-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WGEt/thBrrepx+db+v86NsmXXb06S9PZ3Cfv8pqlunp59Zi0GPO5uC7uouyN6TBG bUhzoujthllXR0uhcaH0bg== 0000912057-99-011008.txt : 19991231 0000912057-99-011008.hdr.sgml : 19991231 ACCESSION NUMBER: 0000912057-99-011008 CONFORMED SUBMISSION TYPE: N-4 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19991230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES CENTRAL INDEX KEY: 0001093278 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 161505436 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4 SEC ACT: SEC FILE NUMBER: 333-93875 FILM NUMBER: 99783837 FILING VALUES: FORM TYPE: N-4 SEC ACT: SEC FILE NUMBER: 811-09763 FILM NUMBER: 99783838 BUSINESS ADDRESS: STREET 1: 120 MADISON STREET CITY: SYRACUSE STATE: NY ZIP: 13202-2808 BUSINESS PHONE: 3154288400 MAIL ADDRESS: STREET 1: 120 MADISON STREET CITY: SYRACUSE STATE: NY ZIP: 13202-2808 N-4 1 N-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1999 1933 ACT REGISTRATION NO. 333- 1940 ACT REGISTRATION NO. 811- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ ------------------------ LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES (EXACT NAME OF REGISTRANT) LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK (NAME OF DEPOSITOR) 120 Madison Street, Suite 1700, Syracuse, NY 13202 (ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE (315)428-8400 ------------------------ COPY TO: ROBERT O. SHEPPARD, ESQUIRE GEORGE N. GINGOLD, ESQUIRE 120 Madison Street 197 King Philip Drive Suite 1700 West Hartford, CT 06117-1409 Syracuse, New York 13202 (Name & Address of Agent of Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the effective date of the Registration Statement. Title of Securities: Interests in a separate account under individual flexible payment deferred variable annuity contracts. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), SHALL DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DELAWARE-LINCOLN NEW YORK CHOICEPLUS LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES HOME OFFICE: Lincoln Life & Annuity Company of New York 120 Madison Street Ste. 1700 Syracuse, NY 13202 This prospectus describes an individual flexible premium deferred variable annuity contract. The contract is for use with nonqualified plans and retirement plans qualified under Section 408 of the tax code (IRAs) and Section 408A (Roth IRA). In the future, we may offer the contract for other qualified plans. Generally, you do not pay federal income tax on the contract's growth until it is paid out. The contract is designed to accumulate ANNUITY ACCOUNT VALUE and to provide retirement income that you cannot outlive or for an agreed upon time. These benefits may be a variable or fixed amount or a combination of both. If you die before the ANNUITY DATE, we will pay your BENEFICIARY A DEATH BENEFIT. The minimum initial PREMIUM PAYMENT for the contract is: 1. $1,500 for a nonqualified plan and for certain rollovers to IRA'S; and 2. $1,000 for a qualified plan. Additional PREMIUM PAYMENTS may be made to the contract and must be at least $25 if transmitted electronically; otherwise the minimum amount is $100. The minimum annual amount of subsequent premium payments is $100 per VAA subaccount, or $2,000 per fixed account guarantee period. You choose whether your contract value accumulates on a variable or fixed (guaranteed) basis or both. We guarantee your principal and a minimum interest rate on premium payments you put into the fixed account. WE LIMIT TRANSFERS FROM THE FIXED ACCOUNT. A MARKET VALUE ADJUSTMENT (MVA) MAY BE APPLIED TO ANY SURRENDER OR TRANSFER FROM THE FIXED ACCOUNT BEFORE THE EXPIRATION OF A GUARANTEE PERIOD. All PREMIUM PAYMENTS for benefits on a variable basis will be placed in Lincoln New York Account N for Variable Annuities (VARIABLE ANNUITY ACCOUNT [VAA]). The VAA is a segregated investment account of LNY. If you put all or some of your PREMIUM PAYMENTS into one or more of the contract's variable options, you take all of the investment risk on the ANNUITY ACCOUNT VALUE and the retirement income. If the SUBACCOUNTS you select make money, your CONTRACT VALUE goes up; if they lose money, your ANNUITY ACCOUNT VALUE goes down. How much the ANNUITY ACCOUNT VALUE goes up or down depends on the performance of the SUBACCOUNTS you select. WE DO NOT GUARANTEE HOW ANY OF THE VARIABLE OPTIONS OR THEIR FUNDS WILL PERFORM. ALSO, NEITHER THE U.S. GOVERNMENT NOR ANY FEDERAL AGENCY INSURES OR GUARANTEES YOUR INVESTMENT IN THE CONTRACT. SERVICING OFFICE: Delaware-Lincoln New York ChoicePlus P.O. Box 7866 Fort Wayne, IN 46801 AIM Variable Insurance Funds, Inc.: - - AIM V.I. Growth Fund - - AIM V.I. International Equity Fund - - AIM V.I. Value Equity Fund - - AIM V.I. Capital Appreciation Fund Alliance Variable Products Series Fund (Class B): - - Alliance Growth and Income Portfolio - - Alliance Growth Portfolio - - Alliance Premium Growth Portfolio - - Alliance Technology Portfolio American Variable Insurance Series (Class 2): - - AVIS Global Small Capitalization Fund - - AVIS Growth Fund - - AVIS International Fund - - AVIS Growth and Income Fund BT Insurance Funds Trust: - - BT Equity 500 Index Fund Delaware Group Premium Fund Inc.: - -Delaware Premium Growth and Income Series - - Delaware Premium Delchester Series - - Delaware Premium Emerging Markets Series - - Delaware Premium REIT Series - - Delaware Premium Small Cap Value Series - - Delaware Premium Trend Series - - Delaware Premium Aggressive Growth Series Franklin Templeton Variable Insurance Products - - Franklin Small Cap Investments Fund - - Franklin Mutual Share Investments Fund - - Templeton Global Growth Fund Liberty Variable Investment Trust: - - Newport Tiger Fund Lincoln National: - - Bond Fund - - Money Market Fund MFS Variable Insurance Trust: - - MFS Emerging Growth Series - - MFS Research Series - - MFS Total Return Series - - MFS Utilities Series Templeton Variable Products Series Fund (Class 2): - - Templeton International Fund Variable Insurance Products Fund - - Fidelity VIP Equity-Income Portfolio - - Fidelity VIP Growth Portfolio - - Fidelity VIP Overseas Portfolio Variable Insurance Products Fund III - - Fidelity VIP III Growth Opportunities Portfolio This Prospectus gives you information about the contract that you should know before you decide to buy a contract and make PREMIUM PAYMENTS. You should also review the prospectuses for the funds that are attached, and keep these prospectuses for future reference. