Exhibit 1(3)(a)
UNDERWRITING AGREEMENT
AGREEMENT made this 28TH day of December, 1987, by the Lincoln National
Life Insurance Company ("Lincoln National"), an Indiana corporation, on its own
behalf and on behalf of Lincoln National Flexible Premium Variable Life Account
F ("Variable Account F"), and American Funds Distributors, Inc. ("AFD"), a
corporation organized under the laws of the State of California.
WHEREAS, Lincoln National has established and maintains Variable Account F,
a segregated investment account, pursuant to the laws of the State of Indiana
for the purpose of selling certain flexible premium variable life insurance
policies, sometimes referred to in the prospectus and/or advertising material as
American Legacy Estate Builder, (the "Policies"), to commence after the
effectiveness of the registration statement for the Policies as filed with the
Securities and Exchange Commission (the "SEC") on Form S-6 (Registration No.
33-14692) pursuant to the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, Variable Account F is registered as a unit investment trust under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, Variable Account F will invest in shares of the American Variable
Insurance Series, a series mutual fund (the "Fund") and such shares will be sold
to Lincoln National for allocation to Variable Account F by [specify any
distributor for Fund shares]; and
WHEREAS, AFD is registered as a broker-dealer with the SEC under the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), and is a
member of the National Association of Securities Dealers (the "NASD"); and
WHEREAS, Lincoln National and Variable Account F desire to have the
Policies sold and distributed through AFD, and AFD is willing to sell and
distribute such Policies, under the terms state herein.
NOW THEREFORE, the parties hereto agree as follows:
1. PRINCIPAL UNDERWRITER. Lincoln National grants to AFD the right to
be, and AFD agrees to serve as, sole distributor and principal underwriter of
the Policies during the term of this Agreement in each state or other
jurisdiction where the Policies may legally be sold. AFD agrees to use its best
efforts to solicit applications for the Policies at its own expense, to
undertake to provide any other sales services relating to the Policies and
otherwise to actively engage in all duties and functions which are necessary and
proper for the sale and distribution of the Policies on a continuous basis while
this Agreement is in effect and a registration statement for the Policies is
effective.
1
2. SELLING GROUP.
a. SALES AGREEMENTS. AFD agrees to form a selling group (the
"Selling Group") consisting of broker-dealers appointed by AFD to distribute the
Policies issued by Lincoln National through its Variable Account F. AFD is
hereby authorized to enter into separate written sales agreements with
broker-dealers registered as such under the 1934 Act which agree to join the
Selling Group and to use their best efforts to solicit applications for the
Policies, PROVIDED that all such sales agreements shall:
i. Expressly be subject to this Agreement;
ii. Require Lincoln National's written approval before taking
effect;
iii. Provide that such broker-dealer will assume full
responsibility for continued compliance by itself and its
representatives with applicable federal and state securities
laws;
iv. Provide that each such broker-dealer will distribute the
Policies only in those jurisdictions in which the Policies are
registered or qualified for sale and only through duly licensed
registered representatives of broker-dealers who are properly
insurance licensed by Lincoln National to sell the Policies in
the applicable jurisdictions; and
v. Provide that all applications and initial and subsequent
payments under the Policies collected by such broker-dealer will
be remitted promptly to Lincoln National.
b. SALES AGREEMENT COPIES. AFD shall submit an executed copy of
each such sales agreement to Lincoln National's Compensation/Contracts section
immediately upon execution thereof.
c. ADDITIONAL BROKER-DEALERS. The parties hereto expressly
understand and agree that Lincoln National may from time to time propose that
the Policies be distributed through additional broker-dealers. In such
circumstances, AFD agrees to enter into a sales agreement in the usual and
customary form with such other broker-dealer, subject to AFD's reasonable
satisfaction with such other broker-dealer's credentials and practices. AFD
agrees that a sales agreement will not be unreasonably withheld.
d. INDEPENDENT CONTRACTORS. All members of the Selling Group shall
act as independent contractors and nothing herein contained shall itself
constitute such broker-dealers or their agents or employees as employees of
Lincoln National in connection with the sale of the Policies.
