PRINCIPAL UNDERWRITING AGREEMENT
--------------------------------
THIS AGREEMENT is entered into on this 18th day of February, 1987 among
LINCOLN NATIONAL PENSION INSURANCE COMPANY ("Lincoln National"), a life
insurance company organized under laws of the State of Indiana on behalf of
itself and SEPARATE ACCOUNT E OF LINCOLN NATIONAL PENSION INSURANCE COMPANY
("Separate Account"), a separate account established by Lincoln National
pursuant to the Indiana Insurance Code and AMERICAN FUNDS DISTRIBUTORS, INC.
("AFD"), a corporation organized under the laws of the State of California.
WITNESSETH:
WHEREAS, Lincoln National proposes to issue to the public certain variable
annuity contracts ("Contracts") and has, by resolution of its Board of Directors
on September 26, 1986, authorized the creation of a segregated investment
account in connection therewith; and
WHEREAS, Lincoln National has established the Separate Account for the
purpose of issuing the Contracts and has registered the Separate Account with
the Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940; and
WHEREAS, the Contracts to be issued by Lincoln National are registered with
the Commission for offer and sale to the public, and otherwise are in compliance
with all applicable laws; and
WHEREAS, AFD is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities Dealers,
Inc., and proposes to form a selling group for the distribution of said
Contracts; and
WHEREAS, Lincoln National desires to obtain the services of AFD as
principal underwriter of the Contracts issued by Lincoln National through the
Separate Account;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, Lincoln National, the Separate Account and AFD hereby agree as
follows:
Duties of AFD
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1. AFD will form a selling group consisting of broker-dealers appointed by
Lincoln National to distribute the Contracts which are issued by Lincoln
National through the Separate Account and are registered with the Commission for
offer and sale to the public. Broker-dealers listed in the attached Schedule of
Excluded Broker-Dealers may not be members of such selling group. Said Schedule
of Excluded Broker-Dealers may be amended from time to time by the mutual
consent of the undersigned parties.
2. AFD will enter into and maintain a dealer agreement with each broker-
dealer joining such selling group ("member"); an executed copy of each will be
provided to Lincoln National. Any such dealer agreement expressly will be made
subject to this Agreement. Any such dealer agreement will provide: (i) that each
member will distribute the Contracts only in those jurisdictions in which the
Contracts are registered or qualified for sale and only through duly licensed
registered representatives of the members who are fully licensed with Lincoln
National to sell the Contracts in the applicable jurisdiction(s), (ii) that all
applications and initial and subsequent payments under the Contracts collected
by the member will be remitted promptly by the member to Lincoln National at
such address as it may from time to time designate and (iii) that each member
will comply with all applicable federal and state laws, rules and regulations.
3. AFD will use reasonable efforts to provide information and marketing
assistance to the members, including preparing and providing members with
advertising materials and sales literature, and providing members with current
Prospectuses of the Contracts and of American Pathway Fund (the "Fund"). AFD
will use reasonable efforts to ensure that members deliver only the currently
effective Prospectuses of the Contracts and the Fund. AFD and Lincoln National
will cooperate in the development of advertising and sales literature, as
requested. AFD will deliver to members, and use reasonable efforts to ensure
that members use, only sales literature and advertising material which conforms
to the requirements of federal and state laws and regulations which has been
authorized by Lincoln National and AFD. AFD will be responsible for filing sales
literature and advertising material, where necessary, with appropriate
securities regulatory authorities, including the National Association of
Securities Dealers, Inc. AFD will not distribute any Prospectus, sales
literature, advertising material or any other printed matter or material
relating to the Contracts or the Fund if, to its knowledge, any of the foregoing
misstates the duties, obligations or liabilities of Lincoln National or AFD. AFD
will not actively encourage any member to sell Contracts to employees of
hospitals in the State of California that are members of the California Hospital
Association.
4. AFD shall not be responsible for (i) taking or transmitting
applications for the Contracts; (ii) examining or inspecting risks or approving,
issuing or delivering Contracts; (iii) receiving, collecting or transmitting
insurance premiums; (iv) assisting in the completion of applications for
Contracts; (v) paying sales commissions to licensed broker-dealers and insurance
agents; and (vi) otherwise offering and selling Contracts directly to the
public.
5. AFD will bear all its expenses of providing services under this
Agreement, including the cost of preparing, printing and mailing advertising and
sales literature, and the cost of printing and mailing Fund and Contract
Prospectuses which are used for sales purposes, except that AFD shall not bear
the expenses of registering and qualifying shares or
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Contracts for sale under federal and state laws and expenses of preparing,
printing and mailing Prospectuses, proxies and shareholder reports to the
extent authorized by law. It is understood that Lincoln National will not be
required to bear the cost of printing and mailing Fund Prospectuses. AFD will,
except with respect to agents and brokers with Lincoln National Sales
Corporation ("LNSC"), reimburse Lincoln National for all state appointing fees
and associated renewal fees incurred to enable members to sell the Contracts.
