PRINCIPAL UNDERWRITING AGREEMENT
THIS AGREEMENT is entered into on this 30th day of January, 1999 between
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LLANY"), a life insurance company
organized under the laws of the State of New York, on behalf of itself and the
separate accounts established by LLANY pursuant to New York Insurance law and
set forth in Schedule A hereto (each a "Separate Account" and collectively the
"Separate Accounts"), and LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), a
corporation organized under the laws of the State of Indiana. Both LLANY and
LFA are indirect subsidiaries of Lincoln National Corporation.
WITNESSETH:
WHEREAS, LLANY proposes to issue to the public certain variable annuity
contracts and variable life insurance policies ("Contracts") and has, by
resolution of its Board of Directors, authorized the creation of segregated
investment accounts in connection therewith; and
WHEREAS, LLANY has established each Separate Account for the purpose of
issuing the Contracts and has registered each such Separate Account with the
Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, interests in the Separate Account portion of the Contracts to be
issued by LLANY are registered (unless an exemption from registration is
available) with the Commission under the Securities Act of 1933 as amended (the
"1933 Act") for offer and sale to the public, and otherwise are in compliance
with all applicable laws; and
WHEREAS, LFA is a broker-dealer registered under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and a member of the National
Association of Securities Dealers, Inc., and proposes to enter into selling
agreements for the distribution of said Contracts, as well as to sell said
Contracts directly; and
WHEREAS, LLANY desires to obtain the services of LFA as principal
underwriter of the Contracts issued by LLANY through the Separate Accounts;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, LLANY and LFA hereby agree as follows:
DUTIES OF LFA
1. LFA will form a selling group by entering into selling group
agreements with broker-dealers which have as associated individuals persons who
are licensed to sell insurance pursuant to the laws of the state of New York, or
any other state in which LLANY determines to issue Contracts ("Relevant State"),
and appointed by LLANY to distribute the Contracts which
are issued by LLANY through the Separate Accounts and interests in the
Separate Account portion of which are registered (unless an exemption from
registration is available) with the Commission under the 1933 Act for offer
and sale to the public.
2. LFA will enter into and maintain a selling group agreement on behalf
of itself and LLANY with each broker-dealer (which has as associated persons
individuals who are licensed to sell insurance pursuant to the laws of the state
of New York or any Relevant State and appointed by LLANY to distribute the
Contracts) joining such selling group ("member"). An executed copy of each such
selling group agreement will be provided to LLANY. Any such selling group
agreement will expressly be made subject to this Agreement. Any such selling
group agreement will provide: (i) that each member will distribute the Contracts
only in New York or any Relevant State in which the Contracts may be legally
sold and only through duly licensed registered representatives of the members
who are fully licensed and appointed with LLANY to sell the Contracts in New
York or any Relevant State; (ii) that all applications and initial and
subsequent payments under the Contracts collected by the member will be
forwarded promptly by the member to LLANY or its designee 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 in the sale of the
Contracts.
3. LFA will not distribute any prospectus, sales literature, advertising
material or any other printed matter or material relating to the Contracts or
the mutual funds available as funding options under the Contracts ("Funds") if,
to its knowledge, it misstates any of the foregoing relating to the duties,
obligations or liabilities of LLANY or LFA. LFA will be responsible for filing
sales literature and advertising material, if necessary, with appropriate
federal regulatory authorities, including the NASD Regulation, Inc. and the
National Association of Securities Dealers, Inc. (collectively "NASD").
4 LFA shall not be responsible for (I) taking or transmitting
applications for the Contracts; (ii) examine or inspecting risks or approving,
issuing or delivering Contracts; (iii) receiving, collecting or transmitting
payments; (iv) assisting in the completion of applications for Contracts; and
(v) otherwise offering and selling Contracts directly to the public, except
insofar as LFA shall sell Contracts directly through its own associated persons.
5. LFA will advise LLANY immediately upon LFA becoming aware of: (a) any
request by the Commission for amendment of the registration statement relating
to the Contracts or the Funds or 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 Funds or the initiation of any
proceeding for that purpose; (c) the institution of any proceeding,
investigation or hearing involving the offer or sale of the Contracts or the
Funds 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 Funds or which requires the making of a change therein in
order to make any statement made therein not misleading.
DUTIES OF LLANY
6. LLANY or its agent will receive and process applications and premium
payments in accordance with the terms of the Contracts. All applications for
Contracts are subject to acceptance or rejection by LLANY in its sole
discretion. LLANY will inform LFA of any such rejection and the reason
therefor.
