Exhibit 1.8(c)
FORM OF
FUND PARTICIPATION AGREEMENT
BETWEEN
--------------------------------------
AND
LINCOLN NATIONAL MONEY MARKET FUND, INC.
THIS AGREEMENT, made and entered into this __ day of ____, 2000,
by and between Lincoln National Money Market Fund, Inc. a corporation organized
under the laws of Maryland (the "Fund"), and _________________, an ________
insurance corporation (the "Company"), on its own behalf and on behalf of each
separate account of the Company named in Schedule 1 to this Agreement as in
effect at the time this Agreement is executed and such other separate accounts
that may be added to Schedule 1 from time to time in accordance with the
provisions of Article XI of this Agreement (each such account referred to as the
"Account"; collectively, the "Accounts").
WHEREAS, the Fund is engaged in business as an open-end
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts (collectively referred to as
"Variable Insurance Products," the owners of such products being referred to as
"Product Owners") to be offered by insurance companies which have entered into
participation agreements with the Fund ("Participating Insurance Companies");
and
WHEREAS, the Fund filed with the Securities and Exchange
Commission (the "SEC") and the SEC has declared effective a registration
statement (referred to herein as the "Fund Registration Statement" and the
prospectus contained therein, or filed pursuant to Rule 497 under the 1933 Act,
referred to herein as the "Fund Prospectus") on Form N-lA to register itself as
an open-end management investment company (File No. 811-3212) under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund shares
(File No.
2-80743) under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has filed a registration statement with the
SEC to register under the 1933 Act (unless exempt therefrom) certain variable
annuity contracts and/or variable life insurance policies described in Schedule
2 to this Agreement as in effect at the time this Agreement is executed and such
other variable annuity contracts and variable life insurance policies which may
be added to Schedule 2 from time to time in accordance with Article XI of this
Agreement (such policies and contracts shall be referred to herein collectively
as the "Contracts," each such registration statement for a class or classes of
contracts listed on Schedule 2 being referred to as the "Contracts Registration
Statement" and the prospectus for each such class or classes being referred to
herein as the "Contracts Prospectus," and the owners of the such contracts, as
distinguished from all Product Owners, being referred to as "Contract Owners");
and
WHEREAS, each Account, a validly existing separate account, duly
authorized by the Company on the date set forth on Schedule 1, sets aside and
invests assets attributable to the Contracts; and
WHEREAS, the Company has registered or will have registered each
Account with the SEC as a unit investment trust under the 1940 Act before any
Contracts are issued by that Account; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares on behalf of each Account to
fund its Contracts and the Fund is authorized to sell such shares to unit
investment trusts such as the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company and the Fund agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares which
the Company orders on behalf of the Account, executing such orders on a daily
basis in accordance with Section 1.4 of this Agreement.
1.2. The Fund agrees to make shares available for purchase by the
Company on behalf of the Account at the then applicable net asset value per
share on Business Days as defined in Section 1.4 of this Agreement, and the
Fund shall use its best efforts to calculate AND DELIVER such net asset value
by 7:00 p.m., E.S.T., on each such Business Day. Notwithstanding any other
provision in this Agreement to the contrary, the Board of Directors of the
Fund (the "Fund Board") may suspend or terminate the offering of shares, if
such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Fund Board acting in good
faith and in light of its fiduciary duties under Federal and any applicable
state laws, suspension or termination is necessary and in the best interests
of the shareholders (it being understood that "shareholders" for this purpose
shall mean Product owners).
1.3. The Fund agrees to redeem, at the Company's request, any
full or fractional shares of the Fund held by the Account or the Company,
executing such requests at the net asset value on a daily basis (the Company
will expect same day redemption wires unless unusual circumstances evolve which
cause the Fund to have to redeem securities) in accordance with Section 1.4 of
this Agreement, the applicable provisions of the 1940 Act and the then currently
effective Fund Prospectus. Notwithstanding the foregoing, the Fund may delay
redemption of Fund shares to the extent permitted by the 1940 Act, any rules,
regulations or orders thereunder, or the then currently effective Fund
Prospectus.
