Exhibit 8 (k)
PARTICIPATION AGREEMENT
AMONG
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
LINCOLN FINANCIAL ADVISORS CORPORATION,
ALLIANCE CAPITAL MANAGEMENT L.P.
AND
ALLIANCE FUND DISTRIBUTORS, INC.
DATED AS OF
MAY 1, 2000
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of May, 2000
("Agreement"), by and among Lincoln Life & Annuity Company of New York, a New
York life insurance company ("Insurer") (on behalf of itself and its "Separate
Account," defined below). Lincoln Financial Advisors Corporation, an Indiana
corporation ("Contracts Distributor"), the principal underwriter with respect to
the Contracts referred to below; Alliance Capital Management L.P., a Delaware
limited partnership ("Adviser"), the investment adviser of the Fund referred to
below; and Alliance Fund Distributors, Inc., a Delaware corporation
("Distributor"), the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and Alliance Variable Products Series
Fund, Inc. (the "Fund") desire that Class B shares of the Fund's Portfolios
listed in Schedule A, as may be amended from time to time (the "Portfolios";
reference herein to the "Fund" includes reference to each Portfolio to the
extent the context requires) be made available by Distributor to serve as
underlying investment media for variable annuity contracts and variable life
insurance policies issued by Insurer listed in Schedule B, as may be amended
from time to time to be offered through Contracts Distributor; and
WHEREAS the Contracts provide for the allocation of net amounts received by
Insurer to separate series (the "Subaccounts"; reference herein to the "Separate
Account" includes reference to each Subaccount to the extent the context
requires) of the Separate Account for investment in Class B shares of
corresponding Portfolios of the Fund that are made available through the
Separate Account to act as underlying investment media,
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NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and Distributor will make Class B shares of the
Portfolios available to Insurer for this purpose at net asset value and with no
sales charges, all subject to the following provisions:
Section 1. Additional Portfolios
--------------------------------
The Fund has and may, from time to time, add additional Portfolios, which
will become subject to this Agreement, if, upon the written consent of each of
the Parties hereto, they are made available as investment media for the
Contracts.
Section 2. Processing Transactions
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2.1 Timely Pricing and Orders.
-------------------------
The Adviser or its designated agent will provide closing net asset value,
dividend and capital gain information for each Portfolio to Insurer at the close
of trading on each day (a "Business Day") on which the New York Stock Exchange
is open for regular trading. The Fund or its designated agent will use its best
efforts to provide this information by 6:00 p.m., New York time, using a
mutually agreed upon format. Insurer will use these data to calculate unit
values, which in turn will be used to process transactions that receive that
same Business Day's Separate Account Subaccount's unit values. Such Separate
Account processing will be done the same evening, and corresponding orders with
respect to Fund shares will be placed the morning of the following Business Day.
Insurer will use its best efforts to place such orders with the Fund by 10:30
a.m., New York time.
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2.2 Timely Payments.
---------------
Insurer will transmit orders for purchases and redemptions of Fund shares
to Distributor, and will wire payment for net purchases to a custodial account
designated by the Fund on the day the order for Fund shares is placed, to the
extent practicable. Payment for shares purchased shall be made in federal funds
transmitted by wire by 2:00 p.m. New York time as long as the banking system is
open for business. If the banking system is closed, payment will be transmitted
the next day that the banking system is open for business. If payment is
received by the Fund after 2:00 p.m. New York time on such Business Day, Insurer
shall, upon the Fund's request, promptly reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred in connection with any
advances, borrowing, or overdrafts. The Fund will confirm receipt of each
purchase (using a mutually agreed upon format) by 1:00 p.m. New York time on the
Business Day the trade is placed. Payment for net redemptions will be wired by
the Fund to an account designated by Insurer on the same day as the order is
placed, to the extent practicable. The Fund agrees to redeem, upon Insurer's
request, any full or fractional shares of the designated Portfolio held by
Insurer. Payment for shares redeemed shall be made in federal funds transmitted
by wire by 2:00 p.m. New York time as long as the banking system is open for
business. If the banking system is closed, payment will be transmitted the next
day that the banking system is open for business. If payment is received by
Insurer after 2:00 p.m. New York time on such Business Day, the Fund shall, upon
the Insurer's request, promptly reimburse Insurer for any charges, costs, fees,
interest or other expenses incurred in connection with any advances, borrowing,
or overdrafts. The Fund will confirm receipt of each redemption (using a
mutually agreed upon format) by 1:00 p.m. New York time on the Business Day the
trade is placed. In any event payment will be made within six calendar days
after the date the order is placed in order
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to enable Insurer to pay redemption proceeds within the time specified in
Section 22(e) of the Investment Company Act of 1940, as amended (the "1940
Act").