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THIS CONTRACT OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE. You can obtain a Statement of Additional Information (SAI) about the contracts that has more information. Its terms are made part of this Prospectus. For a free copy, write: Delaware Lincoln New York Choice Plus, P.O. Box 7866, Fort Wayne, Indiana 46801, or call 1-888-868-2583. The SAI and other information about LNY and the VAA are also available on the SEC's web site (http:\\www.sec.gov). There is a table of contents for the SAI on the last page of this Prospectus. Prospectus Dated: , 2000 1 TABLE OF CONTENTS
PAGE - ------------------------------------------- Special terms 2 Expense tables 3 Summary 7 Condensed financial information for the VAA 9 Financial statements 9 Lincoln Life & Annuity Company of New York 9 Variable annuity account (VAA) 9 Investments of the variable annuity account 9 Charges and other deductions 13 The contracts 14 Annuity payouts 17 Annuity options 17
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PAGE Fixed side of the contract 19 Federal tax matters 20 Voting rights 24 Distribution of the contracts 24 Return privilege 24 State regulation 24 Records and reports 24 Other information 24 Preparing for Year 2000 25 Statement of additional information table of contents for Lincoln Life Variable Annuity Account N Delaware-Lincoln ChoicePlus B-1
SPECIAL TERMS (We have ITALICIZED the terms that have special meaning throughout the Prospectus). ACCOUNT OR VARIABLE ANNUITY ACCOUNT (VAA) -- The segregated investment account, Lincoln New York Account N for Variable Annuities, into which LNY sets aside and invests the assets for the variable side of the contract offered in this Prospectus. ACCUMULATION UNIT -- A measure used to calculate ANNUITY ACCOUNT VALUE for the variable side of the contract before the ANNUITY DATE. ANNUITANT -- The person upon whose life the ANNUITY BENEFIT PAYMENTS are based and made to after the ANNUITY DATE. ANNUITY ACCOUNT VALUE -- At a given time before the ANNUITY DATE, the total value of all ACCUMULATION UNITS for a contract plus the value of the fixed side of the contract. ANNUITY DATE -- The VALUATION DATE when values are withdrawn or converted into ANNUITY UNITS or fixed dollar payout for payment of retirement income benefits under the ANNUITY PAYOUT option you select. ANNUITY PAYOUT -- An amount paid at regular intervals on a variable or fixed basis or a combination of both after the ANNUITY DATE under one of several options available to the ANNUITANT and/or any other payee. ANNUITY UNIT -- A measure used to calculate the amount of each ANNUITY PAYOUT after the ANNUITY DATE. See Annuity payout. BENEFICIARY -- The person you choose to receive any DEATH BENEFIT paid if you die before the ANNUITY DATE. CONTRACTOWNER (you, your, owner) -- The person who can exercise the rights within the contract (e.g., decides on investment allocations, transfers, payout option, designates the BENEFICIARY, etc.) Usually, but not always, the owner is the ANNUITANT. CONTRACT YEAR -- Each one-year period starting with the effective date of the contract and ending with each contract anniversary after that. DEATH BENEFIT -- An amount payable to your designated BENEFICIARY if you die before the ANNUITY DATE. LINCOLN LIFE -- The Lincoln National Life Insurance Company. LNC -- Lincoln National Corporation. LINCOLN NEW YORK (we, us, our) -- Lincoln Life & Annuity Company of New York. PREMIUM PAYMENTS -- Amounts paid into the contract. SAI -- Statement of Additional Information. SUBACCOUNT -- The portion of the VAA that reflects investments in ACCUMULATION and ANNUITY UNITS of a particular fund available under the contract. VALUATION DATE -- Each day the New York Stock Exchange (NYSE) is open for trading. VALUATION PERIOD -- The period starting at the close of trading (currently 4:00 p.m. New York time) on each VALUATION DATE and ending at the close of such trading on the next VALUATION DATE. 2 EXPENSE TABLES SUMMARY OF CONTRACTOWNER EXPENSES: The maximum surrender charge (contingent deferred sales charge) as a percentage of PREMIUM PAYMENTS surrendered/ withdrawn: 6% Transfer fee: $10
The surrender charge percentage is reduced over time. The later the redemption occurs, the lower the surrender charge with respect to that surrender or withdrawal. We may waive this charge in certain situations. See Charges and other deductions -- Surrender charge. A market value adjustment (MVA) may be applied to surrenders or transfers (except for dollar cost averaging and account rebalancing) from a fixed account guarantee period amount. See Fixed side of the contract. The transfer charge will not be imposed on the first 12 transfers during a CONTRACT YEAR. We reserve the right to charge a $10 fee for transfers over 12 times during any CONTRACT YEAR. Automatic dollar cost averaging and automatic rebalancing transfers are not included in these first twelve transfers. ACCOUNT N ANNUAL EXPENSES FOR DELAWARE-LINCOLN NEW YORK CHOICEPLUS SUBACCOUNTS: (as a percentage of average account value) Mortality and expense risk charge.................... 1.25% Administrative charge................................ .15% ---- Total annual charge for each Delaware-Lincoln ChoicePlus SUBACCOUNT.............................. 1.40%
FUND ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1998: (as a percentage of each fund's average net assets):