2
1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall
be the agent of the Fund for the limited purpose of receiving
redemption and purchase requests from the Account (but not
from the general account of the Company), and receipt on any
Business Day by the Company as such limited agent of the
Fund prior to the time prescribed in the current Fund
Prospectus (which as of the date of execution of this
Agreement is 4 p.m., E.S.T.) shall constitute receipt by the
Fund on that same Business Day, provided that the Fund
receives notice of such redemption or purchase request by
9:00 a.m., E.S.T. on the next following Business Day. For
purposes of this Agreement, "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading.
(b) The Company shall pay for the shares on the same day that it
places an order with the Fund to purchase those Fund shares
for an Account. Payment for Fund shares will be made by the
Account or the Company in Federal Funds transmitted to the
Fund by wire to be received by 11:00 a.m., E.S.T. on the day
the Fund is properly notified of the purchase order for
shares. The Fund will confirm receipt of each trade and
these confirmations will be received by the Company via fax
or e-mail by 3:00 p.m. E.S.T. If Federal Funds are not
received on time, such funds will be invested, and shares
purchased thereby will be issued, as soon as practicable.
(c) Payment for shares redeemed by the Account or the Company
will be made in Federal Funds transmitted to the Company by
wire on the same day the Fund is notified of the redemption
order of shares, except that the Fund reserves the right to
delay payment of redemption proceeds, but in no event may
such payment be delayed longer than the period permitted
under Section 22(e) of the 0000 Xxx. The Fund shall not bear
any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds if securities must be
redeemed; the Company alone shall be responsible for such
action.
1.5. Issuance and transfer of Fund shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.6. The Fund shall furnish notice as soon as reasonably
practicable to the Company of any income dividends or capital gain distributions
payable on any shares. The Company, on its behalf and on behalf of the Account,
hereby elects to receive all such dividends and distributions
3
as are payable on any shares in the form of additional shares of that Fund.
The Company reserves the right, on its behalf and on behalf of the Account,
to revoke this election and to receive all such dividends in cash. The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.7. The Fund shall use its best efforts to make the net asset
value per share available to the Company by 7:00 p.m., E.S.T. each Business Day,
and in any event, as soon as reasonably practicable after the net asset value
per share is calculated, and shall calculate such net asset value in accordance
with the then currently effective Fund Prospectus. The Fund shall not be liable
for any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company to the
Fund.
1.8. (a) The Company may withdraw the Account's investment in the Fund
only: (i) as necessary to facilitate Contract owner requests;
(ii) upon a determination by a majority of the Fund Board, or
a majority of disinterested Fund Board members, that an
irreconcilable material conflict exists among the interests
of (x) any Product Owners or (y) the interests of the
Participating Insurance Companies investing in the Fund;
(iii) upon requisite vote of the Contractowners having an
interest in the Fund to substitute the shares of another
investment company for shares in accordance with the terms of
the Contracts; (iv) as required by state and/or federal laws
or regulations or judicial or other legal precedent of
general application; or (v) at the Company's sole discretion,
pursuant to an order of the SEC under Section 26(b) of the
1940 Act.
(b) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive and that the
Fund shares may be sold to other insurance companies
(subject to Section 1.9 hereof) and the cash value of the
Contracts may be invested in other investment companies.
(c) The Company shall not, without prior notice to the Fund
(unless otherwise required by applicable law), take any
action to operate the Accounts as management investment
companies under the 0000 Xxx.
1.9. The Fund agrees that Fund shares will be sold only to
Participating Insurance Companies and their separate accounts. The Fund will not
sell Fund shares to any insurance company or separate account unless an
agreement complying with Article VII of this Agreement is in effect to govern
such sales. No Fund shares will be sold to the general public.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
4
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 _____ of the ___________, 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 Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Fund is
and shall remain registered under the 1940 Act for so long as the Fund shares
are sold. The Fund further represents and warrants that it is a corporation duly
organized and in good standing under the laws of Maryland.