2.3 Applicable Price.
----------------
The Parties agree that Portfolio share purchase and redemption orders
resulting from Contract owner purchase payments, surrenders, partial
withdrawals, routine withdrawals of charges, or other transactions under
Contracts will be executed at the net asset values as determined as of the close
of regular trading on the New York Stock Exchange on the Business Day that
Insurer receives such orders and processes such transactions, which, Insurer
agrees shall occur not earlier than the Business Day prior to Distributor's
receipt of the corresponding orders for purchases and redemptions of Portfolio
shares. For the purposes of this section, Insurer shall be deemed to be the
agent of the Fund for receipt of such orders from holders or applicants of
contracts, and receipt by Insurer shall constitute receipt by the Fund. All
other purchases and redemptions of Portfolio shares by Insurer, will be
effected at the net asset values next computed after receipt by Distributor of
the order therefor, and such orders will be irrevocable. Insurer hereby elects
to reinvest all dividends and capital gains distributions in additional shares
of the corresponding Portfolio at the record-date net asset values until Insurer
otherwise notifies the Fund in writing, it being agreed by the Parties that the
record date and the payment date with respect to any dividend or distribution
will be the same Business Day.
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Section 3. Costs and Expenses
-----------------------------
3.1 General.
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Except as otherwise specifically provided herein, each Party will bear all
expenses incident to its performance under this Agreement.
3.2 Registration.
------------
The Fund will bear the cost of its registering as a management investment
company under the 1940 Act and registering its shares under the Securities Act
of 1933, as amended (the "1933 Act"), and keeping such registrations current and
effective; including, without limitation, the preparation of and filing with the
SEC of Forms N-SAR and Rule 24f-2 Notices respecting the Fund and its shares and
payment of all applicable registration or filing fees with respect to any of the
foregoing. Insurer will bear the cost of registering the Separate Account as a
unit investment trust under the 1940 Act (unless exempt therefrom) and
registering units of interest under the Contracts under the 1933 Act (unless
exempt therefrom) and keeping such registrations current and effective;
including, without limitation, the preparation and filing with the SEC of Forms
N-SAR and Rule 24f-2 Notices respecting the Separate Account and its units of
interest (unless exempt therefrom) and payment of all applicable registration or
filing fees with respect to any of the foregoing.
3.3 Other (Non-Sales-Related) Expenses.
----------------------------------
The Fund will bear the costs of preparing, filing with the SEC and setting
for printing the Fund's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Fund Prospectus"),
periodic reports to shareholders, Fund proxy material and other shareholder
communications and any related requests for voting instructions from
Participants (as defined below). Insurer will bear the costs of preparing,
filing with the SEC and setting for printing,
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the Separate Account's prospectus, statement of additional information and any
amendments or supplements thereto (collectively, the "Separate Account
Prospectus"), any periodic reports to owners, annuitants or participants under
the Contracts (collectively, "Participants"), and other Participant
communications. The Fund and Insurer each will bear the costs of printing in
quantity and delivering to existing Participants the documents as to which it
bears the cost of preparation as set forth above in this Section 3.3, it being
understood that reasonable cost allocations will be made in cases where any such
Fund and Insurer documents are printed or mailed on a combined or coordinated
basis. If requested by Insurer, the Fund will provide annual Prospectus text to
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Insurer on diskette (or by other means as may be mutually agreed upon) for
printing and binding with the Separate Account Prospectus.
3.4 Other Sales-Related Expenses.
----------------------------
Expenses of distributing the Portfolio's shares and the Contracts will be
paid by Contracts Distributor and Insurer and other parties, as they shall
determine by separate agreement.