6. AFD will furnish to Lincoln National such information with
respect to the Fund in such form and signed by such of its officers as Lincoln
National may reasonably request, and will warrant that the statements therein
contained when so signed will be true and correct. AFD will advise Lincoln
National immediately of: (a) any request by the Commission (i) for amendment of
the registration statement relating to the Contracts or the Fund or (ii) for
additional information; (b) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement of the Contracts or
the Fund or the initiation of any proceedings for that purpose; (c) the
institution of any proceeding, investigation or hearing involving the offer or
sale of the Contracts or the Fund of which it becomes aware; or (d) the
happening of any material event, if known, which makes untrue any statement
made in the registration statement of the Contracts or the Fund or which
requires the making of a change therein in order to make any statement made
therein not misleading.
7. AFD will use reasonable efforts to have the Fund register for
sale under the Securities Act of 1933 and, as required, under state securities
laws, from time to time as necessary, such additional shares of the Fund as may
reasonably be necessary for use as the funding vehicle for the Contracts.
Duties of Lincoln National
--------------------------
8. Lincoln National or its agent will receive and process
applications and premium payments in accordance with the terms of the Contracts
and the current Prospectuses. All applications for Contracts are subject to
acceptance or rejection by Lincoln National in its sole discretion. Lincoln
National will inform AFD of any such rejection and the reason therefor.
9. Lincoln National will be responsible for filing the Contracts,
forms, sales literature and advertising material, where necessary, with
appropriate insurance regulatory authorities.
10. Lincoln National will furnish to AFD such information with
respect to the Separate Account and the Contracts in such form and signed by
such of its officers as AFD may reasonably request, and will warrant that the
statements therein contained when so signed will be true and correct. Lincoln
National will advise AFD immediately of: (a) any request
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by the Commission (i) for amendment of the registration statement relating to
the Contracts or the Fund or (ii) for additional information; (b) the issuance
by the Commission of any stop order suspending the effectiveness of the
registration statement of the Contracts or the Fund or the initiation of any
proceedings for that purposes; (c) the institution of any proceeding,
investigation hearing or other action involving the offer or sale of the
Contracts or the Fund of which it becomes aware; (d) the happening of any
material event, if known, which makes untrue any statement made in the
registration statement of the Contracts or the Fund or which requires the making
of a change therein in order to make any statement made therein not misleading.
11. Lincoln National will use reasonable efforts to register for
sale, from time to time as necessary, additional dollar amounts of the Contracts
under the Securities Act of 1933 and, should it ever be required, under state
securities laws and to file for approval under state insurance laws when
necessary and will maintain the Investment Company Act of 1940 registration of
the Separate Account.
12. Lincoln National will pay to members of this selling group such
commissions as are from time to time set forth in dealer agreements. Such dealer
agreements shall provide for the return of sales commissions by the members to
Lincoln National if the Contracts are tendered for redemption to Lincoln
National in accordance with the 20-day review provision in the Contract.
13. Lincoln National will bear its expenses of providing services
under this Agreement, including the cost of preparing, printing and mailing
Prospectuses of the Contracts to Contract owners, expenses and fees of
registering or qualifying the Contracts and the Separate Account under federal
or state laws, and any direct expenses incurred by its employees in assisting
AFD in performing its duties hereunder. Lincoln National will pay to AFD such
remuneration for its services and for the services of its salaried employees,
and such reimbursement for its charges and expenses, as may be contained in such
Schedules of Remuneration as may be adopted and appended to this Agreement from
time to time. Said Schedule of Remuneration may be amended from time to time by
the mutual consent of the undersigned parties; except that AFD may alter the
ratio of commissions paid to dealers and remuneration paid to AFD as set forth
in paragraph 25 of this Agreement.