2.3. The Fund represents and warrants that it currently qualifies
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). The Fund further represents and warrants
that it will make every effort to continue to qualify and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Fund represents and warrants that it will comply with
Section 817(h) of the Code, and all regulations issued thereunder.
2.5. The Company represents that the Contracts are currently and
at the time of issuance will be treated as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code. The
Company shall make every effort to maintain such treatment and shall notify the
Fund immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the future.
2.6. The Fund represents that the Fund's investment policies,
fees and expenses, and operations are and shall at all times remain in material
compliance with the laws of the state of Maryland, to the extent required to
perform this Agreement; 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 Fund, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state. The Company alone shall be responsible for informing the Fund of
any investment restrictions imposed by state insurance
5
law and applicable to the Fund.
2.7. The Fund represents and warrants that it has and maintains a
fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will
immediately notify the Company in the event the fidelity bond coverage should
lapse at any time.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; SALES MATERIAL
AND OTHER INFORMATION
3.1. The Fund shall provide the Company with as many copies of
the current Fund Prospectus as the Company may reasonably request. If requested
by the Company in lieu thereof, the Fund at its expense shall provide to the
Company a camera-ready copy, and electronic version, of the current Fund
Prospectus suitable for printing and other assistance as is reasonably necessary
in order for the Company to have a new Contracts Prospectus printed together
with the Fund Prospectus in one document. See Article V for a detailed
explanation of the responsibility for the cost of printing and distributing Fund
prospectuses.
3.2. The Fund Prospectus shall state that the Statement of
Additional Information for the Fund is available from the Fund and the Fund
shall provide such Statement free of charge to the Company and to any
outstanding or prospective Contract owner who requests such Statement.
3.3. (a) The Fund at its expense shall provide to the Company a
camera-ready copy of the Fund's shareholder reports and other
communications to shareholders (except proxy material), in
each case in a form suitable for printing, as determined by
the Company. The Fund shall be responsible for the costs of
printing and distributing these materials to Contract owners.
(b) The Fund at its expense shall be responsible for preparing,
printing and distributing its proxy material. The Company
will provide the appropriate Contractowner names and
addresses to the Fund for this purpose.
3.4. The Company shall furnish to the Fund, prior to its use,
each piece of sales literature or other promotional material in which the Fund
is named. No such material shall be used, except with the prior written
permission of the Fund. The Fund agrees to respond to any request for approval
on a prompt and timely basis. Failure of the Fund to respond within 10 days of
the request by the Company shall relieve the Company of the obligation to obtain
the prior written permission of the Fund.
3.5. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund other
than the information or representations contained in the Fund Registration
Statement or Fund Prospectus, as such Registration Statement and Prospectus may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature or other promotional material
6
approved by the Fund, except with the prior written permission of the Fund. The
Fund agrees to respond to any request for permission on a prompt and timely
basis. If the Fund does not respond within 10 days of a request by the Company,
then the Company shall be relieved of the obligation to obtain the prior written
permission of the Fund.
3.6. The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations contained in the
Contracts Registration Statement or Contracts Prospectus, as such Registration
Statement and Prospectus may be amended or supplemented from time to time, or in
published reports of the Account which are in the public domain or approved in
writing by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved in writing by the Company,
except with the prior written permission of the Company. The Company agrees to
respond to any request for permission on a prompt and timely basis. If the
Company fails to respond within 10 days of a request by the Fund, then the Fund
is relieved of the obligation to obtain the prior written permission of the
Company.
3.7. The Fund will provide to the Company at least one complete
copy of all Fund Registration Statements, Fund Prospectuses, Statements of
Additional Information, annual and semi-annual reports and other reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments or supplements to
any of the above, that relate to the Fund or Fund shares, within 20 days after
the filing of such document with the SEC or other regulatory authorities.
3.8. The Company will provide to the Fund at least one complete
copy of all Contracts Registration Statements, Contracts Prospectuses,
Statements of Additional Information, Annual and Semi-annual Reports, sales
literature and other promotional materials, and all amendments or supplements to
any of the above, that relate to the Contracts, within 20 days after the filing
of such document with the SEC or other regulatory authorities.