3.5 Parties to Cooperate.
--------------------
The Adviser, Insurer, Contracts Distributor and Distributor each agrees to
cooperate with the others, as applicable, in arranging to print, mail and/or
deliver combined or coordinated prospectuses or other materials of the Fund and
Separate Account.
Section 4. Legal Compliance
---------------------------
4.1 Tax Laws.
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(a) The Adviser will use its best efforts to qualify and to maintain
qualification of each Portfolio as a regulated investment company ("RIC") under
Subchapter M of the Internal
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Revenue Code of 1986, as amended (the "Code"), and the Adviser or Distributor
will notify Insurer immediately upon having a reasonable basis for believing
that a Portfolio has ceased to so qualify or that it might not so qualify in the
future.
(b) Insurer represents that it believes, in good faith, that the
Contracts will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code and that it will make every effort to maintain
such treatment. Insurer will notify the Fund and Distributor immediately upon
having a reasonable basis for believing that any of the Contracts have ceased to
be so treated or that they might not be so treated in the future.
(c) The Adviser and the Distributor represent and warrant that the Fund
currently qualifies as a Regulated Investment Company under Subchapter M of the
Code and will make every effort to continue to qualify and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that they will notify the company immediately upon having a reasonable basis for
believing that the Fund has ceased to so qualify or that it might not so qualify
in the future. The Adviser and the Distributor represent and warrant that the
Fund will comply with Section 8 17(h) of the Code, and all regulations issued
thereunder. In the event of a breach of this Section the Adviser and the
Distributor will: a) immediately notify the Insurer of such breach; and (b) take
the steps necessary to adequately diversify each portfolio so as to achieve such
compliance within the period allowed by regulation.
(d) Insurer represents that it believes, in good faith, that the Separate
Account is a "segregated asset account" and that interests in the Separate
Account are offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section 8 17(h) of
the Code and the regulations thereunder. Insurer will make every effort to
continue to meet
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such definitional requirements, and it will notify the Fund and Distributor
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future.
(e) The Adviser will manage the Fund as a RIC in compliance with
Subchapter M of the Code and will use its best efforts to manage to be in
compliance with Section 8 17(h) of the Code and regulations thereunder. The Fund
has adopted and will maintain procedures for ensuring that the Fund is managed
in compliance with Subchapter M and Section 8 17(h) and regulations thereunder.
(f) Should the Distributor or Adviser become aware of a failure of Fund,
or any of its Portfolios, to be in compliance with Subchapter M of the Code or
Section 8 17(h) of the Code and regulations thereunder, they represent and agree
that they will immediately notify Insurer of such in writing.
(g) The Distributor agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts. No shares of any
Portfolio will be sold to the general public.
4.2 Insurance and Certain Other Laws.
--------------------------------
(a) The Adviser will use its best efforts to cause the Fund to comply
with any applicable state insurance laws or regulations, to the extent
specifically requested in writing by Insurer. If it cannot comply, it will so
notify Insurer in writing.
(b) Insurer represents and warrants that (i) it is an insurance company
duly organized and validly existing under the laws of the State of New York and
has full corporate power, authority and legal right to execute, deliver and
perform its duties and comply with its obligations under this
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Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under New York Law and (iii) the
Contracts comply in all material respects with all other applicable federal and
state laws and regulations.
(c) Contracts Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Indiana and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(d) Distributor represents and warrants that it is a business corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.
(e) Distributor represents and warrants that the Fund is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Maryland and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
(f) Adviser represents and warrants that it is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
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4.3 Securities Laws.
---------------
(a) Insurer represents and warrants that (i) interests in the Separate
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act and the Contracts will be duly authorized for
issuance and sold in compliance with applicable state law, (ii) the Separate
Account is and will remain registered under the 1940 Act to the extent required
by the 1940 Act (unless exempt therefrom), (iii) the Separate Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder (unless exempt therefrom), (iv) the Separate Account's 1933
Act registration statement relating to the Contracts, together with any
amendments thereto, will, at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder (unless exempt therefrom),
and (v) the Separate Account Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder (unless
exempt therefrom).