2
e. INSURANCE LICENSES. AFD shall apply, at its own cost, for any
necessary and proper insurance licenses in the appropriate states or
jurisdictions for the designated persons associated with members of the Selling
Group for the sale of the Policies, PROVIDED that Lincoln National reserves the
right to refuse to appoint any proposed registered representative as an agent or
broker, and to terminate an agent or broker once appointed. AFD shall be
responsible for coordinating the submission of insurance license information to
Lincoln National's Licensing section.
3. PREMIUMS. All premiums or other monies payable for the Policies shall
be remitted promptly in full (unless otherwise agreed in writing by LNL)
together with the related applications, forms and any other required
documentation to Lincoln National or its designated servicing agents, and shall
be the exclusive property of Lincoln National. Checks or money orders in
payment of premiums or other monies payable shall be drawn to the order of "The
Lincoln National Life Insurance Company." Lincoln National will retain all such
payments.
4. SALES EFFORTS AND PROMOTIONAL MATERIALS.
a. PROMOTION. AFD will its best efforts to promote sales of the
Policies, including, without limitation:
i. Providing information and marketing assistance to members of
the Selling Group;
ii. Preparing and providing advertising materials and sales
literature and providing current Prospectuses for the Policies
and the Fund.
"Prospectuses" as used in this Agreement shall include Statements of Additional
Information whenever appropriate. Lincoln National and AFD will cooperate in
the development of all sales and promotional materials (but the costs thereof
will be borne by AFD).
b. POLICY INFORMATION. AFD agrees to offer the Policies for sale
only in accordance with the then current registration statement therefor. AFD
is not authorized to and shall not:
i. Give any information or make any representations concerning
the Policies except those contained in sales literature or
advertising approved pursuant to clause (ii) below or the most
recent Policy registration statement and any supplements thereto,
or
ii. Give any information regarding, or use any description of,
the Policies in any sales literature or advertising or otherwise,
unless approved by Lincoln National in writing in advance.
3
c. FUND INFORMATION. Lincoln National is not authorized to and
shall not:
i. Give any information or make any representations concerning
the Fund, its shares or operations, except those contained in the
most recent Fund registration statement and any supplements
thereto, or
ii. Use any description of the fund in any sales literature or
advertising, unless approved by AFD or the Fund in writing in
advance.
Notwithstanding this paragraph 4(c) or any other provision of this Agreement, it
is not contemplated that Lincoln National will advertise, promote or incur any
expenses for the advertising or promotion of the Policies, except for the
compensation to AFD specified in paragraph 10 hereof.
d. APPROVAL BY LINCOLN NATIONAL. Advertising and sales literature
with respect to the Policies, non-public field sales material (such as
information or brochures intended for brokers only) or other supplemental sales
materials shall be submitted to Lincoln National for prior approval. AFD shall
not use (or allow the use of) any such materials not previously approved by
Lincoln National in writing. AFD expressly agrees not to use any form of
advertising bearing Lincoln National's name or referring to the Policies, other
than that furnished by Lincoln National or approved in writing by Lincoln
National.
e. ADVERTISING. The term "advertising" as used in this Agreement
includes all forms of communication by any medium, direct or indirect,
including, but not limited to, print (including brochures, letters,
illustrations and other materials), radio, television, billboards, direct mail,
booklets leaflets, business cards and stationery.
f. USE BY LINCOLN NATIONAL. Lincoln National shall have the right
to receive free of charge quantities of all such advertising and sales
literature from AFD, for use by Lincoln National in its own sales efforts.
g. REGULATORY APPROVALS. The parties understand that certain sales
literature and materials intended for use in connection with the sale of the
Policies may require filings with and/or approvals from the SEC, NASD and other
securities regulatory authorities. In any such case, AFD shall make such filing
or seek such approval; and that Lincoln National shall make such filings or seek
such approval of any appropriate insurance regulatory authorities.
