' such net asset value per share available by 5:30 p.m.,
Eastern Time, each business day. Any material error in the calculation of net
asset value per share, dividend or capital gain information shall be
reported. promptly to the Company upon discovery by the Fund and the Company
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value.
ARTICLE H. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued and sold
in compliance 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
established each Account as a segregated asset account under applicable state
law and has registered each Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as segregated investment
accounts for the Contracts, and that it will maintain such registration for
so long as the 1940 Act requires. The Company shall amend the registration
statement under the 1933 Act for the Contracts and the registration statement
under the
1940 Act for the Account 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
in accordance with the securities laws of the various states only if and to
the extent deemed necessary by the Company.
2.2. The Company represents that it believes that the Contracts are
currently and at the time of issuance will be treated as annuity contracts or
life insurance policies under applicable provisions of the Internal Revenue
Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Underwriter 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.
2.3. 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 as long as the Fund shares are sold.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by the Fund or the Underwriter.
2.4. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and that
it will make every effort 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.
2.5. The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply
to the Fund. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws and regulations of any state. The
Company alone shall be responsible for informing the Fund of any investment
restrictions imposed by state insurance laws which are applicable to the
Fund. To the extent feasible and consistent with market conditions, the Fund
will adjust its investments to comply with the aforementioned state insurance
laws UPON WRITTEN notice FROM THE COMPANY OF such requirements and proposed
adjustments, it being agreed and understood that in any such case the Fund
shall be allowed a reasonable period of time under the circumstances after
receipt of such notice to make any such adjustment.
2.6. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board of Trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the National Association of Securities Dealers, Inc., ("NASD")
and is registered as a broker-dealer with the SEC. The Underwriter further
represents that it will sell and distribute the Fund shares in accordance
with all applicable federal and state securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of Massachusetts and that it does and will comply with
applicable provisions of the 0000 Xxx.
2.9. The Underwriter represents and warrants that the Fund's Adviser, OpCap
Advisors, is and shall remain duly registered under federal securities laws
and that the Adviser will perform its obligations to the Fund in accordance
with the laws of Massachusetts and any applicable state and federal
securities laws.
2.10. The FUND AND UNDERWRITER REPRESENT AND WARRANT that all of their
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal
coverage as required currently by Rule 17g-(1) adopted pursuant to the 1940
Act or related provisions as may be promulgated from time to time. The
aforesaid Bond includes coverage for larceny and embezzlement and is issued
by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund,- in an amount
not less than $5 million. The aforesaid includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company agrees
to make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and the Underwriter in the event that such coverage no longer applies.
ARTICLE M. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company, at the Company's expense,
with as many copies of the Fund's current prospectus or, if requested by the
Company, a version of the Fund's prospectus that includes only the Portfolios
of the Fund that are used to fund the Company's contracts, as the Company may
reasonably request for use with prospective contractowners and applicants.
The Underwriter shall print and distribute, at the Fund's or Underwriter's
expense, as many copies of said prospectus as necessary for distribution to
existing contractowners or participants. If requested by the Company in lieu
thereof, the Fund shall provide such documentation including a final copy of
a current prospectus set in type at the Fund's expense and other assistance
as is reasonably necessary in order for the Company at least annually (or
more frequently if the Fund prospectus is amended more frequently) to have
the new prospectus for the Contracts and the Fund's new prospectus printed
together in one document. In such case the Fund shall bear its share of
expenses as described above.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or alternatively
from the
Company (or, in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund), and the Underwriter (or the Fund)
shall provide such Statement, at its expense, to the Company-and to any owner
of or participant under a Contract who requests such Statement or, at the
Company's expense, to any prospective contractowner and applicant who
requests such statement.
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and
shall bear the costs of distributing them to existing contractowners or
participants.
