Exhibit 1(8)
FUND PARTICIPATION AGREEMENT
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THIS AGREEMENT, is hereby entered into on this day of , 1997
by and among LINCOLN NATIONAL LIFE INSURANCE COMPANY ("Lincoln National"), a
life insurance company organized under the laws of the State of Indiana for
itself and on behalf of LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT F
("Account"), a separate account established by Lincoln National in accordance
with the laws of the State of Indiana, and AMERICAN VARIABLE INSURANCE SERIES
("Fund"), an open-end management investment company organized under the laws of
the State of Massachusetts.
WITNESSETH:
WHEREAS, the Account has been established by Lincoln National pursuant to
the Indiana Insurance Code in connection with certain variable life insurance
policies ("Policies") proposed to be issued to the public by Lincoln National;
and
WHEREAS, the Account is being registered as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Account are, in accordance with the applicable Policies, to be
credited to or charged against such Account without regard to other income,
gains or losses of Lincoln National; and
WHEREAS, the Account is subdivided into various Subaccounts ("Subaccounts")
under which income, gains and losses, whether or not realized, from assets
allocated to each such Subaccount are, in accordance with the applicable
Policies, to be credited to or charged against such Subaccounts without regard
to other income, gains or losses of other Subaccounts of Lincoln National; and
WHEREAS, the Fund is divided into various series ("Series"), each Series
being subject to separate investment policies and restrictions which may not be
changed without a majority vote of the shareholders of such Series; and
WHEREAS, certain Series will serve as the underlying investment medium for
certain Subaccounts; and
WHEREAS, American Funds Distributors, Inc., the principal underwriter of
the Policies to be funded by the Account, is a broker-dealer registered as such
under the Securities Exchange Act of 1934;
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NOW THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
Lincoln National, the Account, and the Fund hereby agree as follows:
1. The Policies funded through the Account will provide for the allocation
of net amounts among certain Subaccounts for investment in such shares of the
Series as may be offered from time to time in the prospectus of the Policies.
The selection of the particular Subaccount is to be made by the Policy owner,
and such selection may be changed or premiums may be transferred among
Subaccounts in accordance with the terms of the Policies.
2. Fund shares to be made available to certain Subaccounts shall be sold
by the respective Series and purchased by Lincoln National for the corresponding
Subaccount at the net asset value (without the imposition of a sales load) next
computed after receipt of each order by the Fund, as established in accordance
with the provisions of the then current prospectus of the Fund. Orders
concerning a particular Series shall be placed for such quantities and at such
items as determined by Lincoln National to be necessary to meet the requirements
of the Policies. Premium payments or withdrawal requests received by Lincoln
National (or its designated agent) shall be deemed to have been received by the
Fund's transfer agent for purposes of computing the share price for
corresponding purchases and redemptions of shares of the Fund; provided that
such payments or requests are communicated to the Fund's transfer agent not
later than the time, and in the manner, designated by the Fund's transfer agent,
on the business day next following such receipt by Lincoln National (or its
designated agent).
The Fund reserves the right to delay any transfer of its shares until the
payment check has cleared. The Fund reserves the right to suspend sales if the
Board of Trustees of the Fund deems it appropriate and in the best interests of
the Fund or in response to the order of an appropriate regulatory authority.
3. Transfer of the Fund's shares will be by book entry only. No stock
certificates will be issued to the Account. Shares ordered from a particular
Series will be recorded in an appropriate title for the corresponding Subaccount
on the books of Lincoln National. Lincoln National will provide to the Fund a
list of Policy owners (and their addresses) upon written notice from any officer
of the Fund or member of the Fund's Board.
4. The Fund shall furnish notice promptly to Lincoln National of any
dividend or distribution payable on any shares underlying Subaccounts. All of
such dividends and distributions as are payable on shares of a Series recorded
in the title for the corresponding Subaccount shall be automatically reinvested
in additional shares of that Series. The Fund shall notify Lincoln National of
the number of shares so issued.
5. The Fund shall pay all its expenses incidental to its performance under
this Agreement. The Fund shall see to it that all of its shares are registered
and authorized for issue in accordance with applicable federal and state laws
prior to their purchase by Lincoln National
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for the Subaccount. The Fund shall bear the expenses of the cost of registration
of its shares, preparation of its prospectuses, proxy materials and reports, the
printing and distribution of such items to each Policy owner who has allocated
net amounts to any Subaccount, the preparation of all statements and notices
required by any federal or state law, or taxes imposed upon the Series on the
issue or transfer of the Fund's shares subject to this Agreement.
6. Lincoln National shall make no representations concerning the Fund's
shares except those contained in the then current prospectus of the Fund and in
printed information subsequently issued on behalf of the Fund or approved in
writing by the Fund as supplemental to such prospectus.