5. SUSPENSION OF SALES. Lincoln National reserves the right to suspend
sales of the Policies, either nationwide or in selected jurisdictions. AFD will
take any necessary steps to ensure that no offering, sale or other disposition
of the Policies will be made after it has been notified by Lincoln National to
suspend such activities in any states or other jurisdictions and for such time
periods as may be specified in such notice. Lincoln National will not suspend
sales of the Policies without cause and will notify AFD of any cause.
4
6. REPRESENTATIONS AND WARRANTIES BY AFD. AFD represents and warrants to
Lincoln National that:
a. FUND REGISTRATION. A registration statement under the 1933 Act
(Registration No. 33-14692), and under the 1940 Act (Registration No. 811-5164)
with respect to the Fund has been filed with the SEC in the form previously
delivered to Lincoln National, and copies of any and all amendments or
supplements thereto will be forwarded to Lincoln National at the time that they
are filed with the SEC.
b. MAINTENANCE OF REGISTRATION. AFD will maintain effective
registration of an indefinite number of the Fund's shares under the 1933 Act and
will register from time to time as necessary such additional shares of the Fund
(if required under the laws of any state) as may be reasonably necessary for use
as the funding vehicle for the Policies.
c. CONFORMITY TO SECURITIES LAWS. The Fund's registration statement
and any further amendments or supplements thereto will, when they become
effective, conform in all respects to the requirements of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations of the SEC thereunder, and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to AFD by Lincoln National
expressly for use therein.
d. BROKER-DEALER REGISTRATION. AFD is a broker-dealer duly
registered with the SEC pursuant to the 1934 Act and a member in good standing
of the NASD and is in compliance with the federal securities laws and the
securities laws in those states in which it conducts business as a broker-dealer
and AFD will maintain such registration, membership and compliance.
e. COMPLIANCE WITH NASD RULES. AFD will comply with the
requirements of any applicable state broker-dealer regulations and the 1934 Act
and shall conduct its affairs in accordance with the Rules of Fair Practice of
the NASD. Without limiting the generality of the foregoing, AFD agrees that it
shall be fully responsible for the following activities, which it may conduct
directly or through members of the Selling Group:
i. Ensuring that no person shall offer or sell the Policies on
its behalf unless such person is a duly registered representative
of either AFD or a member of the Selling Group, properly
insurance licensed and appointed by Lincoln National, and
appropriately licensed, registered or otherwise qualified to
offer and sell such Policies under any applicable insurance or
securities laws.
5
ii. Training, supervising and controlling all such persons for
purposes of complying on a continuous basis with the NASD Rules
of Fair Practice and with applicable federal and state securities
and insurance laws requirements in connection with the offering
and sale of the Policies. In this connection AFD or such member
of the Selling Group shall:
A. Conduct such training (including the preparation
and utilization of training materials) as is necessary to
accomplish the purposes of this Agreement;
B. Establish and implement reasonable written
procedures for supervision of sales practices of agents,
representatives or brokers selling the Policies, including
ensuring that registered representatives deliver only the
currently effective prospectuses for the Policies and the
Funds and use only sales literature and advertising material
authorized in writing by Lincoln National and AFD and in
compliance with federal and state laws requirements; and
C. Take reasonable steps to ensure that the various
sales representatives appointed by it shall not make
recommendations to an applicant to purchase a Policy in the
absence of reasonable grounds to believe that the purchase
of the Policy is suitable for such applicant. While not
limited to the following, a determination of suitability
shall be based on information furnished after reasonable
inquiry concerning the applicant's insurance and investment
objectives, financial situation and needs, and the
likelihood of the applicant persisting with the Policy for a
reasonable period of time.