(b) The Adviser and Distributor represent and warrant that (i) Fund shares
sold pursuant to this Agreement will be registered under the 1933 Act to the
extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will remain registered under
the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will amend
the registration statement for its shares under the 1933 Act and itself under
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares, (iv) the Fund does and will comply in all material
respects with the requirements of the 1940 Act and the rules thereunder, (v) the
Fund's 1933 Act registration statement, together with any amendments thereto,
will at all times comply in all material respects with the requirements of the
1933 Act and rules thereunder, and (vi) the Fund Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
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(c) The Fund will register and qualify its shares for sale in accordance
with the laws of any state or other jurisdiction only if and to the extent
reasonably deemed advisable by the Fund, Insurer or any other life insurance
company utilizing the Fund.
(d) Distributor and Contracts Distributor each represents and warrants
that it is registered as a broker-dealer with the SEC under the Securities
Exchange Act of 1934, as amended, and is a member in good standing of the
National Association of Securities Dealers Inc. (the "NASD").
4.4 Notice of Certain Proceedings and Other Circumstances.
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(a) Distributor or the Fund shall immediately notify Insurer of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Fund Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of the Fund's shares, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Fund shares in any
state or jurisdiction, including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law or (y) such law
precludes the use of such shares as an underlying investment medium of the
Contracts issued or to be issued by Insurer. Distributor and the Fund will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Insurer and Contracts Distributor shall immediately notify the Fund of
(i) the issuance by any court or regulatory body of any stop order, cease and
desist order or similar order with respect to the Separate Account's
registration statement under the 1933 Act relating to the Contracts or the
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Separate Account Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Separate Account Prospectus, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of the Separate Account interests pursuant to the
Contracts, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Insurer and Contracts Distributor will make every reasonable effort
to prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting thereof at
the earliest possible time.
4.5 Insurer to Provide Documents.
----------------------------
Upon reasonable request, Insurer will provide the Fund and the Distributor
one complete copy of SEC registration statements, Separate Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and amendments to
any of the above, that relate to the Separate Account or the Contracts, and
their investment in the Fund, within 20 days of the filing of such document with
the SEC or other regulatory authorities.
4.6 Fund to Provide Documents.
-------------------------
Upon reasonable request, the Fund will provide to Insurer one complete copy
of SEC registration statements, Fund Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its
shares, within 20 days of the filing of such document with the SEC or other
regulatory authorities.
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Section 5. Mixed and Shared Funding
-----------------------------------
5.1 General.
The Fund has obtained an order exempting it from certain provisions of the
1940 Act and rules thereunder so that the Fund is available for investment by
certain other entities, including, without limitation, separate accounts funding
variable life insurance policies and separate accounts of insurance companies
unaffiliated with Insurer ("Mixed and Shared Funding Order"). The Parties
recognize that the SEC has imposed terms and conditions for such orders that are
substantially identical to many of the provisions of this Section 5.
5.2 Disinterested Directors.
-----------------------
The Fund agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of Adviser or Distributor within the meaning of Section 2(a)(19) of the
1940 Act.
5.3 Monitoring for Material Irreconcilable Conflicts.
------------------------------------------------
The Fund agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
participants in all separate accounts of life insurance companies utilizing the
Fund, including the Separate Account. Insurer agrees to inform the Board of
Directors of the Fund of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
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(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract participants or by participants of
different life insurance companies utilizing the Fund; or
(f) a decision by a life insurance company utilizing the Fund to disregard
the voting instructions of participants.
Insurer will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably requested and necessary for the Board of Directors to consider any
issue raised, including information as to a decision by Insurer to disregard
voting instructions of Participants.
5.4 Conflict Remedies.
-----------------
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Insurer and the other life insurance
companies utilizing the Fund will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take
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whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict, which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in
a different investment medium, including another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected participants and, as
appropriate, segregating the assets of any particular group (e.g.,
annuity contract owners or participants, life insurance contract
owners or all contract owners and participants of one or more life
insurance companies utilizing the Fund) that votes in favor of such
segregation, or offering to the affected contract owners or
participants the option of making such a change; and
(ii) establishing a new registered investment company of the type defined
as a "Management Company" in Section 4(3) of the 1940 Act or a new
separate account that is operated as a Management Company.