3.9. Each party will provide to the other party copies of draft
versions of any registration statements, prospectuses, statements of additional
information, reports, proxy statements, solicitations for voting instructions,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
3.10. For purposes of this Article III, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine or
other periodical, radio, television, telephone or tape recording, videotape
display, computer net site, signs or billboards, motion pictures or other public
7
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 Fund shall solicit voting instructions from Contractowners.
4.2 Subject to applicable law and the requirements of Article VII,
the Company shall:
(a) vote Fund shares attributable to Contract
owners in accordance with instructions or
proxies received in timely fashion from such
Contract owners;
(b) vote Fund shares attributable to Contract
owners for which no instructions have been
received in the same proportion as Fund
shares of such Series for which instructions
have been received in timely fashion; and
(c) vote Fund shares held by the Company on its
own behalf or on behalf of the Account that
are not attributable to Contract owners in
the same proportion as Fund shares of such
Series for which instructions have been
received in timely fashion.
The Company shall be responsible for assuring that voting privileges for the
Accounts are calculated in a manner consistent with the provisions set forth
above.
ARTICLE V. FEES AND EXPENSES
All expenses incident to performance by the Fund under this
Agreement (including expenses expressly assumed by the Fund pursuant to this
Agreement) shall be paid by the Fund to the extent permitted by law. Except as
may otherwise be provided in Section 1.4 and Article VII of this Agreement, the
Company shall not bear any of the expenses for the cost of registration and
qualification of the Fund shares under Federal and any state securities law,
preparation and filing of the Fund Prospectus and Fund Registration Statement,
the preparation of all statements and notices required by any Federal or state
securities law, all taxes on the issuance or transfer of Fund shares, and any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
8
under Rule 12b-1 under the 1940 Act.
The Fund is responsible for the cost of printing and distributing
Fund Prospectuses and SAIs to existing Contractowners. (If for this purpose the
Company decided to print the Fund Prospectuses and SAIs in a booklet or separate
booklets containing disclosure for the Contracts and for underlying funds other
than those of the Fund, then the Fund shall pay only its proportionate share of
the total cost to distribute the booklet to existing Contractowners.)
The Company is responsible for the cost of printing and distributing
Fund prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for
existing Contractowners. The Company shall have the final decision on choice of
printer for all Prospectuses and SAIs.
ARTICLE VI. COMPLIANCE UNDERTAKINGS
6.1. The Fund undertakes to comply with Subchapter M and Section
817(h) of the Code, and all regulations issued thereunder.
6.2. The Company shall amend the Contracts Registration
Statements under the 1933 Act and the Account's Registration Statement under the
1940 Act from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale to the extent required
by applicable securities laws of the various states.
6.3. The Fund shall amend the Fund Registration Statement under
the 1933 Act and the 1940 Act from time to time as required in order to effect
for so long as Fund shares are sold the continuous offering of Fund shares as
described in the then currently effective Fund Prospectus. The Fund shall
register and qualify Fund shares for sale to the extent required by applicable
securities laws of the various states.
6.4. The Company shall be responsible for assuring that any
prospectus offering a Contract that is a life insurance contract where it is
reasonably possible that such Contract would be deemed a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will describe
the circumstances under which a Contract could be treated as a modified
endowment contract (or policy).
6.5. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of
Directors, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
6.6. (a) When appropriate in order to inform the
Fund of any applicable state-mandated
investment restrictions with which the Fund
must
9
comply, the Company shall arrange with
the Fund to amend Schedule 3, pursuant to
the requirements of Article XI.
(b) Should the Fund 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 Fund (the "Board") any potential or existing conflicts between the interests
of Product Owners of all separate accounts investing in the Fund, and to assist
the Board in carrying out its responsibilities under Section 6e-3(T) of the 1940
Act, by providing all information reasonably necessary for the Board to consider
any issues raised, including information as to a decision to disregard voting
instructions of variable contract owners.