f. INFORMATION TRUE. Any information furnished by AFD to Lincoln
National for use in the registration statement of the Fund or the Policies will
not result in the registration statements':
i. Failing to conform in all respects to the requirements of
the 1933 Act, the 1934 Act, or the 1940 Act and the rules and
regulations thereunder, or
ii. Containing any untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. AFD will
furnish Lincoln National such information with respect to the Fund or
otherwise relevant to this Agreement or the distribution of the
Policies in such form and signed by such of its officers as
6
Lincoln National may reasonably request, and warrants that when so
signed, such information will be true and correct.
g. EFFECTIVENESS. AFD will take any necessary steps to ensure that
no offering, sale or other disposition of the Policies will be made until it has
been notified by Lincoln National that the subject registration statements have
been declared effective and the Policies have been released for sale by Lincoln
National, and such offering, sale or other disposition shall be limited to those
jurisdictions that have approved or otherwise permit the offer and sale of the
Policies by Lincoln National.
h. CORPORATE STANDING. AFD is a corporation duly organized and in
good standing under the laws of the State of California, with the power to own
its properties and conduct its business 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.
i. CONSENTS. 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 AFD of the
transactions contemplated by this Agreement.
j. LITIGATION. There are no legal or governmental proceedings
pending to which AFD is a party or otherwise subject, which, if determined
adversely to AFD, would individually or in the aggregate have a material adverse
effect on the financial position, surplus or operations of AFD.
k. NO DEFAULTS. The performance of its duties under this Agreement
by AFD will not result in a breach or violation of any of the terms or
provisions or constitute a default under any statute, any indenture, mortgage,
deed of trust or other agreement or instrument to which AFD is a party or by
which AFD is bound, the Certificate of Incorporation or By-Laws of AFD, or any
order, rule or regulation of any court or government agency or body having
jurisdiction over AFD or its property.
7. REPRESENTATIONS AND WARRANTIES BY LINCOLN NATIONAL.
Lincoln National represents and warrants to AFD that:
a. POLICY REGISTRATION STATEMENT. Registration statements under the
1933 Act (Registration No. 33-14692) on Form S-6 (with respect to the Policies)
and under the 1940 Act (Registration No. 811-5164) on Form N-8B-2 (with respect
to Variable Account F) have been filed with the SEC in the forms previously
delivered to AFD, and copies of any and all amendments and supplements thereto
will be forwarded to AFD at the time that they are filed with the SEC.
7
b. MAINTENANCE OF REGISTRATION. Lincoln National will maintain
effective registration of an indefinite amount of the Policies under the 1933
Act.
c. CONFORMITY TO SECURITIES LAWS. The registration statements and
any further amendments or supplements thereto will, when they become effective,
conform in all material respects to the requirements of the 1933 Act, and the
1934 Act, and the 1940 Act, and the rules and regulations of the SEC thereunder,
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, however, that this representation and warranty
shall not apply to any statement or omission made in reliance upon and in
conformity with information furnished in writing to Lincoln National by AFD
expressly for use therein.
d. STOCK LIFE COMPANY. Lincoln National is validly existing as a
stock life insurance company in good standing under the laws of the State of
Indiana, with the power to own its properties and conduct its business as
described in the registration statement, 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.
e. THE POLICIES. The Policies to be issued through Variable Account
F have been duly and validly authorized and, when issued and delivered against
payment therefor as provided in the Policy registration statements and in the
Policies, will be duly and validly issued and will conform to the description of
such Policies contained in the registration statement therefore.
f. NO DEFAULTS. 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 or other agreement or
instrument to which Lincoln National is a party or by which Lincoln National is
bound, Lincoln National's Charter as a stock life insurance company or By-Laws,
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over Lincoln National or any of its properties.
g. CONSENTS. No consent, approval, authorization or order of any
court or governmental agency or body which has not been obtained by the
effective date of this Agreement is required for the consummation by Lincoln
National of the transactions contemplated by this Agreement.
h. LITIGATION. There are no material legal or governmental
proceedings pending to which Lincoln National or Variable Account F is a party
or of which any property of Lincoln National or Variable Account F is the
subject, other than as set forth in the registration statement relating to the
Policies, and other than litigation incident to the kind of business conducted
by Lincoln National which, if determined adversely to Lincoln National, would
not
8
individually or in the aggregate have a material adverse effect on the financial
position, surplus or operations of Lincoln National.
i. INFORMATION TRUE. Any information furnished in writing by
Lincoln National to AFD for use in the registration statement of the Fund or the
Policies will not result in the registration statement's (i) failing to conform
in all respects to the requirements of the 1933 Act, the 1934 Act, or the 1940
Act and the rules and regulations thereunder or (ii) 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.
