Exhibit 8(a)(xiv)
PARTICIPATION AGREEMENT
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
This Participation Agreement ("Agreement"), dated as of the 1st day of April,
2014, is made by and between THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
("Company"), on behalf of itself and each of the separate accounts identified on
Exhibit A, which is attached hereto, as the parties hereto may amend from time
to time ("Variable Accounts"), XXXXXXX & XXXX, INC. ("W&R"), distributor for Ivy
Funds Variable Insurance Portfolios, and IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
("Ivy Funds VIP").
WHEREAS, Ivy Funds VIP is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"), and currently includes the
separately managed series identified on Exhibit B, which is attached hereto,
that are available to the Variable Accounts in accordance with this Agreement
(each a "Portfolio"); and
WHEREAS, the Portfolios are currently sold to one or more separate accounts of
life insurance companies to fund benefits under variable life insurance policies
and/or variable annuity contracts ("Participating Insurance Companies"); and
WHEREAS, Company, W&R and Ivy Funds VIP mutually desire the inclusion of the
Portfolios as underlying investment options for each of the variable life
insurance policies and/or variable annuity contracts issued by Company
identified on Exhibit A, which is attached hereto, as the parties hereto may
amend from time to time (collectively, the "Contracts"); and
WHEREAS, the Contracts allow for the allocation of net amounts received by
Company to separate sub-accounts of the Variable Accounts for investment in
shares of the Portfolios and other similar funds; and
WHEREAS, selection of a particular sub-account (corresponding to a particular
Portfolio) is made by the owner of a Contract ("Contract Owner") and such
Contract Owner may reallocate their investment options among the sub-accounts of
the Variable Accounts in accordance with the terms of the Contracts.
NOW THEREFORE, Company, W&R and Ivy Funds VIP, in consideration of the promises
and undertakings described herein, agree as follows:
1. SCOPE OF AGREEMENT. The scope of this Agreement is limited to the purchase
of Portfolio shares by the Variable Accounts on behalf of purchasers of the
Contracts.
2. REPRESENTATIONS OF COMPANY.
(a) Company represents and warrants that the Variable Accounts have been
established and are in good standing under the laws of their state of
organization; and the Variable Accounts have been registered as unit
investment trusts under the 1940 Act and will remain so registered, or
are exempt from registration pursuant to Section 3(c)(11) of the 1940
Act;
(b) Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of its state of
incorporation and that it has legally and validly established each
Variable Account as a segregated asset account under applicable state
insurance laws and the regulations thereunder.
(c) Company represents and warrants that (i) prior to and at the time of
any issuance or sale of Portfolio shares, the Contracts will be
registered under the Securities Act of 1933, as amended ("1933 Act"),
unless exempt from such registration, (ii) prior to and at the time of
any issuance or sale of Portfolio shares, the Contracts will be duly
authorized for issuance and sold in compliance with all applicable
federal and state laws, including, without limitation, the 1933 Act,
the Securities Exchange Act of 1934 ("1934 Act"), the 1940 Act and the
law(s) of Company's state(s) of organization and domicile, (iii) each
Variable Account does and will comply in all material respects with
the requirements of the 1940 Act and the rules thereunder, unless
exempt from such requirements, (iv) each Variable 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, (v)
Company will amend the registration statement for its Contracts under
the 1933 Act and for its Variable Accounts under the 1940 Act from
time to time as required in order to effect the continuous offering of
its Contracts or as may otherwise be required by applicable law, and
(vi) each Variable Account prospectus, Statement of Additional
Information ("SAI"), and then-current stickers, will at all times
comply in all material respects with the applicable requirements of
the 1933 Act and the rules thereunder.
(d) Company represents that each Variable Account is a "segregated asset
account" and that interests in each Variable Account are offered
exclusively through the purchase of a "variable contract", within the
meaning of such terms under Section 817 of the Internal Revenue Code
of 1986, as amended ("Code"), and Section 1.817-5(f)(2) of the Federal
Tax Regulations, that it shall make every effort to continue to meet
such definitional requirements, and that it shall notify W&R and Ivy
Funds VIP promptly upon having a reasonable basis for believing that
such requirements have ceased to be met or that they may not be met in
the future.
(e) Company represents that the Contracts are currently, and at the time
of issuance will be, treated as annuity contracts or life insurance
policies, whichever is appropriate under applicable provisions of the
Code, and that it shall make every commercially reasonable effort to
maintain such treatment. Company will promptly notify W&R and Ivy
Funds VIP upon having a reasonable basis for believing that the
Contracts have ceased to be treated as annuity contracts or life
insurance polices, or that the Contracts may not be so treated in the
future. The foregoing does not encompass Contracts which fail to
qualify for treatment as annuity contracts or life insurance policies
under the applicable Code provisions because of the actions or
inaction of the purchasers of such Contracts.
(f) Company represents that it has established such rules and procedures
as are necessary to ensure compliance with applicable federal, state
and self-regulatory requirements relating to the offering of the
Contracts. W&R and Ivy Funds VIP explicitly disclaim any and all
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responsibility for the offer, sale, distribution and/or servicing of
the Contracts, except as otherwise specified in this Agreement.
(g) Company shall during the term of this Agreement comply with all laws,
rules and regulations applicable to it in connection with the
performance of each of its obligations under this Agreement or
applicable to the performance of its business, including, but not
limited to, the requirements of the USA Patriot Act of 2001 (the "AML
Act") and related laws, rules and regulations.
(h) To the extent one or more third parties are engaged by Company to
offer the Contracts and/or perform services that Company is
responsible for under this Agreement (such parties include, but are
not limited to, affiliates of Company) ("Agents"), Company shall
determine that each such Agent is capable of performing such services,
shall take measures as may be necessary to ensure that Agents perform
such services in accordance with the requirements of this Agreement
and applicable law and shall bear full responsibility for, and assume
all liability for (including any obligation for indemnification as
provided in Paragraph 13 hereof), the actions and inactions of such
Agents as if such services had been provided by Company.
(i) From time to time, W&R and/or Ivy Funds VIP may implement policies,
procedures or requirements in an effort to comply with applicable
legal requirements and/or avoid potential adverse effects on the
Portfolios. Company agrees to cooperate in good faith with W&R and/or
Ivy Funds VIP in the implementation of any such policies, procedures
and/or requirements and agrees to comply with any and all
requirements, restrictions and limitations described in the
Portfolios' prospectus, including any restrictions or prohibitions
relating to frequent purchases and redemptions of Portfolio shares.
Such cooperation shall include, but not be limited to, providing,
promptly upon request by W&R and/or Ivy Funds VIP, names, taxpayer
identification numbers and transaction information relating to
Contract Owners issuing instructions to the Company resulting in the
purchase, redemption, transfer or exchange of Portfolio shares,
executing any instructions from W&R and/or Ivy Funds VIP to restrict
or prohibit any further purchases or exchanges of Portfolio shares
relating to any Contract Owner who has been identified by or on behalf
of Ivy Funds VIP as having engaged in transactions of Portfolio shares
that violate policies established by Ivy Funds VIP for the purpose of
eliminating or reducing any dilution of the value of the outstanding
securities issued by the Portfolio, facilitating the imposition of any
applicable redemption fee on such person or persons, and taking such
other remedial steps as are requested by W&R and/or Ivy Funds VIP, all
to the extent permitted or required by applicable law.
(j) Company represents that, during the term of this Agreement, it will
have in force adequate insurance coverage as may be required by
applicable law insuring the Company against potential liabilities
associated with the underwriting and distribution of the Contracts. To
the extent there is no applicable law imposing such a requirement,
Company represents that it is adequately reserved to self-insure for
such liabilities.