(b) If the material irreconcilable conflict arises because of Insurer's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, Insurer may be
required, at the Fund's election, to withdraw the Separate Account's investment
in the Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the Fund
gives notice to Insurer that this provision is being implemented, and until such
withdrawal Distributor and the Fund shall continue to accept and implement
orders by Insurer for the purchase and redemption of shares of the Fund or upon
receipt of a substitution order granted by the SEC, whichever is later.
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(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurer conflicts with the
majority of other state regulators, then Insurer will withdraw the Separate
Account's investment in the Fund within six months after the Fund's Board of
Directors informs Insurer that it has determined that such decision has created
a material irreconcilable conflict, and until such withdrawal Distributor and
Fund shall continue to accept and implement orders by Insurer for the purchase
and redemption of shares of the Fund or upon receipt of a substitution order
granted by the SEC, whichever is later.
(d) Insurer agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will the Insurer, Fund or
Distributor be required to establish a new funding medium for any Contracts.
Insurer will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to Insurer.
-----------------
The Fund will promptly make known in writing to Insurer the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
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5.6 Information Requested by Board of Directors.
-------------------------------------------
Insurer and the Fund will at least annually submit to the Board of
Directors of the Fund such reports, materials or data as the Board of Directors
may reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
-------------------------
If, at any time during which the Fund is serving an investment medium for
variable life insurance policies; 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
mixed and shared funding, the Parties agree that they will comply with the terms
and conditions thereof and that the terms of this Section 5 shall be deemed
modified if and only to the extent required in order also to comply with the
terms and conditions of such exemptive relief that is afforded by any of said
rules that are applicable.
Section 6. Termination
----------------------
6.1 Events of Termination.
---------------------
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
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(a) at the option of Insurer or Distributor upon at least six months
advance written notice to the other Parties, or
(b) at the option of the Fund upon (i) at least sixty days advance written
notice to the other parties, and (ii) approval by a majority vote of the shares
of the affected Portfolio in the corresponding Subaccount of the Separate
Account (pursuant to the procedures set forth in Section 11 of this Agreement
for voting Trust shares in accordance with Participant instructions).
(c) at the option of the Fund upon institution of formal proceedings
against Insurer or Contracts Distributor by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding Insurer's obligations
under this Agreement or related to the sale of the Contracts, the operation of
the Separate Account, or the purchase of the Fund shares, if, in each case, the
Fund reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Portfolio to be terminated; or
(d) at the option of Insurer upon institution of formal proceedings
against the Fund, Adviser, or Distributor by the NASD, the SEC, or any state
insurance regulator or any other regulatory body regarding the Fund's, Adviser's
or Distributor's obligations under this Agreement or related to the operation or
management of the Fund or the purchase of Fund shares, if, in each case, Insurer
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on Insurer, Contracts Distributor or the Subaccount
corresponding to the Portfolio to be terminated; or
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(e) at the option of any Party in the event that (i) the Portfolio's
shares are not registered and, in all material respects, issued and sold in
accordance with any applicable state and federal law or (ii) such law precludes
the use of such shares as an underlying investment medium of the Contracts
issued or to be issued by Insurer; or
(f) upon termination of the corresponding Subaccount's investment in the
Portfolio pursuant to Section 5 hereof; or
(g) at the option of Insurer if the Portfolio ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions; or
(h) at the option of Insurer if the Portfolio fails to comply with Section
817(h) of the Code or with successor or similar provisions; or
(i) at the option of Insurer if Insurer reasonably believes that any
change in a Fund's investment adviser or investment practices will materially
increase the risks incurred by Insurer.
6.2 Funds to Remain Available.
-------------------------
Except (i) as necessary to implement Participant-initiated transactions,
(ii) as required by state insurance laws or regulations, (iii) as required
pursuant to Section 5 of this Agreement, (iv) with respect to any Portfolio as
to which this Agreement has terminated, or (v) pursuant to an SEC approved
Substitution Order, Insurer shall not (x) redeem Fund shares attributable to the
Contracts, or (y) prevent Participants from allocating payments to or
transferring amounts from a Portfolio that was otherwise available under the
Contracts, until, in either case, 90 calendar days after Insurer shall have
notified the Fund or Distributor of its intention to do so.
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6.3 Survival of Warranties and Indemnifications.