Lincoln National will furnish AFD such information with respect to the Policies
in such form and signed by such of its officers as AFD may reasonably request,
and warrants that when so signed, such information will be true and correct.
8. EXPENSES.
a. AFD. AFD will bear all its expenses of providing services under
this Agreement, including but not limited to the cost of:
i. Preparing, printing and mailing or otherwise disseminating
all advertising and sales literature for the Policies;
ii. Printing and mailing Fund and Policy Prospectuses used for
sales purposes; and
iii. Any direct expenses incurred in the normal course of
business by its employees in assisting Lincoln National in performing
its duties hereunder. AFD shall not bear expenses of registering and
qualifying shares of the Fund or Policies for sale under federal or
state laws.
x. XXXXXXX NATIONAL. Lincoln National will bear all its expenses of
providing services under this agreement, including the cost of:
i. Policy Prospectuses not used for sales purposes;
ii. Registering or qualifying the Policies and Variable Account
F under federal or state laws;
iii. Any direct expenses incurred in the normal course of
business by its employees in assisting AFD in performing its duties
hereunder; and
iv. Mailing the Fund's semi-annual reports to Policy owners.
9
c. THE FUND. The parties hereto understand and agree that the Fund
shall bear its own expenses (except to the extent borne by the Fund's investment
adviser or manager), including but not limited to the cost of:
i. Preparing Fund Prospectuses and printing and mailing them to
existing Policy owners;
ii. Preparing and printing Fund proxy materials and reports to
shareholders, and the costs of mailing such proxy materials and
reports to Policy owners; and
iii. Registering Fund shares under federal or state laws.
9. COMPENSATION.
a. COMMISSIONS. Lincoln National shall pay such remuneration to AFD
for its services hereunder as may be contained in such schedules of remuneration
as may be adopted and appended to this Agreement from time to time ("Schedules
of Remuneration"); PROVIDED that no such schedule shall be effective until
signed and attested to on the face thereof by Lincoln National and AFD. No
compensation shall be paid with respect to any Policy that is canceled during
the "Free Look Period" as defined in the Policy Prospectus, and AFD agrees to
refund to Lincoln National any compensation that may have been paid with respect
to such Policies.
b. PAYING AGENT. AFD shall be responsible for paying all
commissions or other fees which are due for the sale of the Policies to members
of the Selling Group or associated persons thereof. AFD hereby appoints Lincoln
National as its paying agent to pay commissions or other remuneration to members
of the Selling Group in accordance with the Schedule of Remuneration and agrees
that Lincoln National shall deduct any amounts so paid from amounts otherwise
due to AFD.
Lincoln National, as paying agent for AFD, shall provide AFD:
i. On a monthly or otherwise regular basis, a statement setting
forth commissions and concessions earned and payable to AFD, along
with an accounting of AFD Selling Group commission accounts; and
ii. On a weekly basis, statements setting forth commissions
earned and payable to Selling Group members together with a separate
accounting of each licensed representative's production.
c. OFFSET. Lincoln National may at any time deduct from any monies
otherwise payable under this Agreement and any supplement or amendment hereto,
any monies or debts due from AFD, including interest [at what rate?] on any such
debts. Furthermore, in
10
administering AFD's compensation accounting with members of the Selling Group,
Lincoln National shall have the authority to offset any Selling Group member
commission accounting debt to AFD. Included in statements described in (a) and
(b) above, will be an accounting of charges that would occur in the normal
course of business. Those charges include but are not limited to: "Not taken
out" charges, cancellation fees, reissue fees, and commission chargebacks.