MANAGEMENT OTHER FEES EXPENSES (AFTER ANY - + (AFTER ANY = WAIVERS/ 12b-1 WAIVERS/ REIMBURSEMENTS) FEES REIMBURSEMENTS) --------------- -------- --------------- 1. AIM V.I. Capital Appreciation Fund.......... 0.62% 0.00% 0.05% 2. AIM V.I. Growth Fund........................ 0.64 0.00 0.08 3. AIM V.I. International Equity Fund.......... 0.75 0.00 0.16 4. AIM V.I. Value Equity Fund.................. 0.61 0.00 0.05 5. Alliance Growth Portfolio................... 0.75 0.25 0.12 6. Alliance Growth and Income Portfolio........ 0.63 0.25 0.10 7. Alliance Premier Growth Portfolio(1)........ 0.97 0.25 0.09 8. Alliance Technology Portfolio(1)............ 0.81 0.25 0.14 9. AVIS Global Smallcap-Class 2 Series(2)...... 0.79 0.25 0.03 10. AVIS Growth-Class 2 Series.................. 0.40 0.25 0.01 11. AVIS Growth-Income-Class 2 Series........... 0.35 0.25 0.01 12. AVIS International-Class 2 Series........... 0.57 0.25 0.09 13. BT Equity 500 Index Fund(3)................. 0.20 0.00 0.10 14. Delaware Premium Select Growth Series(4)(5)............................... 0.68 0.00 0.17 15. Delaware Premium Delchester Series(5)....... 0.65 0.00 0.10 16. Delaware Premium Emerging Markets Series(5)(6)............................... 1.08 0.00 0.42 17. Delaware Premium Growth and Income Series(5).................................. 0.60 0.00 0.11 18. Delaware Premium REIT Series(5)(6)(7)....... 0.58 0.00 0.27 19. Delaware Premium Small Cap Value Series(5).................................. 0.75 0.00 0.10 20. Delaware Premium Trend Series(5)............ 0.75 0.00 0.10 21. Fidelity VIP Equity-Income Portfolio (Initial Class)(8)......................... 0.49 0.00 0.09 22. Fidelity VIP Growth Portfolio (Initial Class)(8).................................. 0.59 0.00 0.09 23. Fidelity VIP III Growth Opportunities Portfolio (Initial Class)(8)............... 0.59 0.00 0.12 24. Fidelity VIP Overseas Portfolio (Initial Class)(8).................................. 0.74 0.00 0.17 25. Franklin SmallCap-Class 2 Fund(9)........... 0.75 0.25 0.02 26. Franklin Mutual Shares-Class 2 Fund(9)...... 0.75 0.25 0.05 27. Liberty Newport Tiger Fund.................. 0.90 0.00 0.40 TOTAL EXPENSES (AFTER ANY WAIVERS/ REIMBURSEMENTS) --------------- 1. 0.67% 2. 0.72 3. 0.91 4. 0.66 5. 1.12 6. 0.98 7. 1.31 8. 1.20 9. 1.07 10. 0.66 11. 0.61 12. 0.91 13. 0.30 14. 0.85 15. 0.75 16. 1.50 17. 0.71 18. 0.85 19. 0.85 20. 0.85 21. 0.58 22. 0.68 23. 0.71 24. 0.91 25. 1.02 26. 1.05 27. 1.30
3
MANAGEMENT OTHER FEES EXPENSES (AFTER ANY - + (AFTER ANY = WAIVERS/ 12b-1 WAIVERS/ REIMBURSEMENTS) FEES REIMBURSEMENTS) --------------- -------- --------------- 28. Lincoln National Bond Fund.................. 0.44 0.00 0.13 29. Lincoln National Money Market Fund.......... 0.48 0.00 0.11 30. MFS Variable Trust Emerging Growth Series(10)................................. 0.75 0.00 0.10 31. MFS Variable Trust Research Series(10)...... 0.75 0.00 0.11 32. MFS Variable Trust Total Return Series(10)................................. 0.75 0.00 0.16 33. MFS Variable Trust Utilities Series(10)..... 0.75 0.00 0.26 34. Templeton Global Growth-Class 2 Fund(9)..... 0.83 0.25 0.05 35. Templeton International-Class 2 Fund(11).... 0.69 0.25 0.17 TOTAL EXPENSES (AFTER ANY WAIVERS/ REIMBURSEMENTS) --------------- 28. 0.57 29. 0.59 30. 0.85 31. 0.86 32. 0.91 33. 1.01 34. 1.13 35. 1.11
(1) Management Fees are stated net of waivers and/or reimbursements. Absent fee waivers and/or reimbursements, the fee paid to Alliance by the Portfolio, as a percentage of average net assets, would have been: 1.00% for Premier Growth and Technology. (2) These expenses are annualized. The fund began operations on April 30, 1998. (3) Under the Advisory Agreement with Bankers Trust Company (the "Advisor"), the fund will pay an advisory fee at an annual percentage rate of 0.20% of the average daily net assets of the fund. These fees are accrued daily and paid monthly. The Advisor has voluntarily undertaken to waive its fee and to reimburse the fund for certain expenses so the fund's total operating expenses will not exceed 0.30% of average daily net assets. If this reimbursement were not in place, the total operating expenses for the year ended December 31, 1998, would have been 1.19%. (4) The Select Growth Series had not commenced operations as of December 31, 1998. Expenses shown are based on estimated and annualized amounts. Actual expenses may be greater or less than shown. The investment advisor for the Select Growth Series is Delaware Management Company, Inc. ("Delaware Management"). Effective May 1, 1999 through April 30, 2000, the investment advisor for the Series of DGPF has agreed voluntarily to waive its management fees and reimburse the Series for expenses to the extent that total expense will not exceed 0.85% for the Select Growth Series. The fee ratio shown above has been restated, if necessary, to reflect the new voluntary limitations which took effect on May 1, 1999. The declaration of a voluntary expense limitation does not bind the investment advisor to declare future expense limitations with respect to the Fund. (5) The investment advisor for the Growth and Income Series (formerly known as "Decatur Total Return Series"), Delchester Series, Trend Series, Select Growth, Small Cap Value Series, and REIT Series is Delaware Management Company, Inc. ("Delaware Management"). The investment advisor for the Emerging Market Series is Delaware International Advisers, Limited ("Delaware International"). Effective May 1, 1999 through April 30, 2000, the investment advisers for the Series of DGPF have agreed voluntarily to waive their management fees and reimburse each Series for expenses to the extent that total expenses will not exceed 0.80% for the Growth and Income Series and Delchester Series; 0.85% for the REIT Series, Trend Series, Small Cap Value Series, and 1.50% for the Emerging Market Series. The fee ratios shown have been restated, if necessary, to reflect the new voluntary limitations which took effect May 1, 1999. The declaration of a voluntary expense limitation does not bind the investment adviser to declare future expense limitations with respect to these Funds. Pursuant to a vote of the Fund's shareholder on March 17, 1999, a new management fee structure based on average daily net assets was approved. The above