3.4. If and to the extent required by law the Company shall:
(ii) solicit voting instructions from contractowners or participants;
(iii) vote the Fund shares held in an Account in accordance with instructions
received from contractowners or participants; and vote Fund shares held in an
Account for which no timely instructions have been received, in the same
proportion as Fund shares of such Portfolio for which instructions have been
received from the Company's contractowners or participants; so long as and to
the extent THAT THE SEC CONTINUES TO INTERPRET the 1940 Act to require pass
through voting privileges for variable contractowners. The Company reserves
the right
to vote Fund shares held in any segregated asset account in its own right, to
the extent permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner consistent with other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular as required, the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the SEC interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Fund's adviser or the Underwriter is named,
at least fifteen business days prior to its use. No such material shall be
used if the Fund or the Underwriter reasonably objects in writing to such use
within ten business days after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of
the Contracts other than the information or representations contained in the
registration statement or prospectus for the Fund shares, 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 or by the
Underwriter, except with the permission of the Fund or the Underwriter. The
Fund and the Underwriter agree to respond to any request for approval on a
prompt and timely basis.
4.3. The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account is
named, at least fifteen business days prior to its use. No such material
shall be used if the Company reasonably objects in writing to such use within
ten business days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts-other than the information or representations
contained in a registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented
from time to time, or IN PUBLISHED REPORTS for each Account which are in the
public domain or approved by the Company for distribution to contractowners
or participants, or in sales
literature or other promotional material approved by the Company, except with
the permission of the Company. timely basis. The Company agrees to respond to
any request for approval on a prompt and
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action LETTERS, AND ALL
AMENDMENTS TO ANY OF THE above, that relate to the Fund or its shares, within
20 days after the filing of such document with the SEC or other regulatory
authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund,
within 20 days after the filing of such document with the SEC or other
regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media),
sales literature (I.E., any written communication distributed or made
generally available to customers- or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
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 V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then, subject to obtaining any required exemptive orders or other
regulatory approvals, the Underwriter may make payments to the Company or to
the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this Agreement
shall be paid by the Fund to the extent permitted by law. All Fund shares
will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to sale. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement,
Fund proxy materials and reports, setting in-type, printing and distributing
the prospectuses, the proxy materials and reports to existing shareholders
and contractowners, the preparation of all statements and notices required by
any federal or state law, all taxes on the issuance or transfer of the Fund's
shares, and any expenses permitted to be paid or assumed by the Fund pursuant
to a plan, if any, under Rule 12b- I under the 1940 Act.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Internal Revenue Code and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund will comply with
Section 817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5,
relating to the diversification requirements for variable annuity, endowment,
or life insurance contracts and any amendments or other modifications to such
Section or Regulations in accordance with guidelines provided by the Company
prior to the execution of this Agreement and as necessary thereafter. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance with the grace period afforded
by Treasury Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor the
Fund for the existence of any material irreconcilable conflict among the
interests of the contractowners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in- applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by
Participating Insurance Companies or by variable annuity contract and
variable life insurance contractowners; or (f) a decision by an insurer to
disregard the voting instructions of contractowners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof. A majority of the Fund Board shall
consist of persons who are not "interested" persons of the Fund.
7.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. As set forth in the Mixed and Shared
Funding Exemptive Order, the Company will report
any potential or existing conflicts of which it is aware to the Fund Board.
The Company agrees to assist the Fund Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Fund Board upon its request with all information reasonably
necessary for the Fund Board to consider any issues raised. This includes,
but is not limited to, an obligation by the Company to inform the Fund Board
whenever contractowner voting instructions are disregarded. The Fund Board
shall record in its minutes or other appropriate records, all reports
received by it and all action with regard to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a majority of
its disinterested Directors, that an irreconcilable material conflict exists,
the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority
of the disinterested Directors), take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting- such assets in a different
investment medium, including (but not limited to) another Portfolio of the'
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected contractowners and, as appropriate,
segregating the assets of any appropriate group (Le., variable annuity
contractowners or variable life insurance 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 (2) establishing a new registered management investment
company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict with
the majority of contractowner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment
in the FUND AND TERMINATE THIS AGREEMENT with respect to such Account. Any
such withdrawal and termination must take place within 90 days after the Fund
gives written notice to the Company that this provision is being implemented.