Notwithstanding the preceding, no member of the Selling Group or associated
person thereof shall have any claim whatsoever against Lincoln National.
d. INDEMNIFICATION OF PAYING AGENT. In consideration for Lincoln
National's agreement to act as paying agent for AFD, AFD agrees to indemnify and
hold harmless Lincoln National, its officers, directors, employees, agents,
servants or successors against any losses, claims, damages or liabilities
incurred as a result of any action taken or omitted by Lincoln National acting
as such paying agent on behalf of AFD, and will reimburse Lincoln National for
any legal or other expenses reasonably incurred by it in investigating or
defending against such loss, claim, damage, liability or action.
10. INDEMNIFICATION.
a. GENERAL INDEMNITY. Each party (the "Indemnifying Party") agrees
to indemnify and hold harmless the other party, its officers, directors,
employees, agents, servants or successors against any losses, claims or
liability incurred as a result of any action taken or omitted by the
Indemnifying Party or any of its officers, directors, employees agents or
servants not authorized by this Agreement, including the violation of any
federal or state law or regulation; PROVIDED, however, that no such indemnity
shall be provided for any such liability resulting from willful misfeasance, bad
faith or gross negligence of the other party.
b. FUND REGISTRATION STATEMENT. Without limiting the generality of
the foregoing, AFD will indemnify and hold harmless Lincoln National and
Variable Account F against any losses, claims, damages or liabilities to which
Lincoln National and Variable Account F may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
i. Any untrue statement or alleged untrue statement of any
material fact contained in the Fund registration statement or
Prospectus or any supplements or amendments thereto,
ii. The omission or alleged omission to state any material fact
required to be stated in the Fund registration statement or Prospectus
or any supplements or amendments thereto or necessary to make the
statements therein not misleading, or
iii. Other misconduct or negligence of AFD in its capacity as
principal underwriter and distributor of the Fund;
11
and will reimburse Lincoln National or Variable Account F for any legal or other
expenses reasonably incurred by it in investigating or defending against such
loss, claim, damage, liability or action.
c. POLICY REGISTRATION STATEMENT. Without limiting the generality
of the foregoing, Lincoln National will indemnify and hold harmless AFD against
any losses, claims, damages or liabilities to which AFD may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
i. Any untrue statement or alleged untrue statement of any
material fact contained in the Policy registration statement or
Prospectus or any supplements or amendments thereto,
ii. The omission or alleged omission to state any material fact
required to be stated in the Policy registration statement or
Prospectus or any supplements or amendments thereto or necessary to
make the statements therein not misleading, or
iii. Other misconduct or negligence of Lincoln National;
and will reimburse AFD for any legal or other expenses reasonably incurred by it
in investigating or defending against such loss, claim, damage, liability or
action.
11. INVESTIGATIONS OR PROCEEDINGS.
a. COOPERATION. AFD and Lincoln National agree to cooperate fully
in:
i. Any insurance regulatory inspection, inquiry, investigation
or proceeding or judicial proceeding arising in connection with the
Policies distributed under this Agreement;
ii. Any securities (including, but not limited to, SEC and NASD)
regulatory inspection, inquiry, investigation or proceeding or any
judicial proceeding with respect to Lincoln National, AFD, or any
affiliates or representatives of either of them to the extent that
such inspection, inquiry, investigation or proceeding relates to the
Policies distributed under this Agreement.
b. NOTIFICATION. Without limiting the foregoing, each party will
promptly notify the other of:
i. Any customer complaint;
12
ii. Notice of any regulatory inspection, inquiry, investigation,
hearing or proceeding or any judicial proceeding with respect to it or
any of its representatives which relates to or might affect the
issuance or distribution of any Policy or any activity in connection
with any such Policy;
iii. Any request by the SEC for the amendment of either or both
the Fund or the Policy registration statement or for additional
information;
iv. The issuance of any stop order suspending effectiveness of
the Fund or the Policy registration statement or the initiation of any
proceeding for that purpose; or
v. The happening of any material event which makes untrue any
statement made in either or both the Fund or the Policy registration
statement or any supplements or amendments thereto, or which requires
the making of a change therein in order to make any statement made
therein not misleading.
c. CUSTOMER COMPLAINTS. In the case of a customer compliant, AFD
and Lincoln National will cooperate in investigating such complaint and consult
with each other to arrive at a mutually satisfactory response.