ratios have been restated to reflect the new management fee structure which took effect on May 1, 1999. (6) For the fiscal year ended December 31, 1998, before waiver and/or reimbursement by the investment adviser, total Series expenses as a percentage of average daily net assets were 1.02% for REIT Series, and 1.67% for Emerging Markets Series. (7) The REIT Series commenced operations on May 1, 1998. Expenses shown are based on annualized amounts. Actual expenses may be greater or less than shown. (8) A portion of the brokerage commissions that certain funds pay was used to reduce fund expenses. In addition, Fidelity Management & Research Company ("FMR") on behalf of certain funds, has entered into arrangements with their custodian whereby credits realized as a result of uninvested cash balances were used to reduce custodian expenses. Including these reductions, the total operating expenses presented in the table would have been 0.57% for VIP Equity-Income; 0.66% for VIP Growth; 0.89% for VIP Overseas and 0.70% for VIP III Growth Opportunities. (9) Because Franklin Templeton Variable Insurance Products Trust Class 2 shares are new, the figures above (other than 12B-1 fees) are estimates based on the historical expenses of each fund's Class 1 shares. Class 2 shares have a distribution plan, which is described in the funds' prospectuses. The fund administration fee is a direct expense 4 for the Franklin Mutual Shares Fund, Franklin Small Cap and Templeton Global Growth Funds pay for similar services indirectly through the management fee. (10) Each series has an expense offset arrangement, which reduces the series' custodian fee based upon the amount of cash maintained by the series with its custodian and dividend-disbursing agent. Each series may enter into other such arrangements and directed brokerage arrangements, which would also have the effect of reducing the series' expenses. Expenses do not take into account these expense reductions, and are therefore higher than the actual expenses of the series. MFS has agreed to bear expenses for these series, subject to reimbursement by these series, such that each such series' "Other Expenses" shall not exceed the following percentages of the average daily net assets of the series during the current fiscal year: 0.25% except for the Emerging Growth Series and the Research Series, which have no such limitation. The payments made by MFS on behalf of each series under this arrangement are subject to reimbursement by the series to MFS, which will be accomplished by the payment of an expense reimbursement fee by the series to MFS computed and paid monthly at a percentage of the series' average daily net assets for its then current fiscal year, with a limitation that immediately after such payment of the series', "Other Expenses" will not exceed the percentage set forth above for that series. The obligation of MFS to bear a series' "Other Expenses" pursuant to this arrangement, and the series' obligation to pay the reimbursement fee to MFS, terminates on the earlier of the date on which payments made by the series' equal the prior payment of such reimbursable expenses by MFS, or December 31, 2004. (11) Class 2 Shares have a distribution plan which is described in the funds' prospectus. EXAMPLES (expenses of the SUBACCOUNTS and the funds) If you surrender your contract at the end of the time period shown, you would pay the following expenses on a $1,000 investment, assuming a 5% annual return:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- 1. AIM V.I. Capital Appreciation Fund.......................... $81 $114 $137 $218 2. AIM V.I. Growth Fund........................................ 82 115 139 222 3. AIM V.I. International Equity Fund.......................... 82 115 139 222 4. AIM V.I. Value Equity Fund.................................. 83 120 148 238 5. Alliance Growth Portfolio................................... 86 128 164 286 6. Alliance Growth and Income Portfolio........................ 84 122 151 243 7. Alliance Premier Growth Portfolio........................... 87 132 166 269 8. Alliance Technology Portfolio............................... 86 129 161 260 9. AVIS Global Smallcap-Class 2 Series......................... 85 125 155 250 10. AVIS Growth-Class 2 Series.................................. 81 113 136 217 11. AVIS Growth-Income-Class 2 Series........................... 80 112 134 213 12. AVIS International-Class 2 Series........................... 83 120 148 238 13. BT Equity 500 Index Fund.................................... 77 103 119 186 14. Delaware Premium Select Growth Series....................... 83 119 145 233 15. Delaware Premium Delchester Series.......................... 83 119 145 233 16. Delaware Premium Emerging Markets Series.................... 85 124 154 241 17. Delaware Premium Growth and Income Series................... 81 115 139 221 18. Delaware Premium REIT Series................................ 83 119 145 233 19. Delaware Premium Small Cap Value Series..................... 83 119 145 233 20. Delaware Premium Trend Series............................... 83 119 145 233 21. Fidelity VIP Equity-Income Portfolio (Initial Class)........ 80 111 133 210 22. Fidelity VIP Growth Portfolio (Initial Class)............... 81 114 137 219 23. Fidelity VIP III Growth Opportunities Portfolio (Initial Class).................................................... 81 115 139 221 24. Fidelity VIP Overseas Portfolio (Initial Class)............. 83 120 148 238 25. Franklin SmallCap-Class 2 Fund.............................. 85 124 153 247 26. Franklin Mutual Shares-Class 2 Fund......................... 85 124 154 249 27. Liberty Newport Tiger Fund.................................. 87 132 165 268 28. Lincoln National Bond Fund.................................. 80 111 132 210 29. Lincoln National Money Market Fund.......................... 80 111 133 211 30. MFS Variable Trust Emerging Growth Series................... 83 119 145 233 31. MFS Variable Trust Research Series.......................... 83 119 146 234 32. MFS Variable Trust Total Return Series...................... 83 120 148 238 33. MFS Variable Trust Utilities Series......................... 84 123 152 246 34. Templeton Global Growth-Class 2 Fund........................ 86 127 158 255 35. Templeton International-Class 2 Fund........................ 85 126 157 254