Warranties
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14. Lincoln National represents and warrants to AFD that: (i) a
registration statement under the Securities Act of 1933 (File No. 33-09644) and
under the Investment Company Act of 1940 (File No. 811-4882) on Form N-4 with
respect to the Contracts and Separate Account has been filed with the Commission
in the form previously delivered to AFD, and copies of any and all amendments
thereto will be forwarded to AFD at the time that they
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are filed with the Commission; (ii) the registration statement and any further
amendments or supplements thereto will, when they become effective, conform in
all material respects to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, and the rules and regulations of the Commission
thereunder, and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statement or omission made in reliance upon
and in conformity with information furnished in writing to Lincoln National by
AFD expressly for use therein; (iii) Lincoln National is validly existing as a
stock life insurance company in good standing under the laws of the State of
Indiana, with power (corporate or other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification; (iv) the Contracts to be issued through the
Separate Account have been duly and validly authorized and, when issued and
delivered against payment therefor as provided in the Prospectuses and in the
Contracts, will be duly and validly issued and will conform to the description
of such Contracts contained in the Prospectuses relating thereto; (v) those
persons who offer and sell the Contracts are appropriately licensed in a manner
as to comply with the state insurance laws; (vi) the performance of this
Agreement and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under any statute, any indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which Lincoln National is a
party or by which Lincoln National is bound, Lincoln National's Charter as a
stock life insurance company or By-Laws, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over Lincoln National
or any of its properties; and no consent, approval, authorization or order of
any court or governmental agency or body which has not been obtained by the
effective date of this Agreement is required for the consummation by Lincoln
National of the transactions contemplated by this Agreement; and (vii) there
are no material legal or governmental proceedings pending to which Lincoln
National or the Separate Account is a party or of which any property of Lincoln
National or the Separate Account is the subject, other than as set forth in the
Prospectus relating to the Contracts, and other than litigation incident to the
kind of business conducted by Lincoln National which, if determined adversely to
Lincoln National, would not individually or in the aggregate have a material
adverse effect on the financial position, surplus or operations of Lincoln
National; and (viii) any information furnished in writing by Lincoln National to
AFD for use in the registration statement of the Fund or the Contracts will not
result in the registration statement's failing to conform in all respects to the
requirements of the Securities Act of 1933 and the rules and regulations
thereunder or containing any untrue statement of a material fact or omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
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15. AFD represents and warrants to Lincoln National that: (i) a
registration statement under the Securities Act of 1933 (File No. 2-86838), and
under the Investment Company Act of 1940 (File No. 811-3857) with respect to
American Pathway Fund has been filed with the Commission in the form previously
delivered to Lincoln National, and copies of any and all amendments thereto will
be forwarded to Lincoln National at the time that they are filed with the
Commission; (ii) the Fund's registration statement and any further amendments or
supplements thereto will, when they become effective, conform in all material
respects to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, and the rules and regulations of the Commission thereunder,
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to AFD by Lincoln National
expressly for use therein; (iii) the performance of its duties under this
Agreement by AFD will not result in a breach or violation of any of the terms or
provisions or constitute a default under any statute, any indenture, mortgage,
deed of trust, note agreement or other agreement or instrument to which AFD is a
party or by which AFD is bound, the Certificate of Incorporation or By-Laws of
AFD, or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over AFD or its property; and (iv) any information
furnished in writing by AFD to Lincoln National for use in the registration
statement of the Fund or the Contracts will not result in the registration
statement's failing to conform in all respects to the requirements of the
Securities Act of 1933 and the rules and regulations thereunder or containing
any untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. AFD further represents and warrants to Lincoln National that: (i) it
is a broker-dealer duly registered with the Commission pursuant to the
Securities Exchange Act of 1934 and a member in good standing of the National
Association of Securities Dealers, Inc. and is in compliance with the securities
laws in those states in which it conducts business as a broker-dealer; (ii) the
performance of its duties under this Agreement by AFD will not result in a
breach or violation of any of the terms or provisions of or constitute a default
under any statute, any indenture, mortgage, deed or trust, note agreement or
other agreement or instrument to which AFD is a party or by which AFD is bound,
the Certificate of Incorporation or By-Laws of AFD, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
AFD or its property; (iii) it will use reasonable efforts to ensure that no
offering, sale or other disposition of the Contracts will be made until it has
been notified by Lincoln National that the subject registration statements have
been declared effective and the Contracts have been released for sale by Lincoln
National, and that such offering, sale or other disposition shall be limited to
those jurisdictions that have approved or otherwise permit the offer and sale of
the Contracts by Lincoln National; (iv) any information furnished in writing by
AFD to
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Lincoln National for use in the registration statement of the Fund or the
Contracts will not result in the registration statement's failing to conform in
all respects to the requirements of the Securities Act of 1933 and the rules and
regulations thereunder or containing any untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and (v) it will comply with the
requirements of state broker-dealer regulations and the Securities Exchange Act
of 1934 as each applies to AFD and shall conduct its affairs in accordance with
the rules of Fair Practice of the National Association of Securities Dealers,
Inc.
Miscellaneous
-------------
16. AFD makes no representation or warranty regarding the number of
Contracts to be sold by licensed broker-dealers and insurance agents or the
amount to be paid thereunder. AFD does, however, represent that it will actively
engage in its duties under this Agreement on a continuous basis while the
Agreement is in effect and there is an effective registration of the Contracts
with the Commission.