7. It is understood among the parties to this Agreement that shares of the
Fund may be offered to separate accounts of various insurance companies in
addition to Lincoln National and in connection with insurance policies or
contracts other than the Policies (this practice is herein described as "mixed
and shared funding"). It is also understood among the parties that shares of the
Series may be offered to other persons identified in paragraph f of Temporary
Regulation Section 1.817-5T. The Fund and CRMC filed an application and an
amendment thereto (file number 812-6393) (the "Application") for an order of the
Securities and Exchange Commission, pursuant to Section 6(c) of the 1940 Act
exempting the Fund and Capital Research and Management Company and certain life
insurance companies from certain provisions of the 1940 Act and the rules
thereunder to the extent necessary to permit shares of the Fund to be sold in
connection with mixed and shared funding. The order was granted in SEC release
no. IC-15899 (the "Order"), subject to certain conditions contained in the
Application (the "Conditions"). The following is a summary of the Conditions as
set forth in the Notice of Application and Opportunity for Hearing (SEC release
no. IC-15233):
(a) A majority of the Board of the Fund shall consist of persons who
are not "interested persons" of the Fund as defined by the 0000 Xxx.
(b) The Board of the Fund will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of policy (or
contract) owners of all separate accounts investing in the Fund.
(c) Lincoln National shall report any potential or existing conflict
to the Fund's Board.
(d) The Board of the Fund shall promptly notify Lincoln National in
writing of any irreconcilable material conflict and its implications.
(e) If an irreconcilable material conflict exists, Lincoln National
shall, to the extent practicable, take whatever steps are necessary to eliminate
such a conflict.
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(f) Lincoln National shall consider whether disclosure in the
prospectus of the Policies regarding potential risks of mixed and shared funding
is appropriate.
(g) Lincoln National shall vote shares of the Fund in accordance with
instructions received from the Policy owners whose Policy cash values are
invested in shares of the Fund. Lincoln National shall vote shares of the Fund
for which no instructions have been received in the same proportion as shares of
the Fund for which instructions have been received from Policy owners.
(h) Lincoln National and the Fund shall undertake to comply with any
material applicable regulation of the Securities and Exchange Commission which
may be adopted relating to mixed and shared funding (including applying for any
additional exemptive relief, if necessary).
(i) The Fund prospectus shall disclose that (1) shares of the Fund are
offered to insurance company separate accounts funding both variable annuity and
variable life insurance contracts, (2) interests of various contract owners
participating in a Fund might be in conflict, and (3) the Board will monitor for
the existence of any material conflicts and determine what action, if any,
should be taken.
Lincoln National hereby agrees to comply with all the Conditions, as
applicable, and the Fund reaffirms its undertaking to comply with the
Conditions. The provisions of this Section are not subject to termination
pursuant to section 10 of this Agreement and shall remain in effect for as long
as necessary to satisfy the Conditions.
9. The Fund agrees to comply with the diversification requirements of
Internal Revenue Code section 817(h) and any regulations thereunder.
10. This Agreement shall terminate:
a. at the option of Lincoln National or of the Fund upon nine months'
advance written notice to the other;
b. at the option of Lincoln National upon institution of formal
enforcement proceedings against the Fund by the Securities and
Exchange Commission;
c. upon a majority vote of the Policy owners having an interest in a
particular Subaccount to substitute the shares of another
investment company for the corresponding Fund shares in
accordance with the terms of the Policies for which those Fund
shares had been selected to serve as the underlying investment
medium. Lincoln National will give 30 days' prior written
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notice to the Fund of the date of any proposed vote to substitute
shares; and
d. in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such law
precludes the use of such shares as an underlying investment for
the Policies issued or to be issued by Lincoln National. In such
event, prompt notice shall be given by Lincoln National or the
Fund to the other.
11. Each notice required by this Agreement shall be given in writing and
delivered via certified mail - return receipt requested.
12. The obligations of the Fund under this Agreement are not binding upon
any of the Trustees, officers, employees, agents or shareholders of the Fund
individually, but bind only the Fund's assets. Lincoln National and the Account
agree to look solely to the assets of the Fund for the satisfaction of any
liability of the Fund with respect to this Agreement and will not seek recourse
against the members of the Board or Trustees of the Fund, or its officers,
employees, agents or shareholders, or any of them, or any of their personal
assets for such satisfaction.
13. This Agreement shall be construed in accordance with the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY FOR ITSELF AND
ON BEHALF OF LINCOLN NATIONAL
FLEXIBLE PREMIUM VARIABLE LIFE
ACCOUNT F
Attest:
___________________________________ By ___________________________________
AMERICAN VARIABLE INSURANCE SERIES
Attest:
___________________________________ By ___________________________________
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