Until the end of such 90 day period the Underwriter and Fund shall continue
to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators, then
the Company will withdraw the Account's investment in the Fund and terminate
this Agreement with respect to such Account. Any such withdrawal and
termination must take place within 90 days after the Fund gives written
notice to the Company that this provision is being implemented. Until the end
of such 90 day period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the
disinterested members of the Fund Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund or the Underwriter be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3
to establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of contractowners materially adversely
affected by the irreconcilable material conflict.
7.7. The Company shall from time to time submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so that
the Fund Board may fully carry out the duties imposed upon it as delineated
in the Mixed and Shared Funding Exemptive Order, and said reports, materials
and data shall be submitted more frequently if deemed appropriate by the Fund
Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3 (T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3 (T), as amended, and Rule 6e-3,
as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5
of this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY (a) The Company agrees to indemnify and
hold harmless the Fund, the Underwriter, and each of the Fund's or the
Underwriter's directors, officers, employees or agents and each person, if
any, who controls or is associated with the Fund or the Underwriter within
the meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8. 1) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
reasonable legal and other expenses), to which the indemnified parties may
become sub ect under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements: (i) arise out of or are based upon any
untrue statements or alleged untrue statements of any material fact contained
in the registration statement, prospectus or statement of additional
information for the Contracts or contained in the Contracts or sales
literature or other promotional material for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
in light of the circumstances in which they were made; provided that this
agreement to indemnify shall not apply as to any indemnified party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the registration statement,
prospectus or statement of additional information for the Contracts or in the
Contracts or sales literature or other promotional material for the Contracts
(or any amendment or supplement to any of the foregoing) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of untrue statements or representations by
or on behalf of the Company (other than statements or representations
contained in the Fund registration statement, Fund prospectus, Fund statement
of additional information or sales literature or other promotional material
of the Fund not supplied by the Company or persons under its control) or
willful malfeasance, bad faith or gross negligence of the Company or persons
under its control, with respect to the sale or distribution of the Contracts
or Fund shares; or arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration statement,
Fund prospectus, statement of additional information 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 a
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 persons
under its control; or 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
(v) arise out of any material breach of any representation and/or warranty
made by the Company in this Agreement or arise out of or result from any
other material breach by the Company of this Agreement; except to the extent
provided in Sections 8. 1 (b) and 8.3 hereof This indemnification shall be in
addition to any liability which the Company may otherwise have. (b) No party
shall be entitled to indemnification if such loss, claim, damage, liability
or litigation is due to the willful misfeasance, bad faith, gross negligence
or reckless disregard of duty by the party seeking indemnification.
(c) The indemnified parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or
sale of THE Fund shares or the Contracts or the operation of the Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
(a) The Underwriter, on its own behalf and on behalf of the Fund, agrees to
indemnify and hold harmless the Company and each of its directors, officers,
employees or agents and each person, if any, who controls or is associated
with the Company within the meaning of such terms under the federal
securities laws (collectively, the "indemnified parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter) or litigation (including reasonable legal and other expenses) to
which the indemnified parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement,
prospectus or statement of additional information for the Fund or sales
literature or other promotional material of the Fund (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 agreement to indemnify shall not apply as to any
indemnified party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity 'with information
furnished to the Underwriter or Fund by or on behalf of the Company for
use in the registration statement, prospectus or statement of additional
information for the Fund or in sales literature or other promotional
material of the Fund (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of untrue statements or representations
(other than statements or representations contained in the Contracts
or in the Contract or Fund registration statement, the Contract or Fund
prospectus, statement of additional information, or sales literature or
other promotional material for the Contracts or of the Fund not supplied
by the Underwriter or the Fund or persons under the control of the
Underwriter or the Fund respectively) or willful malfeasance, bad faith
or gross negligence of the Underwriter or the Fund or persons under the
control of the Underwriter or the Fund respectively, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus,
statement of additional information or sales literature or other
promotional material covering the Contracts (or any amendment thereof or
supplement thereto), or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statement or 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
Company by or on behalf of the Underwriter or the Fund or persons under
the control of the Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services AND
FURNISH THE MATERIALS UNDER THE terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification requirements and procedures related thereto
specified in Article VI of this Agreement except if such failure is a
result of the Company's failure to comply with the notification
procedures specified in Article VI); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter or the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Underwriter or the Fund;
except to the extent provided in Sections 8.2(b) and 8.3 hereof This
indemnification shall be in addition to any liability which the Underwriter
may otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard -of duty by the party seeking
indemnification.