5 If you do not surrender your contract, or if you annuitize, you would pay for the following expenses on a $1,000 investment, assuming a 5% annual return.
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- 1. AIM V.I. Capital Appreciation Fund.......................... $21 $ 64 $107 $218 2. AIM V.I. Growth Fund........................................ 22 65 109 222 3. AIM V.I. International Equity Fund.......................... 22 65 109 222 4. AIM V.I. Value Equity Fund.................................. 23 70 118 238 5. Alliance Growth Portfolio................................... 26 78 134 286 6. Alliance Growth and Income Portfolio........................ 24 72 121 243 7. Alliance Premier Growth Portfolio........................... 27 82 136 269 8. Alliance Technology Portfolio............................... 26 79 131 260 9. AVIS Global Smallcap-Class 2 Series......................... 25 75 125 250 10. AVIS Growth-Class 2 Series.................................. 21 63 105 217 11. AVIS Growth-Income-Class 2 Series........................... 20 62 104 213 12. AVIS International-Class 2 Series........................... 23 70 118 238 13. BT Equity 500 Index Fund.................................... 27 53 89 186 14. Delaware Premium Select Growth Series....................... 23 69 115 233 15. Delaware Premium Delchester Series.......................... 23 69 115 233 16. Delaware Premium Emerging Markets Series.................... 25 74 124 241 17. Delaware Premium Growth and Income Series................... 21 65 109 221 18. Delaware Premium REIT Series................................ 23 69 115 233 19. Delaware Premium Small Cap Value Series..................... 23 69 115 233 20. Delaware Premium Trend Series............................... 23 69 115 233 21. Fidelity VIP Equity-Income Portfolio (Initial Class)........ 20 61 103 210 22. Fidelity VIP Growth Portfolio (Initial Class)............... 21 64 107 219 23. Fidelity VIP III Growth Opportunities Portfolio (Initial Class).................................................... 21 65 109 221 24. Fidelity VIP Overseas Portfolio (Initial Class)............. 23 70 118 238 25. Franklin SmallCap-Class 2 Fund.............................. 25 74 123 247 26. Franklin Mutual Shares-Class 2 Fund......................... 25 74 124 249 27. Liberty Newport Tiger Fund.................................. 27 82 135 268 28. Lincoln National Bond Fund.................................. 20 61 102 210 29. Lincoln National Money Market Fund.......................... 20 61 103 211 30. MFS Variable Trust Emerging Growth Series................... 23 69 115 233 31. MFS Variable Trust Research Series.......................... 23 69 116 234 32. MFS Variable Trust Total Return Series...................... 23 70 118 238 33. MFS Variable Trust Utilities Series......................... 24 73 122 246 34. Templeton Global Growth-Class 2 Fund........................ 26 77 128 255 35. Templeton International-Class 2 Fund........................ 25 76 127 254
We provide these examples to help you understand the direct and indirect costs and expenses of the contract. For more information, see Charges and other deductions in this Prospectus, and in the Prospectuses for the funds. Premium taxes may also apply, although they do not appear in the examples. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. 6 SUMMARY WHAT KIND OF CONTRACT AM I BUYING? It is an individual annuity contract issued by LNY. It may provide for a fixed annuity and/or a variable annuity. This Prospectus describes the variable side of the contract. See The contracts. WHAT IS THE VARIABLE ANNUITY ACCOUNT (VAA)? It is a separate account we established under New York insurance law, and registered with the SEC as a unit investment trust. We allocate VAA assets to one or more SUBACCOUNTS, according to your investment choices. VAA assets are not chargeable with liabilities arising out of any other business which LNY may conduct. See Variable annuity account (VAA). WHAT ARE MY INVESTMENT CHOICES? Based upon your instruction, the VAA applies premium payments to buy shares in one or more of the following investment options: AIM VI Growth Fund, AIM VI Value Equity Fund, AIM VI International Equity Fund, AIM VI Capital Appreciation Fund, Alliance Growth and Income Portfolio, Alliance Growth Portfolio, Alliance Technology Portfolio, Alliance Premier Growth Portfolio, AVIS Global Small Capitalization Fund, AVIS Growth Fund, AVIS International Fund, AVIS Growth-Income Fund, BT Equity 500 Index Fund, Delaware Premium Growth & Income Series, Delaware Premium Delchester Series, Delaware REIT Series, Delaware Emerging Markets Series, Delaware Small Cap Value Series, Delaware Trend Series, Delaware Premium Aggresive Growth Series, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP III Growth Opportunities Portfolio, Liberty Newport Tiger Fund, Lincoln National Money Market Fund, Lincoln National Bond Fund, MFS Emerging Growth Series, MFS Research Series, MFS Total Return Series, MFS Utilities Series, Franklin Small Cap Investments Fund, Franklin Mutual Share Investments Fund, Templeton International Fund, Templeton Global Growth Fund. HOW DOES THE CONTRACT WORK? If we approve your application, we will send you a contract. When make PREMIUM PAYMENTS during the accumulation phase, you buy ACCUMULATION UNITS. If you later decide to receive retirement income payments, your ACCUMULATION UNITS are converted to ANNUITY UNITS. We base your retirement income payments on the number of ANNUITY UNITS you received and the value of each ANNUITY UNIT on payout days. See Charges and other deductions -- The contracts. WHAT CHARGES DO I PAY? If you withdraw from your ANNUITY ACCOUNT, you pay a surrender or withdrawal charge which may range from 