7.2. If a majority of the Board, or a majority of disinterested
Board Members, determines that a material irreconcilable conflict exists, the
Board shall give prompt notice to all Participating Insurance Companies.
(a) If a majority of the whole Board, after notice to
the Company and a reasonable opportunity for the
Company to appear before it and present its case,
determines that the Company is responsible for said
conflict, and if the Company agrees with that
determination, the Company shall, at its sole cost
and expense, take whatever steps are necessary to
remedy the material irreconcilable conflict. These
steps could include: (i) withdrawing the assets
allocable to some or all of the affected Accounts
from the Fund and reinvesting such assets in a
different investment vehicle, or submitting the
question of whether such segregation should be
implemented to a vote of all affected
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
10
right to dispute the determination as between just
the Company and the Fund and to seek reimbursement
from the Fund for the reasonable costs and expenses
of resolving the conflict. After reserving that
right the Company, although disagreeing with the
Board that it (the Company) was responsible for the
conflict, shall take the necessary steps, under
protest, to remedy the conflict, substantially in
accordance with paragraph (a) just above, for the
protection of Contractowners.
(c) As between the Company and the Fund, if within 45
days after the Board's determination the Company
elects to press the dispute, it shall so notify
the Board in writing. The parties shall then
attempt to resolve the matter amicably through
negotiation by individuals from each party who are
authorized to settle the matter. If the matter has
not been amicably resolved within 60 days from the
date of the Company's notice of its intent to press
the dispute, then before either party shall
undertake to litigate the dispute it shall be
submitted to non-binding arbitration conducted
expeditiously in accordance with the CPR Rules for
Non-Administered Arbitration of Business Disputes,
by a sole arbitrator; PROVIDED, HOWEVER, that if
one party has requested the other party to seek an
amicable resolution and the other party has failed
to participate, the requesting party may initiate
arbitration before expiration of the 60-day period
set out just above.
If within 45 days of the commencement of the process to
select an arbitrator the parties cannot agree upon the
arbitrator, then he or she will be selected from the CPR
Panels of Neutrals. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place
of arbitration shall be ________. The Arbitrator is not
empowered to award damages in excess of compensatory damages.
(d) If the Board shall determine that the Fund
or another was responsible for the conflict,
then the Board shall notify the Company
immediately of that determination. The Fund
shall assure the Company that it (the Fund)
or that 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.
11
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 Fund, if the Fund so elects.
7.4. For purposes of this Article, a majority of the
disinterested members of the Board shall determine whether or not any proposed
action adequately remedies any irreconcilable conflict. However, in no event
will the Fund be required to establish a new funding medium for any variable
contract, nor will the Company be required to establish a new funding medium for
any Contract, if in either case an offer to do so has been declined by a vote of
a majority of affected Contractowners.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the Fund and each person who controls or is
associated with the Fund (other than another Participating Insurance Company)
within the meaning of such terms under the federal securities laws and any
officer, trustee, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid with the prior written consent of the Company in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Contracts Registration Statement,
Contracts Prospectus, sales literature or other
promotional material for the Contracts or the
Contracts themselves (or any amendment or
supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided
that this obligation to indemnify shall not apply
if such statement or omission or such alleged
statement or alleged omission was made in reliance
upon and in conformity with information furnished
in writing to the Company by the Fund (or a person
authorized in writing to do so on behalf of the
Fund) for use in the Contracts Registration
Statement, Contracts Prospectus or in the Contracts
or sales literature (or any amendment or
supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
12
(b) arise out of or are based upon any untrue
statement or alleged untrue statement of a
material fact by or on behalf of the Company
(other than statements or representations
contained in the Fund Registration
Statement, Fund Prospectus or sales
literature or other promotional material of
the Fund not supplied by the Company or
persons under its control) or wrongful
conduct of the Company or persons under its
control with respect to the sale or
distribution of the Contracts or Fund
shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund
Registration Statement, Fund Prospectus or sales
literature or other promotional material of the
Fund or any amendment thereof or supplement
thereto, or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading in light of the circumstances in
which they were made, if such statement or omission
was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf
of the Company; or
(d) arise as a result of any failure by the Company to
provide the services and furnish the materials or
to make any payments under the terms of this
Agreement; or
(e) arise out of any material breach by the Company of
this Agreement, including but not limited to any
failure to transmit a request for redemption or
purchase of Fund shares on a timely basis in
accordance with the procedures set forth in
Article I; or
(f) arise as a result of the Company's providing the
Fund with inaccurate information, which causes the
Fund to calculate its Net Asset Values incorrectly.
