FORM OF
PARTICIPATION AGREEMENT
AMONG
XXXXXX VARIABLE TRUST
XXXXXX RETAIL MANAGEMENT, L.P.
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this 30th day of April,
2001, among Lincoln Life & Annuity Company of New York (the "Company"), a New
York corporation, on its own behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto, as such Schedule may be amended from
time to time (each such account hereinafter referred to as the "Account"),
PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and XXXXXX
RETAIL MANAGEMENT, L.P. (the "Underwriter"), a Massachusetts limited
partnership.
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NOW, THEREFORE, in consideration of the promises herein, the Company,
the Trust and the Underwriter agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
1.1 The Underwriter agrees, subject to the Trust's rights under Section
1.2 and otherwise under this Agreement, to sell to the Company those Trust
shares representing interests in Authorized Funds which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the shares of the
Trust. For purposes of this Section 1.1, the Company shall be the designee of
the Trust for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Trust; provided that the Trust
receives notice of such order by 10:00 a.m. New York time on the next
following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its
net asset value pursuant to the rules of the Securities and Exchange
Commission. The initial Authorized Funds are set forth in Schedule B, as such
schedule is amended from time to time. The Trust will confirm receipt of each
trade (ending share balance by account and fund) by 2:30 p.m. New York time
on the day the trade is placed with the Trust (using a mutually agreed upon
format).
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Trust
shall use its best efforts to calculate such net asset value on each day on
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Trustees of the Trust (the "Trustees") may refuse to sell
shares of any Fund to the Company or any other person, or suspend or
terminate the offering of shares of any Fund if such action is required by
law or by regulatory authorities having jurisdiction over the Trust or if the
Trustees determine, in the exercise of their fiduciary responsibilities, that
to do so would be in the best interests of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will
be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms of
its then current prospectus. For purposes of this Section 1.4, the Company
shall be the designee of the Trust for receipt of requests for redemption
from each Account and receipt by such designee shall constitute receipt by
the Trust; provided that the Trust receives notice of such request for
redemption by 10:00 a.m., New York time, on the next following Business Day.
Payment shall be made the same business day that the Trust receives notice of
the order in federal funds initiated by wire no later than 2:30 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.
1.5 The Company shall purchase and redeem the shares of Authorized
Funds offered by the then current prospectus of the Trust in accordance with
the provisions of such prospectus. Trust shall promptly notify Company of any
changes to such provisions.
1.6 The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds initiated
by wire no later than 2:30 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.
1.7 Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded as instructed by the Company
to the Underwriter in an appropriate title for each Account or the
appropriate sub-account of each Account.
1.8 The Underwriter shall furnish prompt notice on or before
ex-dividend date (using a mutually agreed upon format) to the Company of the
declaration of any income, dividends or capital gain distributions payable on
the Trust's shares. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on the Fund shares in
additional shares of that Fund. The Company reserves the right to revoke this
election and to receive all such income dividends and capital gain
distributions in cash. The Underwriter shall notify the Company of the number
of shares so issued as payment of such dividends and distributions. Each year
the Underwriter will provide the Company with a dividend and capital gain
payment schedule (using a mutually agreed upon format).
1.9 The Underwriter shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably
practical after the Trust calculates its net asset value per share and each
of the Trust and the Underwriter shall use its best efforts to make such net
asset value per share available by 6:30 p.m. New York time (using a mutually
agreed upon format). The Underwriter will notify Company when and if
Underwriter does not communicate the net asset value per share by 6:30 pm New
York time. The Trust shall indemnify the Company with respect to all costs,
expenses and losses relating to pricing errors or delays in communication of
net asset value as may be required to be corrected by law.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 Without limiting the scope or effect of Section 4.2 hereof, the
Company shall furnish, or shall cause to be furnished, to the Underwriter
each piece of sales literature or other promotional material (as defined
hereafter) in which the Trust, its investment adviser or the Underwriter is
named at
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least 15 days prior to its use. No such material shall be used if the
Underwriter objects to such use within five Business Days after receipt of
such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust or its designee or by the Underwriter, except
with the written permission of the Trust or the Underwriter or the designee
of either or as is required by law.
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 15 days prior to its use. No
such material shall be used if the Company or its designee objects to such
use within five Business Days after receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in published reports for each Account which are in the
public domain or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by the Company
or its designee, except with the written permission of the Company or as is
required by law.
4.5 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e. any written communication distributed or made
generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all registered
representatives.
4.6 The Underwriter will support onsite visits by Company no less
frequently than biannually and visit the Company no less frequently than
annually. The Trust or Underwriter will provide a signed compliance report as
reasonably requested by the Company or its designee, on a quarterly basis to
include but not limited to: 817 (h), subchapter M, and Prospectus guidelines.