0% to 6%, depending upon how many CONTRACT YEARS your premium payments have been in the contract. We may waive surrender charges in certain situations. See Charges and other deductions -- Surrender charge. We reserve the right to charge a $10 fee for transfers over 12 times during any CONTRACT YEAR, excluding automatic dollar cost averaging and automatic rebalancing program transfers. The surrender or transfer of value from a fixed account guaranteed period may be subject to a market value adjustment (MVA). See Fixed side of the contract. We will deduct any applicable premium tax from PREMIUM PAYMENTS or ANNUITY ACCOUNT VALUE at the time the tax is incurred or at another time we choose. We apply an annual charge totaling 1.40% to the daily net asset value of the VAA. This charge includes 0.15% as an administrative charge and 1.25% as a mortality and expense risk charge. See Charges and other deductions. We may waive these charges in certain situations. The funds' investment management fees, expenses and expense limitations, if applicable, are more fully described in the funds' Prospectuses. WHAT PREMIUM PAYMENTS DO I MAKE, AND HOW OFTEN? Subject to minimum and maximum PREMIUM PAYMENT AMOUNTS, your PREMIUM PAYMENTS are completely flexible. See The contracts -- premium payments. HOW WILL MY ANNUITY PAYOUTS BE CALCULATED? If you decide to annuitize, you may select an annuity option and start receiving retirement income payments from your contract as a fixed option or variable option or a combination of both. See Annuity Payouts -- Annuity Options. REMEMBER THAT PARTICIPANTS IN THE VAA BENEFIT FROM ANY GAIN, AND TAKE A RISK OF ANY LOSS IN THE VALUE OF THE SECURITIES IN THE FUNDS' PORTFOLIOS. WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE? Your BENEFICIARY will receive the greatest of the PREMIUM PAYMENTS, ANNUITY ACCOUNT VALUE or the highest ANNUITY ACCOUNT VALUE as of the most recent CONTRACT ANNIVERSARY occurring on or before the CONTRACTOWNER'S 80th birthday. Your BENEFICIARY has options as to how the DEATH BENEFIT is paid. See The contracts -- death benefit before the ANNUITY DATE. 7 MAY I TRANSFER CONTRACT VALUE AMONG VARIABLE OPTIONS AND BETWEEN THE FIXED SIDE AND VARIABLE SIDE OF THE CONTRACT? Yes, with certain limits. See The contracts -- Transfers between SUBACCOUNTS on or before the ANNUITY DATE; Transfers after the ANNUITY DATE; and Transfers to and from a Fixed Account on or before the ANNUITY DATE. MAY I SURRENDER THE CONTRACT OR MAKE A WITHDRAWAL? Yes, subject to contract requirements and to restrictions of any qualified retirement plan for which the contract was purchased. See The Contracts -- Surrenders and withdrawals. If you surrender the contract or make a withdrawal, certain charges may apply. In addition, if you decide to take a distribution before age 59-1/2, a 10% Internal Revenue Service (IRS) tax penalty may apply. A surrender or withdrawal may also be subject to 20% withholding. See Federal tax matters. DO I GET A FREE LOOK AT THIS CONTRACT? Yes. You can cancel the contract within ten days of the date you first received the contract. You need to return the contract, postage prepaid, to our Servicing Office. You assume the risk of any market drop on PREMIUM PAYMENTS you allocate to the variable side of the contract. See Return privilege. 8 CONDENSED FINANCIAL INFORMATION FOR THE VARIABLE ANNUITY ACCOUNT ACCUMULATION UNIT VALUES No condensed financial information for the VAA is presented because as of December 28, 1999, the Account had not yet commenced operations. FINANCIAL STATEMENTS The audited statutory-basis financial statements of LNY as of December 31, 1998 and 1997 and for the years ended December 31, 1998 and 1997 and the period from June 6, 1996 to December 31, 1996 may be found in the Statement of Additional Information. No financial statements are included for the VAA because as of December 31, 1998, the Account had not yet commenced operations. LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK LNY is a life insurance company founded in New York on June 6, 1996. LNY is a subsidiary of LINCOLN LIFE. LINCOLN LIFE is one of the largest stock life insurance companies in the United States. LINCOLN LIFE, an Indiana corporation, is owned by Lincoln National Corp. (LNC) which is also organized under Indiana law. LNC's primary businesses are insurance and financial services. VARIABLE ANNUITY ACCOUNT (VAA) On March 11, 1999, the VAA was established as an insurance company separate account under New York law. It is registered with the SEC as a unit investment trust under the provisions of the Investment Company Act of 1940 (1940 Act). The SEC does not supervise the VAA or LNY. The VAA is a segregated investment account, meaning that its assets may not be charged with liabilities resulting from any other business that we may conduct. Income, gains and losses, whether realized or not, from assets allocated to the VAA are, in accordance with the applicable annuity contracts, credited to or charged against the VAA. They are credited or charged without regard to any other income, gains or losses of LNY. The VAA satisfies the definition of separate account under the federal securities laws. We do not guarantee the investment performance of the VAA. Any investment gain or loss depends on the investment performance of the funds. You assume the full investment risk for all amounts placed in the VAA. The VAA may be used to support other contracts offered by LNY in addition to the contracts described in this Prospectus. INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT You decide the SUBACCOUNT(S) to which you allocate PREMIUM PAYMENTS. You may change your allocation without penalty or charges. Shares of the funds will be sold at net asset value with no initial sales charge to the VAA in order to fund the contracts. Each fund is required to redeem fund shares at net asset value upon our request. We reserve the right to add, delete or substitute funds, subject to compliance with applicable law. INVESTMENT ADVISORS The funds and their investment advisors are: AIM Variable Insurance Funds, Inc. ("AIM V.I. Funds"), managed by A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173. Alliance Variable Product Series Fund managed by Alliance Capital Management, L.P., 1345 Avenue of the Americas, New York, NY 10105. American Variable Insurance Series managed by Capital Research & Management Company, 333 South Hope Street, Los Angeles, CA 90071 BT Insurance Funds Trust (the "BT Insurance Trust") managed by Bankers Trust Company, 130 Liberty Street, (One Bankers Trust Plaza), New York, NY 10006. Delaware Group Premium Fund Inc., ("Delaware Group"), managed by Delaware Management Company, One Commerce Square, Philadelphia, PA 19103. The Emerging Markets funds are managed by Delaware International Advisers Ltd., 80 Cheapside, London, England, ECV2 6EE. Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP overseas Portfolio and Fidelity VIP III Growth Opportunities Portfolio managed by Fidelity Management and Research Company 82 Devonshire Street, Boston, MA 02109. Franklin Small Cap Investments and Frank Mutual Share Investments managed by Franklin Advisers, Inc. 777 Mariners Island Blvd., San Mateo, CA 94403. Liberty Variable Investment Trust ("Liberty Variable Trust"), managed by Liberty Advisory Series Corp., 125 High Street, Boston, MA 02110 and sub-advised by Colonial Management Associates, Inc. and Newport Fund Management, Inc. 9 Lincoln National Bond Fund, Inc., and Lincoln National Money Market Fund, Inc., managed by Lincoln Investment Management, Inc., 200 East Berry Street, Fort Wayne, IN 46802. MFS-Registered Trademark- Variable Insurance Trust ("MFS Variable Trust") managed by Massachusetts Financial Services Company, 500 Boylston Street, Boston, MA 02116. Templeton Global Growth Fund managed by Templeton Global Advisors, Layford Cay, Nassau, N.P. Bahamas. Templeton International Fund managed by Templeton Investment Counsel, 500 East Broward Blvd., Fort Lauderdale, FL 33394. The Delaware Premium Delchester Series, Delaware Premium Emerging Markets Series, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Overseas Portfolio, MFS Emerging Growth Series, MFS Research Series, MFS Total Return Series, and MFS Utilities Series may invest in non-investment grade, high yield, high- risk debt securities (commonly referred to as "junk bonds"), as detailed in the individual fund prospectuses. As compensation for their services to a fund, the investment advisors receive a fee from each fund, which is accrued daily and paid monthly. This fee is based on the net assets of each fund. With respect to a fund, the advisor and/or distributor, or an affiliate thereof, may compensate LNY or an affiliate for administrative, distribution, or other services. It is anticipated that such compensation will be based on assets of the particular fund attributable to the contracts along with certain other variable contracts issued or administered by LNY or an affiliate. The funds' shares are issued and redeemed only in connection with variable annuity contracts and variable life insurance policies (mixed funding) issued through separate accounts of LNY and other life insurance companies (shared funding). The funds do not foresee any disadvantage to CONTRACTOWNERS arising out of mixed or shared funding. Nevertheless, the funds' Boards intend to monitor events in order to identify any material irreconcilable conflicts which may possibly arise and to determine what action, if any, should be taken in response thereto. If such a conflict were to occur, one of the separate accounts might withdraw its investment in a fund. This might force a fund to sell portfolio securities at disadvantageous prices. DESCRIPTION OF THE FUNDS Certain funds offered under this contract have similar investment objectives and policies to other portfolios managed by the advisor or sub-advisor. The investment results of the funds, however, may be higher or lower than the other portfolios that are managed by the advisor or sub-advisor. There can be no assurance, and no representation is made, that the investment results of any of the funds will be comparable to the investment results of any other portfolio managed by the advisor or sub-advisor. Following are brief summaries of the investment objectives and policies of the funds. Each fund is subject to certain investment policies and restrictions which may not be changed without a majority vote of shareholders of that fund. More detailed information may be obtained from the current Prospectus for the fund which accompanies or precedes this Prospectus. PLEASE BE ADVISED THAT THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE THEIR STATED OBJECTIVES. 1. AIM V.I. Growth Fund: Seeks growth of capital primarily by investing in seasoned and better capitalized companies considered to have strong earnings momentum. 2. AIM V.I. International Equity Fund: Seeks to provide long-term growth of capital by investing in a diversified portfolio of international equities whose issuers are considered to have strong earnings momentum. 3. AIM V.I. Value Fund: Seeks to achieve long-term growth of capital by investing primarily in equity securities judged by its investment advisor to be undervalued relative to the investment advisor's appraisal of the current or projected earnings of the companies issuing the securities, or relative to the current market values of assets owned by the companies issuing the securities or relative to the equity market generally. Income is a secondary objective. 4. AIM V.I. Capital Appreciation Fund: Seeks growth of capital through investment in common stocks, with emphasis on medium and small-sized growth companies. The investment advisor will be particularly interested in companies that are likely to benefit from new or innovative products, services or processes that should enhance such companies prospects' for future growth in earnings. 5. Alliance Premier Growth Portfolio (class B): Seeks long-term growth of capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. 