-------------------------------------------
All warranties and indemnifications will survive the termination of this
Agreement.
6.4 Continuance of Agreement for Certain Purposes.
---------------------------------------------
Notwithstanding any termination of this Agreement, the Distributor shall
continue to make available shares of the Portfolios pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (the "Existing Contracts"), except as otherwise
provided under Section 5 of this Agreement. Specifically, and without
limitation, the Distributor shall facilitate the sale and purchase of shares of
the Portfolios as necessary in order to process premium payments, surrenders and
other withdrawals, and transfers or reallocations of values under Existing
Contracts.
Section 7. Parties to Cooperate Respecting Termination
------------------------------------------------------
The other Parties hereto agree to cooperate with and give reasonable
assistance to Insurer in taking all necessary and appropriate steps for the
purpose of ensuring that the Separate Account owns no shares of a Portfolio
after the Final Termination Date with respect thereto except as specified
under Section 6.4 of this Agreement.
Section 8. Assignment
---------------------
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
20
Section 9. Class B Distribution Payments
----------------------------------------
From time to time during the term of this Agreement the Distributor may
make payments to the Contracts Distributor pursuant to a distribution plan
adopted by the Fund with respect to the Class B shares of the Portfolios
pursuant to Rule 12b-1 under the 1940 Act (the "Rule 12b-1 Plan) in
consideration of the Contracts Distributor's furnishing distribution services
relating to the Class B shares of the Portfolios and providing administrative,
accounting and other services, including personal service and/or the maintenance
of Participant accounts, with respect to such shares. The Distributor has no
obligation to make any such payments, and the Contracts Distributor waives any
such payment, until the Distributor receives monies therefor from the Fund. Any
such payments made pursuant to this Section 9 shall be subject to the following
terms and conditions:
(a) Any such payments shall be in such amounts as the Distributor may from
time to time advise the Contracts Distributor in writing but in any event not in
excess of the amounts permitted by the Rule 12b-1 Plan. Such payments may
include a service fee in the amount of .25 of 1% per annum of the average daily
net assets of the Fund attributable to the Class B shares of a Portfolio held by
clients of the Contracts Distributor. Any such service fee shall be paid solely
for personal service and/or the maintenance of Participant accounts.
(b) The provisions of this Section 9 relate to a plan adopted by the Fund
pursuant to Rule 12b-1. In accordance with Rule 12b-1, any person authorized
to direct the disposition of monies paid or payable by the Fund pursuant to this
Section 9 shall provide the Fund's Board of Directors, and the Directors shall
review, at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
(c) The provisions of this Section 9 shall remain in effect for not more
than a year and thereafter for successive annual periods only so long as such
continuance is specifically approved
21
at least annually in conformity with Rule 12b-1 and the 1940 Act. The provisions
of this Section 9 shall automatically terminate in the event of the assignment
(as defined by the 0000 Xxx) of this Agreement, in the event the Rule 12b-1 Plan
terminates or is not continued or in the event this Agreement terminates or
ceases to remain in effect. In addition, the provisions of this Section 9 may be
terminated at any time, without penalty, by either the Distributor or the
Contracts Distributor with respect to any Portfolio on not more than 60 days'
nor less than 30 days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
Section 10. Notices
-------------------
Notices and communications required or permitted by Section 2 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
Lincoln Life & Annuity Company
of New York
000 Xxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxxx, XX 00000
Attn.: Xxxx Xxxxxxx
Lincoln Financial Advisors Corporation
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxx
Alliance Fund Distributors, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn.:Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
22
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxxx
FAX: (000) 000-0000
Section 11. Voting Procedures
-----------------------------
Subject to the cost allocation procedures set forth in Section 3 hereof,
Insurer will distribute all proxy material furnished by the Fund to Participants
(unless exempt therefrom) and will vote Fund shares in accordance with
instructions received from Participants. Unless exempt therefrom, and for each
Separate Account, Insurer will vote Fund shares that are (a) not attributable to
Participants or (b) attributable to Participants, but for which no instructions
have been received, in the same proportion as Fund shares for which said
instructions have been received from Participants. Insurer agrees that it will
disregard Participant voting instructions only to the extent it would be
permitted to do so pursuant to Rule 6e-3 (T)(b)(15)(iii) under the 1940 Act if
the Contracts were variable life insurance policies subject to that rule. Other
participating life insurance companies utilizing the Fund will be responsible
for calculating voting privileges in a manner consistent with that of Insurer,
as prescribed by this Section 11.