7. LLANY will be responsible for filing the Contracts, applications,
forms, sales literature and advertising material, where necessary, with
appropriate insurance regulatory authorities. LLANY 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 the
underlying Funds. LLANY will use reasonable efforts to ensure that members
deliver to customers and prospective customers only the currently effective
prospectuses of the Contracts and the Funds. LFA and LLANY will cooperate in
the development of advertising and sales literature, as each may request the
other. LLANY 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 and which has been
authorized by LLANY and LFA.
8. LLANY will furnish to LFA such information with respect to the
Separate Account and Contracts in such form and signed by such of its officers
as LFA may reasonably request, and will warrant that the statements therein
contained when so signed will be true or correct. LLANY will advise LFA
immediately of: (a) any request by the Commission for amendment of the
registration statement relating to the Contracts or any Fund or for additional
information; (b) the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement for the Contracts or of any Fund or
the initiation of any proceeding for that purpose; (c) the institution of any
proceeding, investigation, hearing or other action involving the offer or sale
of the Contracts or the Funds of which it becomes aware; (d) the happening of
any material event, if known, which makes untrue any statement made in the
registration statement for the Contracts or any Fund or which requires the
making of a change therein in order to make any statement made therein not
misleading.
9. LLANY will use reasonable efforts to register for sale an indefinite
amount of securities under the 1933 Act pursuant to Rule 24f-2 under the 1940
Act, and, should it ever be required, under state securities laws and to file
for approval under state insurance laws when necessary. LLANY will maintain the
registration of each Separate Account under the 1940 Act and of its securities
under the 1933 Act.
10. LLANY will pay to members of the selling group such commissions on
behalf of and as agent of LFA, as are from time to time set forth in selling
group agreements. LLANY shall pay such commissions and service fees in
compliance with applicable state insurance laws, applicable federal securities
laws and the rules and regulations of the NASD. Such selling group agreements
shall provide for the return of sales commissions by the members to LLANY if
Contracts are tendered for redemption to LLANY in accordance with the right to
examine or similarly worded provision in the Contracts.
11. LLANY will bear its expenses of providing services under this
Agreement, including but not limited to, the cost of preparing (including
typesetting costs), printing and mailing of prospectuses of the Contracts to
Contract owners, expenses and fees of registering or qualifying the Contracts or
interests therein and the Separate Account under federal or state laws, and any
expenses incurred by its employees in assisting LFA in performing its duties
hereunder. LLANY will reimburse LFA for its services and for the services of
its salaried employees, and provide reimbursement for its charges and expenses.
WARRANTIES
12. LLANY represents and warrants to LFA that (i) registration statements
(including amendments thereto) under the 1933 Act and under the 1940 Act with
respect to the Contracts and the Separate Accounts have been filed with the
Commission in the form previously delivered to LFA, and copies of any and all
amendments thereto will be forwarded to LFA at the time that they are filed with
the Commission; (ii) the registration statements and any amendments or
supplements thereto which have become effective, conform in all material
respects to the requirements of the 1933 Act and the 1940 Act, and the rules and
regulations of the Commission thereunder, and do not and will not contain any
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 LLANY by LFA expressly for use therein; (iii) LLANY is
validly existing as a stock life insurance company in good standing under the
laws of the State of New York, 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; (vi) the Contracts
to be issued through the Separate Accounts have been duly and validly authorized
and, when issued and delivered against payment therefor as provided in the
prospectus and in the Contracts, will be duly and validly issued and conform to
the description of such Contracts contained in the prospectus relating thereto;
(vi) LLANY will only accept applications submitted by and pay commissions to
persons who, to the best of LLANY's knowledge, are appropriately licensed to
offer and sell the Contracts 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 LLANY is a party or by which LLANY is bound, LLANY'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 LLANY 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 LLANY of
the transactions contemplated by this Agreement; and (vii) there are no material
legal or governmental proceedings pending to which LLANY or any Separate Account
is a party or of which any property of LLANY or any Separate Account is
subject, other than litigation incidental to the
kind of business conducted by LLANY which, if determined adversely to LLANY,
would not individually or in the aggregate have a material adverse effect on
the financial position, surplus or operations of LLANY.