3. AUTHORITY OF COMPANY. Subject to the terms and conditions of this
Agreement, Company shall be authorized to, and agrees, to act as a limited
agent of W&R for purposes of Rule 22c-1 under the 1940 Act and to the
extent permitted by applicable law, for the sole
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purpose of receiving instructions for the purchase and redemption of
Portfolio shares (from Contract Owners or participants making investment
allocation decisions under the Contracts) prior to the close of business of
the New York Stock Exchange ("NYSE"), normally 3:00 p.m. Central Time
("Pricing Time") each Business Day. "Business Day" shall mean any day on
which the NYSE is open for trading and on which the Portfolios calculate
their net asset value as set forth in the Portfolios' most recent
prospectuses and SAIs. Except as particularly stated in this paragraph,
Company shall have no authority to act on behalf of W&R or Ivy Funds VIP or
to incur any cost or liability on its behalf.
4. AVAILABLE PORTFOLIOS.
(a) AVAILABILITY. Ivy Funds VIP will make shares of the Portfolios
available to Company and its Variable Accounts for purchase and
redemption at the applicable net asset value and with no sales charges
on those days on which the Portfolios calculate their net asset value
pursuant to the rules of the SEC, subject to the terms and conditions
of this Agreement. Notwithstanding the foregoing, the Board of
Trustees of Ivy Funds VIP ("Board") may refuse to sell shares of any
Portfolio to any person or suspend or terminate the offering of shares
of any Portfolio (a) if such action is required by law or by
regulatory authorities having jurisdiction, (b) if, in the sole
discretion of the Board, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, the
Board deems such action to be in the best interests of the
shareholders of such Portfolio, or (c) if such action is required by
any policies that the Board has adopted and that apply to all
Participating Insurance Companies. Further, it is acknowledged and
agreed that the availability of Portfolio shares shall be subject to
Ivy Funds VIP's current prospectus and SAI and to federal and state
laws, rules and regulations.
(b) ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS. W&R and/or Ivy Funds
VIP may, from time to time, add other Portfolios to provide additional
funding options for the Contracts, or to delete, combine or modify
existing Portfolios, by amending Exhibit B hereto. W&R and/or Ivy
Funds VIP reserve the right to amend Exhibit B in their sole and
exclusive discretion upon written notice to Company, such notice to
provide adequate time for Company and the Variable Accounts to comply
with any and all regulatory requirements relating to notice to the
purchasers of the Contracts that may be engendered by such amendment.
Upon such amendment to Exhibit B, any applicable reference to a
Portfolio, Ivy Funds VIP or its shares herein shall include a
reference to any such additional Portfolio.
(c) NO SALES TO THE GENERAL PUBLIC. Ivy Funds VIP represents and warrants
that shares of the Portfolios will be sold only to insurance companies
and/or their separate accounts funding variable life insurance
policies and/or variable annuity contracts or to other persons or
entities permitted under Section 817 of the Code, or regulations
promulgated thereunder. Ivy Funds VIP represents and warrants that no
shares of any Portfolio have been or will be sold to the general
public.
5. PROCESSING OF PORTFOLIO PURCHASE AND REDEMPTION REQUESTS.
(a) PRICING INFORMATION. Ivy Funds VIP or its agents will use reasonable
best efforts to provide closing net asset value, change in net asset
value, dividend or daily accrual rate
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information and capital gain information by 6:00 p.m. Central Time
each Business Day to Company. Company shall use this data to calculate
unit values for its Variable Accounts. Unit values shall be used to
process that same Business Day's Variable Account transactions. In the
event adjustments to transactions previously effected on behalf of a
Variable Account are required to correct any material error in the
computation of the net asset value of a Portfolio's shares, Ivy Funds
VIP or its agent shall notify Company as soon as practicable after
discovering the need for those adjustments which result in a
reimbursement to a Variable Account in accordance with Ivy Funds VIP's
then current policies on reimbursement, which Ivy Funds VIP represents
are consistent with applicable SEC standards. If an adjustment is to
be made in accordance with such policies to correct an error which has
caused a Variable Account to receive an amount different than that to
which it is entitled, Ivy Funds VIP or its agent shall make all
necessary adjustments to the number of shares owned in the Variable
Account and distribute to the Variable Account the amount of such
underpayment for credit by the Company to affected Contract Owners. In
the event that any such material error is the result of the gross
negligence of W&R or Ivy Funds VIP, or a designated agent for
calculating the net asset value, any administrative or other costs or
losses incurred for correcting underlying Contract owner accounts
shall be at W&R's expense. The Company agrees to use its best efforts
to minimize any costs incurred under this paragraph and shall provide
W&R with acceptable documentation of any such costs incurred.
(b) PLACING OF ORDERS BY COMPANY. Orders for purchases or redemptions
shall be placed by Company with W&R or its specified agent, in a
manner and format as mutually agreed upon between the parties, no
later than 8:30 a.m. Central Time on the following Business Day. In
the event that the Company is unable to meet the time stated
immediately above with respect to placing orders, then Company shall
immediately notify W&R and Company will be allowed to submit orders
until 9:00 a.m. Central Time. The Company may place purchase and/or
redemption orders on the following Business Day for shares of the
Portfolios that it receives prior to the Pricing Time each Business
Day. The Company will not aggregate pre-Pricing Time trades with
post-Pricing Time trades. All orders shall be communicated by the
Company through the National Securities Clearing Corporation's
("NSCC") Fund/SERV system. The following information shall be supplied
by the Company at the time each order is placed: (i) total purchases
for each Portfolio (including all purchase, exchange and transfer
orders received by the Company resulting in purchases of Portfolio
shares); (ii) total redemptions for each Portfolio (including all
redemption, exchange and transfer orders received by the Company
resulting in redemptions of Portfolio shares); and (iii) such other
information required by NSCC or reasonably requested by W&R.
(c) PROCESSING OF ORDERS. To the extent permitted by applicable law,
orders for shares of Portfolios received by Company prior to the
Pricing Time on a Business Day and received by W&R by 8:30 a.m.
Central time or, if permitted by W&R, by 11:00 a.m. Central Time on
the following Business Day shall be executed at the time they are
received by W&R and at the net asset value price determined as of the
close of trading on the previous Business Day, provided that Company
represents it has received such orders prior to the close of the NYSE
on the previous Business Day. In connection with this Section 5(c),
Company represents and warrants that it will not submit any order for
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shares of a Portfolio or engage in any practice, nor will it allow any
person acting on its behalf to submit any order for shares of a
Portfolio or engage in any practice, that would violate or cause a
violation of Section 22 of the 1940 Act or Rule 22c-1 thereunder. W&R
will not accept any order made on a conditional basis or subject to
any delay or contingency. Company shall only place purchase orders for
shares of Portfolios on behalf of its customers whose addresses
recorded on Company's books are in a state or other jurisdiction in
which the Portfolios are registered or qualified for sale, or are
exempt from registration or qualification as confirmed in writing by
W&R.
(d) PAYMENT FOR SHARES. Payment for net purchases shall be wired to a
custodial account designated in writing by W&R and payment for net
redemptions will be wired to an account designated in writing by
Company. Company will wire payment for net purchases to a custodian
account designated by Ivy Funds VIP by 5:00 p.m. Central Time on the
same day as the order for Portfolio shares is placed, to the extent
practicable. Ivy Funds VIP will wire payment for net redemptions to an
account designated by Company by 5:00 p.m. Central Time on the day the
order is communicated to W&R, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed
in order to enable Company to pay redemption proceeds within the time
specified in Section 22(e) of the 1940 Act or such period of time as
may be required by law. Net purchase orders are subject to
cancellation at the option of W&R and/or Ivy Funds VIP in the event
that payment is not received by end of the second day after the day
the order is settled. Company shall indemnify W&R and Ivy Funds VIP
for any losses incurred in connection with a cancelled order.