(c) The indemnified parties will promptly notify the Underwriter of the
commencement of any litigation or Proceedings against them in connection with
the issuance or
sale of THE Contracts or the operation of the Account.
8.3. INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.3) shall not be
liable under the indemnification provisions of this Article VIII with respect
to any claim made against a party entitled to indemnification under this
Article VIII ("indemnified party" for the purpose of this Section 8.3) unless
such indemnified party shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such indemnified party (or after such party shall have received notice of
such service on any designated agent), but failure to notify the indemnifying
party of any such claim shall not relieve the indemnifying party from any
liability which it may have to the indemnified party against whom such action
is brought under the indemnification provision of this Article VIII, except
to the extent that the failure to notify results in the failure of actual
notice to the indemnifying party and such indemnifying party is damaged
solely as a result of failure to give such notice. In case any such action is
brought against the indemnified party, the indemnifying party will be
entitled to participate, at its own expense, in the defense thereof The
indemnifying party also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
indemnifying party to
the indemnified party of the indemnifying party's election to assume the
defense thereof, the indemnified party shall bear the fees and expenses of
any additional counsel retained by it, and the indemnifying party will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense there of other than reasonable costs of investigation, unless (1) 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.
8.4. CONTRIBUTION
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Article VIII is due in
accordance with its terms
but for any reason is held to be unenforceable with respect to a party
entitled to indemnification ("indemnified party" for purposes of this Section
8.4) pursuant to the terms of this Article VIII, then each party obligated to
indemnify pursuant to the terms of this Article VIII shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and litigations in such proportion as is
appropriate to reflect the relative benefits received by the parties to this
Agreement in connection with the offering of Fund shares to the Account and
the acquisition, holding or sale of Fund shares by the Account, or if such
allocation is not permitted by applicable law, in such proportions as is
appropriate to reflect the relative net benefits referred to above but also
the relative fault of the parties to this Agreement in connection with any
actions that lead to such losses, claims, damages, liabilities or
litigations, as well as any other relevant equitable considerations.
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 New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon six months' advance written notice to
the other parties unless otherwise agreed in a separate written agreement
among the parties; or
(b) at the option of the Company if shares of the Portfolios delineated in
Schedule 2 are not reasonably available to meet the requirements of the
Contracts as determined 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 administration of the Contracts,
the operation of the Account, or the purchase of the Fund shares, which the
Fund reasonably believes would have a material adverse effect on the
Company"s ability, to perform its obligations under this Agreement; or
(d) AT THE OPTION OF THE COMPANY UPON INSTITUTION of formal proceedings
against the Fund or the Underwriter by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, which the
Company reasonably believes would have a material adverse effect on the
Fund's or the Underwriter's ability to perform its obligations under this
Agreement; or
(e) at the option of the Company or the Fund upon receipt of any necessary
regulatory approvals and/or the vote of the contractowners having an interest
in the Account (or any subaccount) to substitute the shares of another
investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares
had been selected to serve as the underlying investment media. The Company
will give 30 days prior written notice to the Fund of the date of any
proposed vote or other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested Fund Board
members, that an irreconcilable material conflict exists among the interests
of (i) all contractowners of variable insurance products of all separate
accounts or (ii) the interests of the Participating Insurance Companies
investing in the Fund as delineated in Article VII of this Agreement; or
(g) at the option of the Company if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code,
or under any successor or similar provision, or if the Company reasonably
believes that the Fund may fall to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof, or
(i) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in its sole
judgment exercised in GOOD FAITH, THAT EITHER THE Fund or the Underwriter has
suffered a material adverse change in its business, operations or financial
condition since the date of this Agreement; or
(k) at the option of the Fund or Underwriter, if the Fund or Underwriter
respectively, shall determine in its sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement; or
(l) at the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without
notice.