Section 12. Foreign Tax Credits
-------------------------------
The Adviser agrees to consult in advance with Insurer concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to the Fund's shareholders.
23
Section 13. Indemnification
---------------------------
13.1 Of Fund, Distributor and Adviser by Insurer.
-------------------------------------------
(a) Except to the extent provided in Sections 13.1(b) and 13.1(c),
below, Insurer agrees to indemnify and hold harmless the Fund, Distributor and
Adviser, each of their directors and officers, and each person, if any, who
controls the Fund, Distributor or Adviser within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 13.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Insurer) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions are related to the sale, acquisition, or holding
of the Fund's shares and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Separate Account's
1933 Act registration statement, the Separate Account Prospectus, the
Contracts or, to the extent prepared by Insurer, sales literature or
advertising for the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to Insurer by or on behalf of
the Fund, Distributor or Adviser for use in the Separate Account's
1933 Act registration
24
statement, the Separate Account Prospectus, the Contracts, or sales
literature or advertising (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or representations
(other than statements or representations contained in the Fund's 1933 Act
registration statement, Fund Prospectus, sales literature or advertising
of the Fund, or any amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of Insurer or the negligent,
illegal or fraudulent conduct of Insurer or persons under their control
(including, without limitation, their employees and "Associated Persons,"
as that term is defined in paragraph (m) of Article I of the NASD's By-
Laws), in connection with the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Fund's 1933 Act
registration statement, Fund Prospectus, sales literature or advertising
of the Fund, or any amendment or supplement to any of the foregoing, 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 if such a statement or omission was made in reliance upon and
in conformity with information furnished to the Fund, Adviser or
Distributor by or on behalf of Insurer for use in the Fund's 1933 Act
registration statement, Fund Prospectus, sales literature or advertising
of the Fund, or any amendment or supplement to any of the foregoing; or
25
(iv) arise as a result of any failure by Insurer to perform the
obligations, provide the services and furnish the materials required
of them under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Insurer in the Agreement.
(b) Insurer shall not be liable under this Section 13.1 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of that Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to Distributor or to the Fund.
(c) Insurer shall not be liable under this Section 13.1 with respect to
any action against an Indemnified Party unless the Fund, Distributor or Adviser
shall have notified Insurer in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Insurer of any such action shall not relieve
Insurer from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 13.1. In
case any such action is brought against an Indemnified Party, Insurer shall be
entitled to participate, at its own expense, in the defense of such action.
Insurer also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from Insurer to such Indemnified Party of
Insurer's election to assume the defense thereof, the Indemnified Party will
cooperate fully with Insurer and shall bear the
26
fees and expenses of any additional counsel retained by it, and Insurer will not
be liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
13.2 Indemnification of Insurer and Contracts Distributor by Adviser and
-------------------------------------------------------------------
Distributor
-----------
(a) Except to the extent provided in Sections 13.2(d) and 13.2(e),
below, Adviser and Distributor agree to indemnify and hold harmless Insurer and
Contracts Distributor, each of their directors and officers, and each person, if
any, who controls Insurer or Contracts Distributor within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 13.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Adviser) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or actions are related to the sale, acquisition, or holding of the Fund's shares
and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Fund's 1933
Act registration statement, Fund Prospectus, sales literature or
advertising of the Fund or, to the extent not prepared by Insurer or
Contracts Distributor, sales literature or advertising for the
Contracts (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such
27
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to
Distributor, Adviser or the Fund by or on behalf of Insurer or
Contracts Distributor for use in the Fund's 1933 Act registration
statement, Fund Prospectus, or in sales literature or advertising
(or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained
in the Separate Account's 1933 Act registration statement, Separate
Account Prospectus, sales literature or advertising for the
Contracts, or any amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of Distributor,
Adviser, or the Fund) or the negligent, illegal or fraudulent
conduct of the Fund, Distributor, Adviser or persons under their
control (including, without limitation, their employees and
Associated Persons), in connection with the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Separate
Account's 1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising covering the Contracts,
or any amendment or supplement to any of the foregoing, 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, if such statement or omission was made in
reliance upon and in conformity with information furnished to
Insurer or Contracts Distributor by or on behalf of the Fund,
Distributor or Adviser for use in the Separate Account's 1933 Act
registration statement, Separate Account Prospectus, sales
28
literature or advertising covering the Contracts, or any amendment
or supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or Distributor
to perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, Adviser, or
Distributor in the Agreement.