(e) DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. Dividends and capital gain
distributions shall be reinvested in additional Portfolio shares at
net asset value. Notwithstanding the above, W&R shall not be held
responsible for providing Company with ex-date net asset value, change
in net asset value, dividend or capital gain information when the NYSE
is closed, when an emergency exists making the valuation of net assets
not reasonably practicable, or during any period when the SEC has by
order permitted the suspension of pricing shares for the protection of
shareholders. Ivy Funds VIP shall furnish, on or before the
ex-dividend date, notice to Company of any income dividends or capital
gain distributions payable on the shares of the Portfolios. Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional
shares of the Portfolio. Ivy Funds VIP shall notify Company of the
number of shares so issued as payment of such dividends and
distributions.
(f) MANUAL TRANSACTIONS. In the event that there are technical problems
with the NSCC Fund/SERV System or the parties are not able to transmit
or receive information through Fund/SERV, the following provisions
shall apply:
a. Purchase and Redemption Orders. On each Business Day, Company
shall calculate the net purchase and redemption Orders accepted
by Company for shares of a Portfolio that it received prior to
the close of that day's trading on the NYSE and shall communicate
to W&R or Ivy Funds VIP the net purchase or redemption Order (if
any) for each Variable Account for such Business Day (which is
also the Trade Date). This communication shall be by facsimile or
by
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such other means as the parties hereto may agree to in writing
and shall be received by W&R or Ivy Funds VIP prior to 8:30 a.m.
Central Time, on the next Business Day following the Trade Date.
All trades communicated to W&R or Ivy Funds VIP by this deadline
shall be treated as if they were received by W&R or Ivy Funds VIP
prior to the close of trading on the Trade Date. Orders received
after the close of that day's trading on the NYSE shall be
communicated by Company to W&R or Ivy Funds VIP prior to 8:30
a.m. Central Time, on the next Business Day following the Trade
Date.
b. Settlement of Transactions.
i. Purchases. W&R shall provide Company written purchase
instructions for wire transfers to the custodian for the
applicable Portfolios. Company shall wire the purchase price
for each purchase order in accordance with said instructions
so that the funds are received by the applicable Portfolio's
custodian by no later than close of business on the next
Business Day following the Trade Date and Company shall use
its best efforts so that such funds are provided to the
Portfolio's custodian by 3:00 p.m. Central Time. Company may
make such wire transfers on a "net by Portfolio basis."
Company agrees that if it or its Agents fails to provide
funds to the Portfolio's custodian as set forth above, then
at the option of W&R or Ivy Funds VIP, (A) the transaction
may be cancelled, or (B) the transaction may be processed at
the next-determined net asset value for the applicable
Portfolio after purchase order funds are received. In such
event, Company shall indemnify and hold harmless W&R, Ivy
Funds VIP and the Portfolios from any liabilities, costs and
damages any may suffer as a result of such failure to
provide funds in accordance with such deadline.
ii. Redemptions. W&R and/or Ivy Funds VIP shall use its best
efforts to cause to be transmitted by wire transfer on the
Business Day immediately following the Trade Date, to such
account as Company shall direct in writing, the proceeds of
all redemption orders placed by Company no later than the
close of business on the Business Day immediately following
the Trade Date. Should W&R and/or Ivy Funds VIP need to
extend the settlement on a trade, it shall contact Company
to discuss the extension; provided, however, that any such
extension shall not relieve W&R and/or Ivy Funds VIP of its
settlement obligations under Applicable Law.
iii. All wire transfers effecting settlements will be made on an
aggregate net basis; that is, the aggregate of the net
amounts due after offsetting purchases and redemptions for
all applicable Portfolios.
(g) ISSUANCE OF SHARES. Issuance and transfer of Portfolio shares will be
by book entry only. Share certificates will not be issued to Company
for any Variable Account. Portfolio shares will be recorded in the
appropriate title for each Variable Account.
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(h) COMPANY REPORTING. Company shall provide W&R with monthly reports in a
manner and format as detailed in Exhibit D no later than ten (10)
calendar days following the end of each month during the term of this
Agreement. Such reports will set forth a listing of each order
received from Contract Owners during the month resulting in the
purchase or sale of Portfolio shares, including the following
information with respect to each such order and such additional
information as W&R shall reasonably request: (i) the transaction date,
which shall be the Business Day the order was received by the Company,
if the order was received prior to the Pricing Time, or the Business
Day following the Business Day the order was received by the Company,
if the order was received after the Pricing Time; (ii) the transaction
type (e.g., purchase, redemption, exchange, transfer, etc.); (iii) the
Portfolio CUSIP number; (iv) the dollar amount of the transaction; (v)
the name of the agent assigned to the Contract Owner's account/policy;
and (vi) the agent's branch office number, city, state and zip code.
Company agrees to provide W&R, upon request, written reports
indicating the number of Contract Owners and such other information
(including books and records) and in such format as W&R may reasonably
request or as may be necessary or advisable to enable it to comply
with any law, regulation or order.
6. EXPENSES. All expenses incident to the performance by Company, W&R and/or
Ivy Funds VIP of their respective obligations under this Agreement shall be
paid by the party subject to the obligation. W&R shall pay compensation to
Company under this Agreement as provided on Exhibit C.
7. PROSPECTUSES, SAIS, PROXIES AND REPORTS.
(a) DELIVERY TO COMPANY. W&R shall promptly provide Company (or its
designee), or cause Company (or its designee) to be provided with:
(1) as many copies of the Portfolios' prospectus and supplements
as Company may reasonably request in addition to
camera-ready copy of the Portfolios' prospectus and any
supplements, for use by Company in producing a combined
prospectus for each Contract incorporating both the Contract
prospectus and the Portfolios' prospectus;
(2) a portable document format (".pdf") version of the
Portfolios' SAI and any supplements, in addition to
providing Company or Contract Owners printed SAIs free of
charge if so requested in accordance with a statement
contained in the Portfolios' prospectus that said SAI is
available from W&R or Ivy Funds VIP;
(3) periodic reports required under the 1940 Act ("Periodic
Reports") in such quantity as Company shall reasonably
require for distribution to Contract Owners, or in lieu
thereof at Company's request, a .pdf version of Periodic
Reports; and
(4) copies of any Portfolio proxy materials in such quantity as
Company shall reasonably require for distribution to
Contract Owners.
For purposes of clarity, see Schedule A, paragraph F, attached hereto,
which outlines each parties responsibility with respect to this
Section.
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(5) In the event that Company desires to utilize summary
prospectuses, Company shall promptly notify W&R and at such
time, the parties agree to abide by Exhibit E with respect
to the use and deliver of summary prospectuses.
(b) DELIVERY TO CONTRACT OWNERS. Company assumes sole responsibility for
ensuring that such materials are delivered to Contract Owners in
accordance with applicable federal and state securities laws.
(c) USE OF PORTFOLIO MATERIALS BY COMPANY. If Company elects to include
any materials provided by W&R or Ivy Funds VIP, specifically
prospectuses, SAIs, Periodic Reports and proxy materials, on its web
site or in any other computer or electronic format, Company assumes
sole responsibility for maintaining such materials in the form
provided by W&R or Ivy Funds VIP and for promptly replacing such
materials with all updates provided by W&R or Ivy Funds VIP. W&R or
Ivy Funds VIP agree to provide all such materials requested by Company
in a ".pdf" in a timely fashion at no additional cost, together with
such other formats at Company's cost as may be mutually agreed upon.