13. LFA represents and warrants to LLANY 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 LFA 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 LFA is a party or by
which LFA is bound, the Certificate of Incorporation or By-Laws of LFA, or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over LFA or its property; and (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 LLANY that the
subject registration statements have been declared effective and the
Contracts have been released for sale by LLANY, 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 LLANY;
(iv) it will comply in all material respects with the requirements of state
broker-dealer regulations and the 1934 Act as each applies to LFA and shall
conduct its affairs in accordance with the Rules of the NASD; and (v) any
information furnished in writing by LFA to LLANY for use in the registration
statement for the Contracts will not result in the registration's failing to
conform in all respects to the requirements of the 1933 Act 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.
MISCELLANEOUS
14. LFA shall maintain and preserve for the periods prescribed by law or
other agreement such accounts, books and other documents as are required of it
by applicable law and regulation. The books, records and accounts of LLANY, of
each Separate Account and LFA as to all transactions hereunder shall be
maintained such that they clearly and accurately disclose the nature and details
of such transaction, including such accounting information as is necessary to
support the reasonableness of the amounts to be paid by LLANY.
15. LFA 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. LFA does, however, represent that will actively
engage in its duties under this Agreement on a continuous basis while the
Agreement is in effect.
16. LFA may act as principal underwriter, sponsor, distributor or dealer
for issuers other than LLANY or its affiliates in connection with mutual funds
or insurance products and otherwise.
17. Nothing in this Agreement shall obligate LLANY to appoint any member
or representative of a member its agent for purposes of the distribution of the
Contracts. Nothing in this Agreement shall be construed as requiring LFA to
effect sales of the Contracts directly to the public or act as an insurance
agent or insurance broker on behalf of LLANY for purposes of state insurance
laws.
18. LFA agrees to indemnify LLANY (or any control person, shareholder,
director, officer or employee of LLANY) for any liability incurred (including
costs relating to defense of any action) arising out of any action) arising out
of any LFA 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 LLANY or from the reckless disregard by LLANY of
the duties and obligations arising under this Agreement.
19. LLANY agrees to indemnify LFA (or any control person, shareholder,
director, officer or employee of LFA) for any liability incurred (including
costs relating to defense of any action) arising out of any LLANY 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 and gross
negligence of LFA or from the reckless disregard by LFA of the duties and
obligations arising this Agreement.
20. This Agreement will terminate automatically upon its assignment, as
that term is defined in the 1940 Act. 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 LLANY upon six months advance written notice to LFA; or
b. at the option of LFA upon six months advance written notice to LLANY; or
c. at the option of LLANY upon institution of formal proceedings against
LFA by regulatory body;
d. at the option of LF A upon the institution of formal proceedings against
LLANY by the Department of Insurance of a state or any other federal or
state regulatory body;
e. as otherwise required by the Investment Company Act of 1940;
f. at the option of either party upon the termination of the Administrative
Service Agreement(s) entered into between the Lincoln National Life
Insurance Company and the UNUM Life Insurance Company of America and/or
affiliates of each.
21. Each notice required by this Agreement shall be given in writing and
delivered by certified mail-return receipt requested.
22. This agreement shall be subject to the laws of the State of New York
and construed so as to interpret the Contracts as insurance products written
within the business operation of LLANY.
23. This Agreement covers and includes all agreements, oral and written
(expressed or implied) between LLANY and LFA 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.
24. This Agreement may be amended from time to time by mutual agreement
and consent of the undersigned parties, provided such amendment is in writing
and duly executed.
25. Schedule A hereto may be amended unilaterally by LLANY from time to
time by written notice to LFA.
This Agreement shall become effective on January 30, 1999
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
duly executed and attested on the date first stated above.
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
Attest:
By:
------------------------------ --------------------------------
LINCOLN FINANCIAL ADVISORS CORPORATION
Attest:
By:
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SCHEDULE A
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
SEPARATE ACCOUNTS
Lincoln Life & Annuity Variable Annuity Account L
(Group Variable Annuity I)
Established 7/24/96
Lincoln Life & Annuity Variable Annuity Account L
(Group Variable Annuity II)
Established 7/24/96
Lincoln Life & Annuity Variable Annuity Account L
(Group Variable Annuity III)
Established 7/24/96
Lincoln Life & Annuity Flexible Premium Variable Life Account J
Established 8/4/97
Lincoln Life & Annuity Flexible Premium Variable Life Account M
Established 11/24/97
LLANY Account Q for Variable Annuities
Established 1/29/98
LLANY Separate Account R for Flexible Premium Variable Life Insurance
Established 1/29/98
LLANY Separate Account S for Flexible Premium Variable Life Insurance
Established 11/2/98