This indemnification will be in addition to any liability which the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.2. INDEMNIFICATION BY THE FUND. The Fund agrees to indemnify
and hold harmless the Company and each person who controls or is associated with
the Company within the meaning of such terms under the federal securities laws
and any officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts
13
paid with the prior written consent of the Fund in settlement
of, any action, suit or proceeding or any claim asserted), to which they or any
of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Fund Registration Statement, Fund
Prospectus (or any amendment or supplement thereto)
or sales literature or other promotional material
of the Fund, or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading in light of the circumstances in which
they were made; provided that this obligation to
indemnify shall not apply if such statement or
omission or alleged statement or alleged omission
was made in reliance upon and in conformity with
information furnished in writing by the Company to
the Fund for use in the Fund Registration
Statement, Fund Prospectus (or any amendment or
supplement thereto) or sales literature for the
Fund or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(b) arise out of or are based upon any untrue
statement or alleged untrue statement of a
material fact made by the Fund (other than
statements or representations contained in
the Fund Registration Statement, Fund
Prospectus or sales literature or other
promotional material of the Fund not
supplied by the Distributor or the Fund or
persons under their control) or wrongful
conduct of the Fund or persons under its
control with respect to the sale or
distribution of the Contracts or Fund
shares; or
(c) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Contract's Registration Statement, Contracts
Prospectus or sales literature or other promotional
material for the Contracts (or any amendment or
supplement thereto), or the omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such
statement or omission was made in reliance upon
information furnished in writing by the Fund to the
Company (or a person authorized in writing to do so
on behalf of the Fund); or
(d) arise as a result of any failure by the Fund to
provide the services and furnish the materials
under the terms of this Agreement (including, but
not by way of limitation, a failure, whether
14
unintentional or in good faith or otherwise: (i) to
comply with the diversification requirements
specified in Sections 2.4 and 6.1 in Article VI of
this Agreement; and (ii) to provide the Company
with accurate information sufficient for it to
calculate its accumulation and/or annuity unit
values in timely fashion as required by law and by
the Contracts Prospectuses); or
(e) arise out of any material breach by the Fund of
this Agreement.
This indemnification will be in addition to any liability which the Fund may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
8.3. INDEMNIFICATION PROCEDURES. After receipt by a party
entitled to indemnification ("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.
15
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 ________,
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 Fund
are not available to meet the requirements of the
Contracts as determined by the Company. Prompt
notice of the election to terminate for such cause
shall be furnished by the Company. Termination
shall be effective ten days after the giving of
notice by the Company; or
(c) at the option of the Fund upon institution of
formal proceedings against the Company by the NASD,
the SEC, the insurance commission of any state or
any other regulatory body regarding the Company's
duties under this Agreement or related to the sale
of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of
Fund shares;
(d) at the option of the Company upon institution of
formal proceedings against the Fund, the investment
advisor or any sub-investment advisor, by the NASD,
the SEC, or any state securities or insurance
commission or any other regulatory body; or
(e) upon requisite vote of the Contract owners having
an interest in the Fund (unless otherwise required
by applicable law) and written approval of the
Company, to substitute the shares of another
investment company for the corresponding shares of
the Fund in accordance with the terms of the
Contracts; or
16
(f) at the option of the Fund in the event any of the
Contracts are not registered, issued or sold in
accordance with applicable Federal and/or state
law; or
(g) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a
majority of disinterested Fund Board members, that
an irreconcilable material conflict exists among
the interests of (i) any Product owners or (ii) the
interests of the Participating Insurance Companies
investing in the Fund; or
(h) at the option of the Company if the Fund ceases to
qualify as a Regulated Investment Company under
Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably
believes, based on an opinion of its counsel, that
the Fund may fail to so qualify; or
(i) at the option of the Company if the Fund fails to
meet the diversification requirements specified in