(d) PROXY VOTING. Except to the extent prohibited by law, the Company
shall, at any time the provisions of Section 11 of the Agreement are
in effect: (i) solicit voting instructions from Contract Owners; (ii)
vote the Portfolio(s) shares in accordance with the instructions
received from Contract Owners; and (iii) vote Portfolio(s) shares for
which no instructions have been received in the same proportion as the
vote of all other holders of such shares, provided however, that the
Company reserves the right to vote Portfolio shares held in any
segregated asset account in its own right, to the extent permitted by
law. Company and its agents will in no way recommend action in
connection with or oppose or interfere with the solicitation of
proxies for the Portfolio shares held for the benefit of such Contract
Owners.
8. SALES MATERIAL AND INFORMATION.
(a) Company and its agents shall make no representations concerning the
Portfolios or Portfolio shares except those contained in the
Portfolios' then current prospectuses, SAIs or other documents
produced by W&R (or an entity on its behalf) which contain information
about the Portfolios. Company agrees to submit to W&R for prior review
and approval any communication with the public containing any
Portfolio information. Company agrees to allow at least ten (10)
Business Days for W&R to review any advertising and sales literature
drafted by Company (or agents on its behalf) with respect to the
Portfolios prior to using such material or submitting such material to
any regulator. Such material may be used at the end of said review
period absent any objection provided in writing to Company by W&R.
(b) W&R and Ivy VIP Funds VIP shall make no representations concerning
Company or its Variable Accounts or the Contracts supported by them
except those contained in the then current prospectuses for the
Contract, SAIs or other documents produced by Company
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(or an entity on its behalf) which contain information about the
Company, the Variable Accounts or the Contracts. W&R and Ivy Funds VIP
agree to submit to Company for prior review and approval any
communication with the public containing any information regarding
Company, the Variable Accounts or the Contracts. W&R and Ivy Funds VIP
agree to allow at least ten (10) Business Days for Company to review
any advertising and sales literature drafted by W&R or Ivy Funds VIP
(or agents on their behalf) with respect prior to using such material
or submitting such material to any regulator. Such material may be
used at the end of said review period absent any objection provided in
writing to W&R by Company.
9. REPRESENTATIONS OF W&R AND/OR IVY FUNDS VIP.
(a) W&R represents that the Portfolios are currently qualified as
regulated investment companies under Subchapter M of the Code and that
Ivy Funds VIP shall make every effort to maintain such qualification.
W&R shall promptly notify Company upon having a reasonable basis for
believing that any of the Portfolios has ceased to so qualify, or that
they may not qualify as such in the future.
(b) W&R represents that each of the Portfolios currently complies with the
diversification requirements pursuant to Section 817(h) of the Code
and Section 1.817-5(b) of the Federal Tax Regulations and that Ivy
Funds VIP will make every effort to maintain the Portfolios'
compliance with such diversification requirements, unless the
Portfolios are otherwise exempt from Section 817(h) and/or except as
otherwise disclosed in the Portfolios' prospectus. W&R will notify
Company promptly upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify, or that a Portfolio might not so
qualify in the future.
(c) W&R represents and warrants that Ivy Funds VIP is duly organized and
validly existing under the laws of Delaware and that each Portfolio
does and will comply in all material respects with the 1940 Act and
the rules and regulations thereunder.
(d) W&R represents and warrants that the Portfolio shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act and
each Portfolio shall be registered under the 1940 Act prior to and at
the time of any issuance or sale of such shares. W&R shall amend the
Portfolios' registration statement under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous
offering of Portfolio shares. Ivy Funds VIP shall register and qualify
its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by Ivy Funds VIP or W&R.
(e) Ivy Funds VIP represents and warrants that it, its trustees, officers,
employees and others dealing with the money or securities, or both, of
a Portfolio shall at all times be covered by a blanket fidelity bond
or similar coverage for the benefit of the Portfolio in an amount not
less than the minimum coverage required by Rule 17g-1 or other
regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
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(f) W&R represents and warrants that it is currently and will continue to
be a registered-broker dealer and member in good standing with the
Financial Industry Regulatory Authority ("FINRA").
10. MONTHLY CONFIRMATIONS. Ivy Funds VIP or its agent shall provide Company a
monthly statement of account or electronic access to account information,
which shall confirm all transactions in Portfolio shares made during that
particular month by a Variable Account.
11. MIXED AND SHARED FUNDING.
(a) GENERAL. The SEC has granted an order to Ivy Funds VIP exempting it
from certain provisions of the 1940 Act and rules thereunder ("Order")
so that Ivy Funds VIP may be available for investment by the Variable
Accounts and by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life
insurance policies, separate accounts of insurance companies
unaffiliated with Company, and qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). 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 11.
Sections 11(b) through 11(h) below shall apply pursuant to the Order
granted to Ivy Funds VIP. Ivy Funds VIP hereby notifies Company that
it may be appropriate to include in the prospectus pursuant to which a
Contract is offered disclosure regarding the potential risks of Mixed
and Shared Funding.
(b) MATERIAL IRRECONCILABLE CONFLICTS. Company agrees to inform the Board
of the existence of any potential or existing material irreconcilable
conflicts 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 reason, including without limitation:
(1) an action by any state insurance or other regulatory
authority;
(2) 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;
(3) an administrative or judicial decision in any relevant
proceeding;
(4) the manner in which the investments of any Portfolios are
being managed;
(5) a difference in voting instructions given by variable
annuity contract participants, variable life insurance
policy participants to Participating Insurance Companies (as
that term is defined in the Order) and trustees of
Participating Plans (as that term is defined in the Order);
11
(6) a decision by a Participating Insurance Company to disregard
the voting instructions of participants; or
(7) a decision by a Participating Plan to disregard the voting
instructions of plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 11(a) hereof, Company will
assist the Board in carrying out its responsibilities under the Order
by providing the Board with all information reasonably necessary for
the Board to consider any issue raised, including information as to a
decision by Company to disregard voting instructions of Contract
Owners. Company's responsibilities in connection with the foregoing
shall be carried out with a view only to the interests of Contract
Owners.
(c) CONFLICT REMEDIES.
(1) It is agreed that if it is determined by a majority of the
members of the Board or a majority of the Disinterested Trustees
that a material irreconcilable conflict exists, Company will, if
it is a Participating Insurance Company involved in the material
irreconcilable conflict, at its own expense and to the extent
reasonably practicable (as determined by a majority of the
Disinterested Trustees), take 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
Variable Accounts from Ivy Funds VIP or any Portfolio and
reinvesting such assets in a different investment medium,
including another Portfolio, 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
participants, life insurance participants or all
participants) that votes in favor of such segregation, or
offering to the affected 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.
(2) If the material irreconcilable conflict arises because of
Company's decision to disregard Contract Owner voting
instructions and that decision represents a minority position or
would preclude a majority vote, Company may be required at Ivy
Funds VIP's election, to withdraw each Variable Account's
investment in Ivy Funds VIP or any Portfolio. No charge or
penalty will be imposed as a result of such withdrawal. Any such
withdrawal must take place within six (6) months after Ivy Funds
VIP gives notice to Company that this provision is being
implemented, and until such withdrawal Ivy Funds VIP shall
continue to accept and implement orders by Company for the
purchase and redemption of shares of Ivy Funds VIP.