12. CONFIDENTIALITY. Any information, documents or materials, whether
printed or oral, furnished by either party or its agents or employees to the
other which are not otherwise publicly available shall be held in confidence.
No such information shall be given to any third party, other than to such
sub-contractors of AFD as may be permitted herein (except under requirement of a
lawful authority), without the prior express written consent of the other party.
13. TERMINATION.
a. EVENTS OF TERMINATION. This Agreement may be terminated:
i. Either with or without cause, upon 90 days' written notice
to the other party;
ii. At any time upon the mutual written consent of the parties
hereto,
iii. At the option of Lincoln National upon the institution of
formal proceedings against AFD by the SEC, NASD, or any other
regulatory authority, or
iv. As otherwise provided in the 1940 Act, in any such case
without a penalty.
13
b. RETURN OF RECORDS, ETC.. Upon termination of this Agreement,
i. All rate manuals, policyholder records, application forms,
letters or other correspondence with Policy owners and representatives
of Lincoln National, sales material, equipment and all other supplies
and records in the possession of AFD or members of the Selling Group
shall be returned to Lincoln National;
ii. All authorizations, rights and obligations shall cease,
except the obligations to settle accounts hereunder, and any
obligation to cooperate referred to in paragraph 12 hereof; and
iii. Both AFD and Lincoln National will use best efforts to
preserve in force the business as issued pursuant to this Agreement.
14. ASSIGNMENT. AFD shall not assign or delegate its responsibilities
under this Agreement and shall not assign any concessions or commissions payable
hereunder without the prior written consent of an authorized officer of Lincoln
National.
15. EXCLUSIVITY.
a. The services of AFD and Lincoln National hereunder are not to be
deemed exclusive and AFD and Lincoln National shall be free to render similar
services to others, except that:
i. AFD shall not, while this Agreement is in effect, act as
principal underwriter, sponsor, distributor or dealer with respect to
flexible premium variable life insurance policies issued by insurance
companies other than Lincoln National and its affiliates;
ii. Shares of the Fund shall not be sold to any other life
insurance company to fund flexible premium variable life insurance
policies.
16. REGULATION.
a. APPLICABLE LAWS. This Agreement shall be subject to the
provisions of the 1940 Act and the 1934 Act and the rules, regulations, and
rulings thereunder and of the NASD from time to time in effect, including such
exemptions from the 1940 act as the SEC may grant, and the terms of this
Agreement shall be interpreted and construed and in accordance therewith.
b. SUBMISSION TO REGULATION. AFD shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of Variable
Account F, present or future; and if, and only if, requested by Lincoln
National, AFD will provide any information,
14
reports or other material which any such body may request or require pursuant to
applicable laws or regulations.
17. CONVICTIONS FOR FRAUD. AFD represents that neither AFD nor any
registered representative of any member of the Selling Group, or any other
person employed or utilized in any connection with respect to the services
provided pursuant to this Agreement:
a. FEDERAL VIOLATIONS. Within the last ten years has been convicted
of any felony or misdemeanor arising out of conduct involving embezzlement,
fraudulent conversion, or misappropriation of funds or securities, or involving
violations of sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code; or
b. INSURANCE VIOLATIONS. Within the last ten years has been found
by any state regulatory authority to have violated or has acknowledged violation
of any provision of any state insurance law involving fraud, deceit or knowing
misrepresentation; or
c. SECURITIES VIOLATIONS. Within the last ten years has been found
by any federal or state regulatory authorities to have violated or have
acknowledged violation of any provision of federal or state securities laws
involving fraud, deceit or knowing misrepresentation.