10.2. NOTICE REQUIREMENT
(a) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice shall be given in
advance of the effective date of termination as required by such provisions.
(b) In the event that any termination of this Agreement is based upon the
provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt written notice
of the election to terminate this Agreement for cause shall be furnished by
the party terminating the Agreement to the non-terminating parties, with said
termination to be effective upon receipt of such notice by the
non-terminating parties.
(c) In the event that any termination of this Agreement is based upon the
provisions of Sections 10.10) or 10.1(k), prior written notice of the
election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non terminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3. It is understood and agreed that the right to terminate this Agreement
pursuant to Section 10. 1 (a) may be exercised for any reason or for no
reason.
10.4. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement pursuant to Section
10. 1 of this Agreement, and subject to Section 1.3 of this Agreement, the
Company may require the Fund and the Underwriter to, continue to make
available additional shares of the Fund 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, the
owners of the Existing Contracts 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. The
parties agree that this Section 10.4 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
(b) If shares of the Fund continue to be made available after termination of
this Agreement pursuant to this Section 10.4, the provisions of this
Agreement shall remain in effect except for Section 10.1 (a) and thereafter
the Fund, the Underwriter, or the Company may terminate the Agreement, as so
continued pursuant to this Section 10.4, upon 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 or Underwriter, need not be for more
than 90 days.
10.5. Except as necessary to implement contractowner initiated or approved
transactions, or as required by state insurance laws or regulations, the
Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts,
until 90 days after the Company shall have notified the Fund or Underwriter
of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be deemed duly given only if sent by hand, evidenced by
written receipt or by certified mail, return receipt requested, to the other
party at the address of such party set forth below or at such other address
as such party may from time to time specify in writing to the other party.
All notices shall be deemed given three business days after the date received
or rejected by the addressee.
If to the Fund:
Xx. Xxxxxxx X. Xxxxx
President
OpCap Advisors
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxx X. Xxxxxxxxx
The Lincoln National Life Insurance Company
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000-0 506
If to the Underwriter:
Xx. Xxxxxx X. Xxxxxx
Secretary
OCC Distributors
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Directors, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party hereto shall treat
as confidential all information reasonably identified as such in writing by
any other party hereto (including without limitation the names and addresses
of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as it may come into the public domain without the
express prior written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect
their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto without the
prior written consent of all the parties.
12.7. 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 each other and 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.
12.8. 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.
12.9. 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, the
Accounts or the Portfolios of 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 representative as
of the date and
year first WRITTEN above.
SEAL
SEAL
COMPANY
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
FUND:
OCC ACCUMULATION TRUST
By:
UNDERWRITER:
OCC DISTRIBUTORS
By:
SCHEDULE I
Participation Agreement
Among
OCC Accumulation Trust, The Lincoln National Life Insurance Company
and
OCC Distributors
The following separate accounts of The Lincoln National Life Insurance
Company are permitted in accordance with the provisions of this Agreement to
invest in Portfolios of the Fund shown in Schedule 2:
Lincoln Life Flexible Premium Variable Life Separate Account M
Lincoln Life Flexible Premium Variable Life Separate Account R
May 15, 1998
SCHEDULE 2
Participation Agreement
Among
OCC Accumulation Trust, The Lincoln National Life Insurance Company
and
OCC Distributors
The Separate Account(s) shown on Schedule I may invest in the following
Portfolios of the OCC Accumulation Trust:
Global Equity Portfolio
Managed Portfolio
May 15, 1998
S:\LEGALDEP\FUNDS\ASSET\WORD\PARTAGR2.LNL