The Trust or Underwriter will provide State of California Bulletin 97-2
compliance certification upon reasonable request. The Trust or Underwriter
will provide fund statistics and commentaries (as reasonably required by
Company) in electronic format each calendar quarter, no later than the 17th
of the month following quarter-end. The Underwriter will support the
Company's marketing and due diligence efforts by granting reasonable requests
for visits to the Underwriter's and its affiliates' offices by
representatives of the Company.
ARTICLE V. FEES AND EXPENSES
5.1 Except as provided in Article VI, the Trust and Underwriter shall
pay no fee or other compensation to the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall bear the expenses for
the cost of registration and qualification of the Trust's shares, preparation
and filing of the Trust's prospectus and registration statement, proxy
materials and reports, setting the prospectus and shareholder reports in
type, setting in type and printing
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the proxy materials, and the preparation of all statements and notices
required by any federal or state law, in each case as may reasonably be
necessary for the performance by it of its obligations under this Agreement.
5.3 The Trust shall bear the expenses of printing and distributing the
Trust's proxy materials to existing Contract owners. The Trust will bear the
expense of printing its shareholder reports sent to existing Contract owners.
The Company will pay the costs of distributing such reports.
5.4 The Company shall bear the expenses of printing and distributing
materials, including the Trust's prospectus, used in connection with the
sales of the Contracts. The Company shall also bear the expenses of printing
and distributing the Account's prospectus (including supplements) to existing
Contract owners.
ARTICLE VI. SERVICE FEES
6.1 So long as the Company complies with its obligations in this
Article VI, the Underwriter shall pay such Company a service fee (the
"Service Fee") on shares of the Funds held in the Accounts at the annual
rates specified in Schedule B, subject to Section 6.2 hereof. In this Article
VI only, use of the term Company shall also include Company's designee. The
Company represents and warrants that any Service Fees paid to the Company
with respect to the Company's own retirement plans will be used in compliance
with the Employee Retirement Income Security Act of 1974, as amended.
6.2 The Company understands and agrees that all Service Fee payments
are subject to the limitations contained in each Fund's Distribution Plan,
which may be varied or discontinued at any time and hereby waives the right
to receive such service fee payments with respect to the Fund if the Fund
ceases to pay 12b-1 fees to the Underwriter.
6.3 (a) The Company's failure to provide the services described in
Section 6.4 or otherwise comply with the terms of this Agreement will render
it ineligible to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company, amend
this Article VI to change the terms of the Service Fee payments with 90 days
prior written notice to the Company.
6.4 The Company will provide the following services to the Contract
Owners purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and assisting in
answering inquiries concerning the Funds;
(ii) Assisting in printing and distributing shareholder reports and
prospectuses provided by the Underwriter;
(iii) Assisting the Underwriter and its affiliates in the establishment
and maintenance of investor accounts and records;
(iv) Assisting Contract owners in effecting administrative changes,
such as exchanging shares in or out of the Funds;
(v) Assisting in processing purchasing purchase and redemption
transactions; and
(vi) Providing any other information or services as the Contract owners
or the Underwriter may reasonably request.
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6.5 The Company's compliance with the service requirement set forth in
this Agreement will be evaluated from time to time by monitoring redemption
levels of Fund shares held in any Account and by such other methods as the
Underwriter deems appropriate.
6.6 The provisions of this Article VI shall remain in effect for not
more than one year from the date hereof and thereafter for successive annual
periods only so long as such continuance is specifically approved at least
annually by the Trustees in conformity with Rule 12b-1. This Article VI shall
automatically terminate in the event of this Agreement' assignment (as
defined by the 1940 Act). In addition, this Article VI may be terminated at
any time, without the payment of any penalty, with respect to any Fund or the
Trust as a whole by any party upon written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or , as provided in
Rule 12b-1 under the 1940 Act by the Trustees or by the vote of the holders
of the outstanding voting securities of any Fund.
6.7 The Underwriter shall provide the Trustees of each of the Funds,
and such Trustees shall review at least quarterly, a written report of the
amounts paid to the Company under this Article VI and the purposes for which
such expenditures were made.
The Company will support the Underwriter's marketing efforts by granting
reasonable requests for visits to the Company's offices by representatives of
the Underwriter.
6.8 For purposes of computing the payment to Company contemplated under
this Section 6, the average aggregate net asset value of shares of the Trust
held by the Accounts over a one-month period shall be computed by totaling
each Account's aggregate investment (share net asset value multiplied by
total number of shares held by each Account) on each calendar day during the
month, and dividing by the total number of calendar days during such month.
The payment shall be calculated by Trust at the end of each calendar quarter
and will be paid to the Company within thirty (30) calendar days thereafter.
The payment will be accompanied by a statement showing the calculation of the
quarterly amounts payable by Trust and such other supporting data as may be
reasonably requested by Company. The Company reserves the right to audit the
calculations made by Trust.