Section 817(h) of the Code and any regulations
thereunder; or
(j) at the option of the Fund if the Contracts cease to
qualify as annuity contracts or life insurance
policies, as applicable, under the Code, or if the
Fund reasonably believes that the Contracts may
fail to so qualify; or
(k) at the option of the Fund if the Fund shall
determine, in its sole judgment exercised in good
faith, that either (1) the Company shall have
suffered a material adverse change in its
business or financial condition; or (2) the Company
shall have been the subject of material adverse
publicity which is likely to have a material
adverse impact upon the business and operations of
the Fund; or
(l) at the option of the Company, if the Company shall
determine, in its sole judgment exercised in good
faith, that: (1) the Fund shall have suffered a
material adverse change in its business or
financial condition; or (2) the Fund shall have
been the subject of material adverse publicity
which is likely to have a material adverse impact
upon the business and operations of the Company; or
(m) automatically upon the assignment of this Agreement
(including, without limitation, any transfer of the
Contracts or the Accounts to another insurance
company pursuant to an assumption reinsurance
agreement) unless the non-assigning party consents
thereto or unless
17
this Agreement is assigned to an affiliate of the
Company or the Fund, as the case may be.
10.2. NOTICE REQUIREMENT. Except as otherwise provided in Section
10.1, no termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to the other party
of its intent to terminate, which notice shall set forth the basis for such
termination. Furthermore:
(a) In the event that any termination is based
upon the provisions of Article VII or the
provisions of Section 10.1(a) of this
Agreement, such prior written notice shall
be given in advance of the effective date of
termination as required by such provisions; and
(b) in the event that any termination is based
upon the provisions of Section 10.1(c) or
10.1(d) of this Agreement, such prior
written notice shall be given at least
ninety (90) days before the effective date
of termination, or sooner if required by law
or regulation.
10.3. EFFECT OF TERMINATION
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, the
Fund will, at the option of the Company, continue
to make available additional Fund shares for so
long after the termination of this Agreement as the
Company desires, pursuant to the terms and
conditions of this Agreement as provided in
paragraph (b) below, for all Contracts in effect on
the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the Company so
elects to make additional Fund shares available,
the owners of the Existing Contracts or the
Company, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in
the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional
purchase payments under the Existing Contracts.
(b) If Fund shares continue to be made available
after such termination, the provisions of
this Agreement shall remain in effect except
for Section 10.1(a) and thereafter either
the Fund or the Company may terminate the
Agreement, as so continued pursuant to this
Section 10.3, upon prior written notice to
the other party, such notice to be for a
period that is reasonable under the
circumstances but, if given by the Fund,
need not be for more than six months.
18
(c) The parties agree that this Section 10.3
shall not apply to any termination made
pursuant to Article VII, and the effect of
such Article VII termination shall be
governed by the provisions set forth or
incorporated by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTACTS
The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the Contracts
and to add new classes of variable annuity contracts and variable life insurance
policies to be issued by the Company through new or existing Separate Accounts
investing in the Fund. The provisions of this Agreement shall be equally
applicable to each such separate account and each such class of contracts or
policies, unless the context otherwise requires. Any such amendment must be
signed by the parties and must bear an effective date for that amendment.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party(ies) at the address of such party(ies) set
forth below or at such other address as such party(ies) may from time to time
specify in writing to the other party.
If to the Fund:
Lincoln National Money Market Fund, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
If to the Company:
--------------------
--------------------
--------------------
Attn:
--------------------
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.
19
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.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
LINCOLN NATIONAL MONEY MARKET FUND, INC.
Signature:________________________________________________
Name: ____________________________________________________
Title: ___________________________________________________
(Company)
Signature:________________________________________________
Name: ____________________________________________________
Title: ___________________________________________________
20