(b) Except to the extent provided in Sections 13.2(d) and 13.2(e)
hereof, Adviser and Distributor agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, except as set
forth in Section 13.2(c) below, the written consent of Adviser) or actions in
respect thereof (including, to the extent reasonable, legal and other expenses)
to which the Indemnified Parties may become subject directly or indirectly under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions directly or indirectly result from or arise out
of the failure of any Portfolio to operate as a regulated investment company in
compliance with (i) Subchapter M of the Code and regulations thereunder and (ii)
Section 817(h) of the Code and regulations thereunder (except to the extent that
such failure is caused by Insurer), including, without limitation, any income
taxes and related penalties, rescission charges, liability under state law to
Contract owners or Participants asserting liability against Insurer or Contracts
Distributor pursuant to the Contracts, the costs of any ruling and closing
agreement or other settlement with the Internal Revenue Service, and the cost of
any substitution by Insurer of shares of another investment company
29
or portfolio for those of any adversely affected Portfolio as a funding medium
for the Separate Account that Insurer deems necessary or appropriate as a result
of the noncompliance.
(c) The written consent of Adviser and Distributor referred to in Section
13.2(b) above shall not be required with respect to amounts paid in connection
with any ruling and closing agreement or other settlement with the Internal
Revenue Service.
(d) Adviser and Distributor shall not be liable under this Section 13.2
with respect to any losses, claims; damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties under this Agreement or to Insurer, Contracts Distributor
or the Separate Account.
(e) Adviser and Distributor shall not be liable under this Section 13.2
with respect to any action against an Indemnified Party unless Insurer or
Contracts Distributor shall have notified Adviser and Distributor in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Adviser or
Distributor of any such action shall not relieve Adviser or Distributor from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this Section 13.2. In case any such action
is brought against an Indemnified Party, Adviser and Distributor will be
entitled to participate, at its own expense, in the defense of such action.
Adviser and Distributor also shall be entitled to assume the defense thereof
(which shall include, without limitation, the conduct of any ruling request and
closing agreement or
30
other settlement proceeding with the Internal Revenue Service), with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from Adviser or Distributor to such
Indemnified Party of their election to assume the defense thereof, the
Indemnified Party will cooperate fully with Adviser and Distributor and shall
bear the fees and expenses of any additional counsel retained by it, and Adviser
and Distributor will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
13.3 Effect of Notice.
----------------
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Section 13.1(c) or 13.2(e) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
Section 13. Applicable Law
--------------------------
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with New York law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts
-------------------------------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
31
Section 15. Severability
------------------------
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
-----------------------------
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
Section 17. Restrictions on Sales of Fund Shares
------------------------------------------------
Insurer agrees that the Fund will be permitted (subject to the other terms
of this Agreement) to make its shares available to separate accounts of other
life insurance companies.
Section 18. Headings
--------------------
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
32
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: 2/nd/ VP, CFO
LINCOLN FINANCIAL ADIVSORS
CORPORATION
By: Xxxxxxx X. Xxxxxx
Name: XXXXXXX X. XXXXXX
Title: 2/ND/ V.P. + CONTROLLER
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
its General Partner
By: Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President and Chief Operating Officer
ALLIANCE FUND DISTRIBUTORS, INC.
By: Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director and Senior Vice
President
33
Schedule A
Portfolios of the Fund made available under this Agreement:
Premier Growth Portfolio
Growth and Income Portfolio
Growth Portfolio
Technology Portfolio
34
Schedule B
Insurer Contracts to which the Portfolios of the Fund are made available under
this Agreement:
Lincoln New York Choice Plus Variable Annuity
Group Variable Annuity
(GVA) I, II, & III
35