18. ENTIRETY OF AGREEMENT AMENDMENT. This Agreement covers and includes
all agreements, oral and written, expressed or implied, between Lincoln National
and AFD and supersedes any and all other agreements between the parties with
respect to the subject matter hereof. Any provision of this Agreement may be
waived or amended only by a written instrument duly executed by the parties
hereto.
19. SEVERABILITY. 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.
20. WAIVER. Forbearance or neglect of Lincoln National to insist upon
full performance of any term or provision of this Agreement shall not constitute
a waiver of any rights and privileges hereunder.
21. LIMITATIONS. Neither party shall have authority on behalf of the
other to make, alter or discharge any contractual terms of the Policy, to waive
any forfeiture, to extend the time of making any contributions to the Policy,
nor to guarantee dividends, to alter the forms which either may prescribe, or to
substitute other forms in place of those prescribed by the other.
22. CAPTIONS. The captions, headings and arrangements used in this
Agreement are for convenience of reference only and do not affect, limit or
amplify the terms and provisions hereof.
15
23. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials as of the day and year first above
written to take effect upon the effectiveness of the registration statement with
respect to the Policies.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY, on behalf of
itself and Variable Account F
Attest:
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
By
----------------------------------- --------------------------------------
Name:
Title:
AMERICAN FUNDS DISTRIBUTORS, INC.
Attest:
/s/ Xxxxxxx Xxxxxx /s/
By
----------------------------------- --------------------------------------
Name:
Title:
16
SCHEDULE OF COMMISSIONS TO DEALERS AND REMUNERATION TO AFD
1. ALL SALES
Lincoln National will make direct payment of commissions to dealers and
remuneration to AFD with respect to all sales of the Policies according to
the schedule set forth below. Where state law prohibits direct payment to
AFD, payment will be made in accordance with the applicable state law.
Commissions Remuneration
to Dealers to AFD
---------- ------
All Premiums from
Policies Sold By
Member Dealers 5.5% 1.00%
Commissions to Remuneration
Lincoln National to AFD
---------------- ------
All Premiums from
Policies Sold By LNSC (As determined by
Agents and Brokers Lincoln National) 0.40%
An annual .25% continuing commission will be paid to dealers (except
Lincoln Nation) on the Policy value of premiums beginning in the second
Policy year. This asset based compensation will be paid at the end of each
calendar quarter and will be calculated as follows: At the end of each
quarter, Lincoln National will calculate and pay, for all Policies which
have been in force for 15 months or more as of the last day of the quarter,
an amount equal to .0625% of an amount equal to the excess of Policy value
over loans as of the last day of the quarter.
2. SALES VOLUME ALLOWANCE
Effective January 1, 1988, AFD will relinquish a portion of its
remuneration in order to provide an additional sales volume allowance of
.25% to be paid to dealers (except LNSC agents and brokers) attaining a
sales volume of at least $2,000,000 in American Legacy Life premiums in
each calendar year. For calendar year 1988, the allowance will be paid on
all premiums received between April 1 and December 31 for years thereafter,
the allowance will be paid on all premiums received during the calendar
year.
Lincoln National, upon notification from AFD that a broker-dealer has
calendar year sales of $2,000,000 or more, will deduct from AFD's
remuneration to pay that broker-dealer the allowance due. The initial
payment will be included in the next possible check due
17
following attainment of the $2,000,000 premium threshold for American
Legacy Life sales. All subsequent payments will be made at the end of each
quarter throughout the remainder of the calendar year. The broker-dealers
must attain the $2,000,000 sales volume each calendar year to qualify for
the additional allowance payments.
3. INTRODUCTORY PERIOD
All member dealers (except LNSC agents and brokers) will be paid a 6.50%
commission on all Policy premiums on Policies sold between January 4, 1988,
and March 31, 1988.
18