17. AFD may act as principal underwriter, sponsor, distributor or dealer
for issuers other than Lincoln National or its affiliates in connection with
mutual funds or insurance products; except that AFD shall not, while this
Agreement is in effect, act as principal underwriter, sponsor, distributor or
dealer with respect to insurance contracts which are issued by insurance
companies other than Lincoln National or its affiliates that are similar to the
Contracts. While this Agreement is in effect, Lincoln National will neither
issue any insurance contract similar to the Contracts which are distributed
through broker-dealers (except LNSC and the broker-dealers listed in the
attached Schedule of Excluded Broker-Dealers) without the written consent of AFD
nor enter into an agreement with any other organization for the purpose of
distributing the Contracts. It is understood that shares of American Pathway
Fund may be sold to fund insurance contracts of issuers other than Lincoln
National or its affiliates or to other shareholders in accordance with Internal
Revenue Code Section 817(h) and the regulations thereunder.
18. Nothing in this Agreement shall obligate Lincoln National to appoint
any member or registered representative of a member its agent for purposes of
the distribution of the Contracts. Nothing in this Agreement shall be construed
as requiring AFD to effect sales of the Contracts directly to the public or to
act as an insurance agent or insurance broker on behalf of Lincoln National for
purposes of state insurance laws.
19. AFD agrees to indemnify Lincoln National (or any control person,
shareholder, director, officer or employee of Lincoln National) for any
liability incurred (including costs relating to defense of any action) arising
out of any AFD act or omission relating to (i) rendering services under this
Agreement or (ii) the purchase, retention or surrender of a
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Contract by any person or entity; provided, however, that indemnification will
not be provided hereunder for any such liability that results from the willful
misfeasance, bad faith or gross negligence of Lincoln National or from the
reckless disregard by Lincoln National of the duties and obligations arising
under this Agreement.
20. Lincoln National agrees to indemnify AFD (or any control person,
shareholder, director, officer or employee of AFD) for any liability incurred
(including costs relating to defense of any action arising out of any Lincoln
National act or omission relating to (i) rendering services under this Agreement
or (ii) the purchase, retention or surrender of a Contract by any person or
entity; provided however, that indemnification will not be provided hereunder
for any such liability that results from the willful misfeasance, bad faith or
gross negligence of AFD or from the reckless disregard by AFD of the duties and
obligations arising under this Agreement.
21. This Agreement will terminate automatically upon its assignment, as
that term is defined in the Investment Company Act of 1940. The parties
understand that there is no intention to create a joint venture in the subject
matter of this Agreement. Accordingly, the right to terminate this Agreement
and to engage in any activity not inconsistent with this Agreement is absolute.
This Agreement will terminate, without the payment of any penalty by either
party: (a) at the option of Lincoln National upon six months' advance written
notice to AFD; or (b) at the option of AFD upon six months' advance written
notice to Lincoln National; or (c) at the option of Lincoln National upon
institution of formal proceedings against AFD by the National Association of
Securities Dealers, Inc. or by the Commission; or (d) as otherwise provided in
the Investment Company Act of 1940.
22. Each notice required by this Agreement shall be given in writing and
delivered by certified mail-return receipt requested.
23. This Agreement shall be subject to the laws of the State of Indiana
and construed so as to interpret the Contracts as insurance products written
within the business operation of Lincoln National.
24. This Agreement covers and includes all agreements, oral and written
(expressed or implied) between Lincoln National and AFD with regard to the
marketing and distribution of the Contracts, and supersedes any and all
Agreements between the parties with respect to the subject matter of this
Agreement; except that this Agreement shall not affect the operation of any
previous agreements entered into between Lincoln National and AFD unrelated to
the subject matter of this Agreement.
25. This Agreement, along with any Schedule of Remuneration attached
hereto and incorporated herein by reference, may be amended from time to time by
the mutual agreement and consent of the undersigned parties, provided such
amendment be in writing and duly executed; except that with respect to any
Schedule of Remuneration, AFD in its sole discretion, may alter upon written
notice to Lincoln National the ratio of commissions
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paid to dealers and remuneration paid to AFD. AFD agrees to reimburse Lincoln
National any remuneration previously received to the extent necessary to pay
additional commissions to dealers due to a retroactive change of this ration.
This Agreement shall become effective as of the effective date of the Form
N-4 Registration Statement filed under the Securities Act of 1933 and the
Investment Company Act of 1940 with respect to the Contracts.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and attested on the date first stated above.
Lincoln National Pension Insurance
Company on behalf of itself and
Separate Account E of Lincoln
National Pension Insurance Company
Attest:
/s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxxx Xxxxx Xxxxxx X. Xxxxxxx
Attest:
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxx
--------------------------------- ---------------------------------
Xxxxxxx Xxxxxx Xxxx X. Xxxxxx
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