12
(3) If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
Company conflicts with the majority of other state regulators,
then Company will withdraw each Variable Account's investment in
Ivy Funds VIP within six (6) months after the Board informs
Company that it has determined that such decision has created a
material irreconcilable conflict, and until such withdrawal Ivy
Funds VIP shall continue to accept and implement orders by
Company for the purchase and redemption of shares of Ivy Funds
VIP. No charge or penalty will be imposed as a result of such
withdrawal.
(4) Company 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.
(5) For purposes hereof, a majority of the Disinterested Trustees
will determine whether or not any proposed action adequately
remedies any material irreconcilable conflict. In no event,
however, will Ivy Funds VIP or any of its affiliates be required
to establish a new funding medium for any Contracts. Company 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.
(d) NOTICE TO COMPANY. Ivy Funds VIP will promptly make known in writing
to Company the Board's 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.
(e) INFORMATION REQUESTED BY BOARD. Company and W&R (or W&R's affiliate)
will at least annually submit to the Board such reports, materials or
data as the Board may reasonably request so that the Board may fully
carry out the obligations imposed upon it by the provisions hereof the
Order or any other exemptive order granted by the SEC to permit Mixed
and Shared Funding, and said reports, materials and data will be
submitted at any reasonable time deemed appropriate by the Board.
(f) COMPLIANCE WITH SEC RULES. If, at any time during which Ivy Funds VIP
is serving as 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, Ivy Funds VIP agrees that it will comply with the terms and
conditions thereof and that the terms of this Section 11 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.
(g) OTHER REQUIREMENTS. Ivy Funds VIP will require that each other
Participating Insurance Company and each Participating Plan enter into an
agreement with Ivy Funds VIP that contains in substance the same provisions
as are set forth in Sections 2(c), 2(d), 7(d), 9(b) and 11 of this
Agreement.
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12. TERMINATION.
(a) EVENTS OF TERMINATION. This Agreement shall terminate as to the sale
and issuance of Portfolio(s) shares:
(1) at the option of Company, W&R or Ivy Funds VIP upon at least
sixty (60) days advance written notice to the other;
(2) at any time with respect only to an applicable Portfolio(s), upon
W&R's election, if Ivy Funds VIP determines that liquidation of
the Portfolio(s) is in the best interest of the Portfolio(s) and
its (their) beneficial owners. Reasonable advance notice of
election to liquidate shall be furnished by W&R to permit the
substitution of Portfolio shares with the shares of another
investment company;
(3) if the Contracts are not treated as annuity contracts or life
insurance policies by the applicable regulators or under
applicable rules or regulations (note: the foregoing does not
encompass Contracts which fail to qualify for treatment as
annuity contracts or life insurance policies under the applicable
Code provisions because of the actions or inaction of the
purchasers of such Contracts);
(4) if the Variable Accounts are not deemed "segregated asset
accounts" by the applicable regulators or under applicable rules
or regulations;
(5) with respect only to the applicable Portfolio(s), upon a decision
by Company based on reasonable cause, in accordance with
applicable law, to substitute such Portfolio shares with the
shares of another investment company for Contracts for which the
Portfolio shares have been selected to serve as the underlying
investment medium. Company shall give at least sixty (60) days
written notice to Ivy Funds VIP and W&R of any decision to
substitute Portfolio shares;
(6) upon sixty (60) days notice upon assignment of this Agreement
unless such assignment is made with the written consent of each
other party;
(7) in the event Portfolio shares are not registered, issued or sold
pursuant to Federal law, or such law precludes the use of
Portfolio shares as an underlying investment medium of Contracts
issued or to be issued by Company. Prompt written notice shall be
given by either party to the other in the event the conditions of
this provision occur; and
(8) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement.
(b) NOTICE REQUIREMENT. In the event of any termination of this Agreement
at the option of one of the parties, prompt written notice of the
election to terminate this Agreement shall be furnished by the party
terminating the Agreement to the non-terminating parties.
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(c) PORTFOLIOS TO REMAIN AVAILABLE; EFFECT OF TERMINATION. Notwithstanding
any termination of this Agreement by Company, Ivy Funds VIP will, at
the option of Company, continue to make available additional shares of
any Portfolio offered under a Contract pursuant to the terms and
conditions of this Agreement, for any Contract that is in effect on
the effective date of termination of this Agreement and that offers
the particular Portfolio(s) as an investment option under the Contract
as of that date (hereinafter referred to as "Existing Contracts"),
unless W&R or the Board determines that doing so would not serve the
best interests of the shareholders of the affected Portfolio(s) or
would be inconsistent with applicable law or regulation. Specifically,
without limitation, the owners of the Existing Contracts will be
permitted to reallocate investments in the Portfolio(s) (as in effect
on such date), redeem investments in the Portfolio(s) and/or invest in
the Portfolio(s) upon the making of additional purchase payments under
the Existing Contracts. The parties agree that this Section 12 will
not apply to any (i) actions taken pursuant to Section 11 and the
effect of such actions will be governed by Section 11 of this
Agreement or (ii) any rejected purchase and/or redemption order as
described in Section 2(i) hereof. If Company elects to continue to
make available Portfolio shares to Contract Owners after the effective
date of termination of this Agreement in accordance with this Section
12(c), all provisions of this Agreement will survive any termination
of this Agreement solely with respect to transactions in such
Portfolio shares under the Existing Contracts.
(d) Sections 6, 12(c), 14 and 16 and this Section 12(d) shall survive
termination of this Agreement.
13. NOTICES.
(a) DELIVERY. All notices sent under this Agreement shall be given in
writing, and shall be delivered personally, or sent by fax, or by a
nationally-recognized overnight courier, postage prepaid. All such
notices shall be deemed to have been duly given when so delivered
personally or sent by fax, with receipt confirmed, or one (1) business
day after the date of deposit with such nationally-recognized
overnight courier. All such notices to Company, W&R or Ivy Funds VIP
shall be delivered to:
The Lincoln National Life Insurance Company
____________________________________________
____________________________________________
Attention: _________________________________
Xxxxxxx & Xxxx, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Attention: Legal Department
Ivy Funds Variable Insurance Portfolios
0000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Attention: Secretary
15
All such notices to Company, W&R and Ivy Funds VIP shall be delivered to
their respective addresses as listed above, or such other address as
Company, W&R and/or Ivy Funds VIP may have furnished in writing to the
other parties in accordance herewith.
(b) NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(1) Ivy Funds VIP or W&R will immediately notify Company 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 Ivy
Funds VIP's registration statement under the 1933 Act or Ivy
Funds VIP's prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Ivy Funds VIP
prospectus that may affect the offering of shares of Ivy Funds
VIP, (iii) the initiation of any proceedings for that purpose or
for any other purpose relating to the registration or offering of
Ivy Funds VIP Shares, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of shares of any
Portfolio in any state or jurisdiction, including, without
limitation, any circumstances in which (a) such shares are not
registered and, in all material respects, issued and sold in
accordance with applicable state and federal law, or (b) such law
precludes the use of such shares as an underlying investment
medium of the Contracts issued or to be issued by Company. Ivy
Funds VIP and W&R will make every reasonable effort to prevent
the issuance, with respect to any Portfolio, 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.
(2) Company will immediately notify Ivy Funds VIP 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 each
Variable Account's registration statement under the 1933 Act
relating to the Contracts or each Variable Account prospectus,
(ii) any request by the SEC for any amendment to such
registration statement or Variable Account prospectus that may
affect the offering of shares of Ivy Funds VIP, (iii) the
initiation of any proceedings for that purpose or for any other
purpose relating to the registration or offering of each Variable
Account's 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. Company 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.
14. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY.