ARTICLE VII. DIVERSIFICATION
7.1 The Trust and the Underwriter represent and warrant that the Trust
will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, and life insurance contracts and any amendments or other
modifications to such Section or Regulations. Trust will notify Company
immediately upon failure to comply with the diversification requirements and
take all steps necessary to remedy the failure.
ARTICLE VIII. POTENTIAL CONFLICTS
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ARTICLE IX. INDEMNIFICATION
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ARTICLE X. APPLICABLE LAW
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ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate:
(a) at the option of any party upon six months advance written notice
to the
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other parties; or
(b) at the option of the Trust or the Underwriter in the event that
formal administrative proceedings are instituted against the Company by the
NASD, the Securities and Exchange Commission, any State Insurance
Commissioner or any other regulatory body regarding the Company's duties
under this Agreement or related to the sales of the Contracts, with respect
to the operation of any Account, or the purchase of the Trust shares,
provided, however, that the Trust or the Underwriter determines in its sole
judgment exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Underwriter by
the NASD, the Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body regarding the Trust's or
Underwriter's duties under this Agreement or with respect to the operation of
any Trust, or the sale of shares of the Trust to the Company, provided,
however, that the Company determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Trust or Underwriter to perform its
obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to substitute
the shares of another investment company for the corresponding Fund shares of
the Trust in accordance with the terms of the Contracts for which those Fund
shares had been selected to serve as the underlying investment media. The
Company will give 30 days' prior written notice to the Trust of the date of
any proposed vote to replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 90 days advance written
notice from the Underwriter to the Company, upon a decision by the
Underwriter to cease offering shares of the Fund for sale; or
(f) at the option of the Company in the event that the Trust fails to
maintain its status as a Registered Investment Company or fails to comply
with Section 817(h) of the Code.
11.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for
any reason or for no reason.
11.3 No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice
shall set forth the basis for such termination. Such prior written notice
shall be given in advance of the effective date of termination as required by
this Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement, the Trust and the Underwriter shall, at the
option of the Company, continue to make available additional shares of the
Trust pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, subject to Section 1.2 of this Agreement, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 11.4 shall not apply to any termination under Article VIII
and the effect of such Article VIII termination shall be governed by Article
VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract owner
initiated transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally required Redemption"). Upon request,
the Company will promptly furnish to the Trust and the
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Underwriter an opinion of counsel for the Company, reasonably satisfactory to
the Trust, to the effect that any redemnification pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, subject to Section 1.2 of this
Agreement, the Company shall not prevent Contract owners from allocating
payments to an Authorized Fund that was otherwise available under the
Contracts without first giving the Trust or the Underwriter 45 days notice of
its intention to do.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Trust:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
If to the Underwriter:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
If to the Company:
Lincoln Life & Annuity Company of New York
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
ARTICLE XIII. MISCELLANEOUS
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Lincoln Life & Annuity Company of New York
By its authorized officer,
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Second Vice President
XXXXXX VARIABLE TRUST
By its authorized officer,
-----------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
XXXXXX RETAIL MANAGEMENT, L.P.
By its authorized officer,
-----------------------------------------
Name: Xxxx Xxxx
Title: Senior Vice President
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SCHEDULE A
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK SEPARATE ACCOUNTS
SEPARATE ACCOUNT NAME DATE ESTABLISHED FUNDS USED CONTRACT NAME
Lincoln Life & Annuity Variable July 24, 1996 Growth and Income - Class XX Xxxxxxx Life Group Variable
Annuity Account L Annuity
Health Sciences - Class XX
Xxxxxxx New York Xxxxxxxx Xxxxx 00, 0000 Xxxxxx and Income - Class XX Xxxxxxx ChoicePlus II
Account N for Variable Annuities
Health Sciences - Class XX Xxxxxxx ChoicePlus Access II
Lincoln Life & Annuity Flexible November 24, 1997 Growth and Income - Class XX Xxxxxxx Variable Universal Life
Premium Variable Life Account M (CV) and (CV2)
Health Sciences - Class XX
Xxxxxxx Variable Universal Life
(DB) and (DB2)
Lincoln Variable Universal Life
MoneyGuard
LLANY Separate Account R for January 29, 1998 Growth and Income - Class XX Xxxxxxx Survivor Variable
Flexible Premium Variable Life Universal Life
Health Sciences - Class XX
Xxxxxxx Survivor Variable
Universal Life II
LLANY Separate Account S for Xxxxx 0, 0000 Xxxxxx and Income - Class XX Xxxxxxx Corporate-owned Variable
Flexible Premium Variable Life Universal Life Series III
Health Sciences - Class IB
SCHEDULE B
SERVICE FEE PAYMENTS ON CLASS IB SHARES
FUND RATE
Xxxxxx VT Health Sciences Fund 0.25% per annum
Xxxxxx VT Growth & Income Fund 0.25% per annum