(1) Company agrees to reimburse and/or indemnify and hold harmless
W&R, Ivy Funds VIP, and each of their trustees, officers,
employees, agents and each person, if any, who controls or is
controlled by W&R within the meaning of the 1933 Act
(collectively, "Affiliated Party") against any losses, claims,
damages or
16
liabilities ("Losses") to which W&R or any such Affiliated Party
may become subject, under the 1933 Act or otherwise, insofar as
such Losses arise out of or are based upon, but not limited to:
(i) any untrue statement or alleged untrue statement of any
material fact contained in information furnished by Company;
(ii) the omission or the alleged omission to state in the
Registration Statements or prospectuses of the Variable
Accounts, or Contract, or in any sales literature or other
public communication generated by Company on behalf of the
Variable Accounts or Contracts, a material fact required to
be stated therein or necessary to make the statements
therein not misleading;
(iii)statements or representations of Company or its agents or
third parties, with respect to the offer, sale or
distribution of Contracts for which Portfolio shares are an
underlying investment, or negligent or wrongful conduct of
Company or its agents or third parties with respect to
offers or sales of Contracts or Portfolio shares;
(iv) the failure of Company to comply with applicable legal or
self-regulatory requirements to which it is subject;
(v) a material breach of this Agreement or of any of the
representations or warranties contained herein; or
(vi) any failure to register the Contracts or the Variable
Accounts under federal or state securities laws, state
insurance laws or to otherwise comply with such laws, rules,
regulations or orders.
(2) Provided however, that Company shall not be liable in any such
case to the extent any such Losses arise out of or are based upon
an act, statement, omission or representation or alleged act,
alleged statement, alleged omission or alleged representation
which was made in reliance upon and in conformity with written
information furnished to Company by or on behalf of W&R
specifically for its use.
(3) Company shall reimburse any legal or other expenses reasonably
incurred by W&R, Ivy Funds VIP, or any Affiliated Party in
connection with investigating or defending any such Losses,
provided, however, that Company shall have prior approval of the
use of said counsel or the expenditure of said fees.
(4) This indemnity agreement shall be in addition to any liability
which Company may otherwise have and shall survive termination of
this Agreement.
(b) INDEMNIFICATION BY W&R AND/OR IVY FUNDS VIP.
(1) W&R and/or Ivy Funds VIP, as applicable, agree to indemnify and
hold harmless Company and each of its directors, officers,
employees, agents and each person,
17
(collectively, "Company Affiliated Party"), who controls Company
within the meaning of the 1933 Act against any Losses to which
Company or any such Company Affiliated Party may become subject,
under the 1933 Act or otherwise, insofar as such Losses arise out
of or are based upon; but not limited to:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any information furnished by W&R
or Ivy Funds VIP, including but not limited to, the
Registration Statements, prospectuses or sales literature of
the Portfolios;
(ii) the omission or the alleged omission to state in the
Registration Statements or prospectuses of the Portfolios or
in any sales literature generated by W&R, Ivy Funds VIP or
their affiliates a material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(iii)W&R's failure to keep the Portfolios fully diversified and
qualified as regulated investment companies as required by
the applicable provisions of the Code, the 1940 Act, and the
applicable regulations promulgated thereunder;
(iv) the failure of W&R or Ivy Funds VIP to comply with
applicable legal or self-regulatory requirements to which
they are subject;
(v) a material breach of this Agreement or of any of the
representations or warranties contained herein; or
(vi) any failure to register the Portfolios under federal or
state securities laws or to otherwise comply with such laws,
rules, regulations or orders.
(2) Provided however, that W&R and Ivy Funds VIP shall not be liable
in any such case to the extent that any such Losses arise out of
or are based upon an act, statement, omission or representation
or alleged act, alleged statement, alleged omission or alleged
representation which was made in reliance upon or in conformity
with written information furnished to W&R or Ivy Funds VIP by
Company specifically for their use.
(3) W&R and/or Ivy Funds VIP, as applicable, shall reimburse any
reasonable legal or other expenses reasonably incurred by Company
or any Company Affiliated Party in connection with investigating
or defending any such Losses, provided, however, that W&R and Ivy
Funds VIP shall have prior approval of the use of said counsel or
the expenditure of said fees.
(4) This indemnity agreement will be in addition to any liability
which W&R and/or Ivy Funds VIP, as applicable, may otherwise have
and shall survive termination of this Agreement.
(c) NOTICE AND DEFENSE OF CLAIMS. Each party shall promptly notify the
other party(ies) in writing of any situation which presents or appears
to involve a claim which
18
may be the subject of indemnification under this Agreement and the
indemnifying party shall have the option to defend against any such
claim. In the event the indemnifying party so elects, it shall notify
the indemnified party and shall assume the defense of such claim, and
the indemnified party shall cooperate fully with the indemnifying
party, at the indemnifying party's expense, in the defense of such
claim. Notwithstanding the foregoing, the indemnified party shall be
entitled to participate in the defense of such claim at its own
expense through counsel of its own choosing. Neither party shall admit
to wrong-doing nor make any compromise in any action or proceeding
which may result in a finding of wrongdoing by the other party without
providing the other party with advance written notice of its intention
to do so and will defer making such an admission or effecting such a
compromise until it receives the other party's prior written consent,
which shall not be unreasonably withheld and shall be provided in a
prompt manner. Any notice given by the indemnifying party to an
indemnified party or participation in or control of the litigation of
any such claim by the indemnifying party shall in no event be deemed
to be an admission by the indemnifying party of culpability, and the
indemnifying party shall be free to contest liability among the
parties with respect to the claim.
15. SUBSTITUTION APPLICATIONS. W&R may request or Company may initiate the
filing of a substitution application pursuant to Section 26(c) of the 1940
Act to substitute shares of a Portfolio held by a Company Variable Account
for another investment option ("Substitution Application"). The costs
associated with a Substitution Application shall be allocated as follows:
(a) In the event W&R requests Company to submit a Substitution
Application, W&R shall reimburse Company for all reasonable costs
incurred by Company in preparing and filing the Substitution
Application and any amendment thereto. W&R shall be obligated to
reimburse Company under this provision irrespective of whether the
Substitution Application requested by W&R is granted by the SEC or the
substitution is effectuated. W&R shall not have any liability to
reimburse any other costs or expenses incurred in connection with
effecting the substitution.
(b) In the event Company initiates a Substitution Application, Company
shall bear all costs associated with the Substitution Application
irrespective of whether the Substitution Application is granted or the
substitution is effectuated.
(c) In the event Company initiates a Substitution Application in
accordance with Section 12(a)(5), Company shall bear the costs
incurred in the transfer.
16. CONFIDENTIALITY.
(a) COMPANY. Ivy Funds VIP acknowledges that the identities of the
customers of Company or any of its affiliates (collectively, the "the
Company Protected Parties" for purposes of this Section 16),
information maintained regarding those customers, and all computer
programs and procedures or other information developed by the Company
Protected Parties or any of their employees or agents in connection
with Company's performance of its duties under this Agreement are the
valuable property of the Company Protected Parties. Ivy Funds VIP
agrees that if it comes into possession of any list or
19
compilation of the identities of or other information about the
Company Protected Parties' customers, or any other information or
property of the Company Protected Parties, other than such information
as may be independently developed or compiled by Ivy Funds VIP from
information supplied to it by the Company Protected Parties' customers
who also maintain accounts directly with Ivy Funds VIP, Ivy Funds VIP
will hold such information or property in confidence and in accordance
with all relevant privacy laws, rules and regulations and refrain from
using, disclosing or distributing any of such information or other
property except: (a) with Company's prior written consent; or (b) as
required by law or judicial process.
(b) IVY FUNDS VIP. Company acknowledges that the identities of the
customers of Ivy Funds VIP or any of its affiliates (collectively, the
"Ivy Funds VIP Protected Parties" for purposes of this Section 16),
information maintained regarding those customers, and all computer
programs and procedures or other information developed by the Ivy
Funds VIP Protected Parties or any of their employees or agents in
connection with Ivy Funds VIP's performance of its duties under this
Agreement are the valuable property of the Ivy Funds VIP Protected
Parties. Company agrees that if it comes into possession of any list
or compilation of the identities of or other information about the Ivy
Funds VIP Protected Parties' customers or any other information or
property of the Ivy Funds VIP Protected Parties, other than such
information as may be independently developed or compiled by Company
from information supplied to it by the Ivy Funds VIP Protected
Parties' customers who also maintain accounts directly with Company,
Company will hold such information or property in confidence and in
accordance with all relevant privacy laws, rules and regulations and
refrain from using, disclosing or distributing any of such information
or other property except: (a) with Ivy Funds VIP's prior written
consent; or (b) as required by law or judicial process.
(c) BOTH PARTIES. Each party acknowledges that any breach of the
agreements in this Section 16 would result in immediate and
irreparable harm to the other parties for which there would be no
adequate remedy at law and agree that in the event of such a breach,
the other parties will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as
any court of competent jurisdiction deems appropriate.
17. TRADEMARKS AND FUND NAMES.
(a) Except as may otherwise be provided in a license agreement among Ivy
Funds VIP and Company, neither Company or any of its respective
affiliates, shall use any trademark, trade name, service xxxx or logo
of W&R, Ivy Funds VIP or any of their respective affiliates, or any
variation of any such trademark, trade name, service xxxx or logo,
without W&R's or Ivy Funds VIP's prior written consent, as applicable,
the granting of which shall be at the sole option of W&R or Ivy Funds
VIP, as applicable. Notwithstanding the foregoing, but subject to all
other provisions of this Agreement, Company is hereby granted a
limited nonexclusive, nontransferable license to use Ivy Funds VIP's
trade name and the trade names of the Portfolios in connection with
its performance of this Agreement. Company will cease using all or any
of such trade names upon written request of W&R.
20
(b) Except as otherwise expressly provided in this Agreement, neither Ivy
Funds VIP, its investment adviser, its principal underwriter, or any
affiliates thereof shall use any trademark, trade name, service xxxx
or logo of Company or any of its affiliates, or any variation of any
such trademark, trade name, service xxxx or logo, without Company's
prior written consent, the granting of which shall be at Company's
sole option.
18. FORCE MAJEURE. Each party shall be excused from the performance of any of
its obligations to the other where such nonperformance is occasioned by any
event beyond its control which shall include, without limitation, any
applicable order, rule or regulation of any federal, state or local body,
agency or instrumentality with jurisdiction, work stoppage, accident,
natural disaster, war, acts of terrorism or civil disorder, provided that
the party so excused shall use all commercially reasonable efforts to
minimize its nonperformance and overcome, remedy, cure or remove such event
as soon as is reasonably practicable, and such performance shall be excused
only for so long as, in any given case, the force or circumstances making
performance impossible shall exist.
19. NO WAIVER. The forbearance or neglect of any party to insist upon strict
compliance by another party with any of the provisions of this Agreement,
whether continuing or not, or to declare a forfeiture of termination
against the other parties, shall not be construed as a waiver of any of the
rights or privileges of any party hereunder. No waiver of any right or
privilege of any party arising from any default or failure of performance
by any party shall affect the rights or privileges of the other parties in
the event of a further default or failure of performance.
20. GOVERNING LAW. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of Delaware, without
respect to its choice of law provisions and in accordance with the 1940
Act. In the case of any conflict, the 1940 Act shall control.
21. AUTHORIZATION. Each party hereby represents and warrants to the other that
the persons executing this Agreement on its behalf are duly authorized and
empowered to execute and deliver the Agreement and that the Agreement
constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms. Except as particularly set forth herein,
neither party assumes any responsibility hereunder, and will not be liable
to the other for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
22. RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed to
create a partnership or joint venture by and among the parties hereto.
23. ENTIRE AGREEMENT AND AMENDMENT. This Agreement, including all exhibits
hereto, constitutes the entire agreement and understanding between the
parties with respect to the matters addressed herein. Except to amend
Exhibits A or B, which may be amended unilaterally by W&R and/or Ivy Funds
VIP in its sole discretion, or as otherwise provided in this Agreement,
this Agreement may not be amended or modified except by a written amendment
executed by each of the parties.
21
24. COOPERATION. Each party shall cooperate with each other party and all
appropriate government authorities (including without limitation the SEC,
FINRA and state securities and insurance regulators) and shall permit such
authorities having jurisdiction reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement
or the transactions contemplated hereby.
25. NON-EXCLUSIVE AGREEMENT. The parties of this Agreement acknowledge and
agree that this Agreement shall not be exclusive in any respect.
26. COUNTERPARTS. This Agreement may be executed by facsimile or other
electronic signature and it may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
/S/ XXXXXX X. XXXXX
-------------------
By: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXXX & XXXX, INC.
/s/ Xxxxxx X. Xxxxx
-------------------------------------------
By: Xxxxxx X. Xxxxx
Title: President
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
By: Xxxxx X. Xxxxxxxx
Title: President
23
EXHIBIT A
VARIABLE ACCOUNTS OF COMPANY
NAME SEC FILE NO.
--------------------------------------- ----------------
Lincoln Life Variable Annuity Account N 811-08517
24
EXHIBIT B
All Portfolios of the Ivy Funds Variable Insurance Portfolios
25
EXHIBIT C
FEES OR OTHER COMPENSATION
Company shall provide the administrative services set out in Schedule A hereto
and made a part hereof, as the same may be amended from time to time. For such
services, W&R agrees to pay to Company as follows:
(a) ASSETS UNDER MANAGEMENT. Each quarter, W&R shall calculate and pay to
Company a fee that shall be equal to fifty (50) basis points, on an
annualized basis, of the average daily account value of all assets in the
Portfolios in connection with the Contracts ("Aggregated Assets"),
provided, however, that the fee is subject to change pursuant to Paragraph
(b) below. The fee (the "Total Fee") shall include and not be in addition
to the payment by W&R of the 12b-1 fees received by W&R from Ivy Funds VIP
relating to the Aggregated Assets.
(b) CHANGES IN LAW. If a change in the law or the Board of Trustees of Ivy
Funds VIP requires a reduction in the fees paid by a pooled investment
vehicle pursuant to Rule 12b-1 of the Investment Company Act of 1940 (or
its functional equivalent), and if Ivy Funds VIP is required to reduce the
12b-1 fees it pays that are based upon the value of the Aggregated Assets
as a result of such change in the law or Board action, then there shall be
a corresponding reduction in the amount of the Total Fee due pursuant to
above.
The parties to this Agreement recognize and agree that W&R's payments hereunder
are for administrative services and personal Contract Owner services (as
described in Schedule A) only and do not constitute payment in any manner for
investment advisory services or for costs of distribution of Contracts or of
Portfolio shares, and are not otherwise related to investment advisory or
distribution services or expenses. The Company represents and warrants that the
fees to be paid by W&R for services to be rendered by Company pursuant to the
terms of this Agreement are to compensate Company for providing administrative
services to Ivy Funds VIP and for providing personal services to Contract Owners
as described in Schedule A, and are not designed to reimburse or compensate
Company for providing any other services with respect to the Contracts or any
Variable Account.
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EXHIBIT D
FIRM FIRM
CODE NAME STATE ZIP CONTRIB FREELOOK WITHDRAWALS TRFIN TRFOUT
----- ---- ----- ---- ------- -------- ----------- ----- ------
$ $ $ $ $
27
EXHIBIT E
For purposes of this Exhibit, the terms summary prospectus and statutory
prospectus shall have the same meanings as set forth in Rule 498 under the 1933
Act.
Ivy Funds VIP and W&R agree to provide each Portfolio's summary prospectus
in formats suitable for print and electronic delivery purposes. Ivy Funds VIP
and W&R agree that the hosting of such current summary prospectuses and other
current documents required by Rule 498(e)(1) ("Fund Documents"), at the url
website address designated by Ivy Funds VIP and W&R on each summary prospectus
("Fund Documents Site"), is designed to lead directly to the Fund Documents Site
and complies with all applicable requirements of Rule 498(e) and (f)(3). Ivy
Funds VIP and W&R, as applicable, also agree to be responsible for compliance
with the provisions of Rule 498 (f)(1) involving requests for additional Fund
Documents made directly to Ivy Funds VIP or W&R. Ivy Funds VIP and W&R are not
required to provide the summary prospectus delivery option for any Portfolio and
should Ivy Funds VIP and W&R decide to discontinue such option, W&R agrees to
give the Company no less than sixty (60) days' advance written notice of such
discontinuance and agrees to continue the hosting of the current Fund Documents
Site only as long as required by Rule 498(e)(1).
The parties hereto agree that the Company is not required to use the
summary prospectus delivery option for any Portfolio. If the Company elects to
use a portfolio's summary prospectus, the Company agrees to do so in compliance
with the Agreement and Rule 498. The Company also agrees that any binding
together of summary prospectuses or statutory prospectuses with other materials
will be done in compliance with Rule 498(c), consistent with industry standards.
The Company further agrees that the Company will be responsible for compliance
with the provisions of Rule 948(f)(1) involving requests for Fund Documents made
directly to the Company's distribution of any Portfolio's summary prospectuses,
the Company agrees to be solely responsible for the maintenance of its website
links that lead to the Fund Documents Site. The Company acknowledges that the
Fund Documents Site is transmitted over the Internet on a best-efforts basis but
that neither Ivy Funds VIP nor W&R warrants or guarantees its reliability. The
Company agrees that it will comply with any policies concerning the Fund
Documents Site usage that Ivy Funds VIP or W&R provides to the Company,
including any posted website Terms of Use.
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SCHEDULE A
ADMINISTRATIVE SERVICES FOR
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
Company shall provide certain administrative services respecting the operations
of Ivy Funds VIP and certain personal services to Contract Owners investing in
Ivy Funds VIP, as set forth below. This Schedule, which may be amended from time
to time as mutually agreed upon by Company and W&R, constitutes an integral part
of the Agreement to which it is attached. Capitalized terms used herein shall,
unless otherwise noted, have the same meaning as the defined terms in the
Agreement to which this Schedule relates.
A. RECORDS OF PORTFOLIO SHARE TRANSACTIONS; MISCELLANEOUS RECORDS.
1. Company shall maintain master accounts with Ivy Funds VIP, on behalf
of each Portfolio, which accounts shall bear the name of Company as
the record owner of Portfolio shares on behalf of each Variable
Account investing in the Portfolio.
2. Company shall provide assistance reasonably requested by W&R, Ivy
Funds VIP and Ivy Funds VIP's transfer agent as may be necessary to
track and record Portfolio share transactions and facilitate the
computation of each Portfolio's net asset value per share.
3. In addition to the foregoing records, and without limitation, Company
shall maintain and preserve all records as required by law to be
maintained and preserved in connection with providing administrative
services hereunder.
B. ORDER PLACEMENT AND PAYMENT.
1. Company shall determine the net amount to be transmitted to the
Variable Accounts as a result of redemptions of each Portfolio's
shares based on Contract Owner redemption requests and shall disburse
or credit to the Variable Accounts all proceeds of redemptions of
Portfolio shares. Company shall notify Ivy Funds VIP of the cash
required to meet redemption payments.
2. Company shall determine the net amount to be transmitted to Ivy Funds
VIP as a result of purchases of Portfolio shares based on Contract
Owner purchase payments and transfers allocated to the Variable
Accounts investing in each Portfolio. Company shall transmit net
purchase payments to Ivy Funds VIP's custodian.
C. ACCOUNTING SERVICES. Company shall perform miscellaneous accounting
services as may be reasonably requested from time to time by W&R, which
services shall relate to the business contemplated by this Agreement, as
amended from time to time. Such services shall include, without limitation,
periodic reconciliation and balancing of Company's books and records with
those of Ivy Funds VIP with respect to such matters as cash accounts,
Portfolio share purchase and redemption orders placed with Ivy Funds VIP,
dividend and distribution payments by Ivy Funds VIP, and such other
accounting matters that may arise from time to
29
time in connection with the operations of Ivy Funds VIP as related to the
business contemplated by this Agreement.
D. BOARD REPORTS. Company acknowledges that W&R may, from time to time, be
called upon by the Board, to provide various types of information
pertaining to the operations of Ivy Funds VIP and related matters, and that
W&R also may, from time to time, decide to provide such information to the
Board in its own discretion. Accordingly, Company agrees to provide W&R
with such assistance as W&R may reasonably request so that W&R can report
such information to the Ivy Funds VIP's Board in a timely manner. Company
acknowledges that such information and assistance shall be in addition to
the information and assistance required of Company pursuant to Ivy Funds
VIP's mixed and shared funding SEC exemptive order, described in Section 11
of this Agreement.
Company further agrees to provide W&R with such assistance as W&R may
reasonably request with respect to the preparation and submission of
reports and other documents pertaining to Ivy Funds VIP to appropriate
regulatory bodies and third party reporting services.
X. XXX FUNDS VIP-RELATED CONTRACT OWNER SERVICES. The parties agree to
allocate obligations and expenses with respect to the timely printing and
distribution of, prospectuses, SAIs, supplements thereto, Periodic Reports
and any other materials of Ivy Funds VIP required by law or otherwise to be
given to its shareholders, including, without limitation, Contract Owners
investing in Portfolio shares, in accordance with the chart set forth in F.
below. Company further agrees to provide telephonic support for Contract
Owners, including, without limitation, advice with respect to inquiries
about Ivy Funds VIP and each Portfolio (not including information about
performance or related to sales).
30
F. For convenience purposes, the chart below details the party responsible for
the cost of delivering, printing and mailing prospectuses, SAIs, proxies
and reports:
PARTY RESPONSIBLE FOR
ITEM FUNCTION EXPENSE
-------------------------------------- ----------------------------- -----------------------------
VIP Prospectus & Annual Mailing Typesetting, Layout, Proofing Funds
Printing Existing Funds
Printing Prospective Company
Mailing Existing Company
Mailing Prospective Company
VIP Prospectus Sticker Typesetting, Layout, Proofing Funds
Printing Existing Funds
Mailing Existing Company
Printing Prospective Company
VIP SAI Typesetting, Layout, Proofing Funds
Printing Existing W&R
Printing Prospective Company
Mailing Existing Company
Mailing Prospective Company
Proxy Material for VIP required by Law Printing W&R/Funds
Mailing W&R/Funds
VIP Annual & Semi-Annual Report Typesetting, Layout, Proofing Funds
Printing Existing Funds
Printing Prospective Company
Mailing Existing Company
Mailing Prospective Company
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