6. Alliance Growth and Income Portfolio (class B): Seeks reasonable current income and reasonable appreciation through investments primarily in dividend-paying common stocks of good quality. The portfolio also may invest in fixed-income securities and convertible securities. 7. Alliance Growth Portfolio (class B): Seeks to provide long-term growth of capital. Current income is only an incidental consideration. The portfolio 10 invests primarily in equity securities of companies with favorable earnings outlooks, which have long-term growth rates that are expected to exceed that of the U.S. economy over time. 8. Alliance Technology Portfolio (class B): Emphasizes growth of capital and invests for capital appreciation. Current income is only an incidental consideration. The portfolio may seek income by writing listed call options. The portfolio invests primarily in securities of companies expected to benefit from technological advances and improvements (i.e., companies that use technology extensively in the development of new or improved products or processes). 9. AVIS Global Small Capitalization Fund (class 2): Seeks to make your investment grow over time by investing primarily in stocks of smaller companies located around the world that typically have market capitalizations of $50 million to $1.2 billion. The fund is designed for investors seeking capital appreciation through stocks. Investors in the fund should have a long-term perspective and be able to tolerate potentially wide price fluctuations. 10. AVIS Growth Fund (class 2): Seeks to make your investment grow by investing primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The fund is designed for investors seeking capital appreciation through stocks. Investors in the fund should have a long-term perspective and be able to tolerate potentially wide price fluctuations. 11. AVIS International Fund (class 2): Seeks to make your investment grow over time by investing primarily in common stocks of companies located outside the United States. The fund is designed for investors seeking capital appreciation through stocks. Investors in the fund should have a long- term perspective and be able to tolerate potentially wide price fluctuations. 12. AVIS Growth and Income Fund (class 2): Seeks to make your investment grow and provide you with income over time by investing primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The fund is designed for investors seeking both capital appreciation and income. 13. BT Equity 500 Index Fund: Seeks to match the performance of the stock market as represented by Standard & Poor's 500-Registered Trademark- Index, before fund expenses. 14. Delaware Premium Growth and Income Series: Seeks the highest possible total return by investing in stocks that exhibit the potential for growth while providing higher than average dividend income. 15. Delaware Premium Delchester Series: Seeks as high a level of current income as possible by investing in rated and unrated corporate bonds (including high risk, high-yield bonds commonly known as junk bonds), U.S. government securities and commercial paper. An investment in this series may involve greater risks than an investment in a portfolio comprised primarily of investment grade bonds. 16. Delaware Premium Emerging Markets Series: Seeks long-term growth by investing primarily in stocks of companies located or operating in emerging or developing countries. 17. Delaware Premium REIT Series: Seeks to achieve maximum long-term total return by investing primarily in the securities of real estate investment trusts and real estate operating companies. 18. Delaware Premium Small Cap Value Series: Seeks growth by investing primarily in stocks of small cap companies whose market values appear low relative to underlying value or future earnings and growth potential. 19. Delaware Premium Trend Series: Seeks long-term growth by investing primarily in stocks of small companies and convertible securities of emerging and other growth-oriented companies. 20. Delaware Premium Aggressive Growth Series: Seeks long-term capital appreciation by primarily investing in common stocks of companies that have the potential for high earnings growth. Companies of any size are considered, as long as they are larger than $300 million in market capitalization. 21. Fidelity VIP Equity-Income Portfolio: Seeks reasonable income by investing primarily in income-producing equity securities, with some potential for capital appreciation, seeking a yield that exceeds the composite yield on the securities comprising the Standard and Poor's 500 Index (S&P 500). 22. Fidelity VIP Growth Portfolio: Seeks long-term capital appreciation. The portfolio normally purchases common stocks. 23. Fidelity VIP Overseas Portfolio: Seeks long-term growth of capital by investing primarily in foreign securities. 24. Fidelity VIP III Growth Opportunities Portfolio: Seeks capital growth by investing primarily in common stocks. 25. Franklin Small Cap Investments Fund (class 2): Seeks long-term capital growth by investing in 11 equity securities of U.S. small cap growth companies. Small cap companies are generally those with market cap values of less than $1.5 billion at time of purchase. 26. Franklin Mutual Shares Investments Fund (class 2): Seeks capital appreciation with income as a secondary goal. It invests in equity securities of companies that the manager believes are available at market prices less than their actual value on certain recognized or objective criteria. 27. Liberty Newport Tiger Fund: Seeks long-term capital growth by investing primarily in the stocks of high quality international companies located in the nine "Tigers" of Asia: Hong Kong, China, Singapore, Malaysia, Thailand, Indonesia, the Philippines, South Korea and Taiwan. 28. Lincoln National Bond Fund: Seeks maximum current income consistent with prudent investment strategy. The fund invests primarily in medium- and long-term corporate and government bonds. 29. Lincoln National Money Market Fund: Seeks maximum current income consistent with the preservation of capital. The fund invests in short- term obligations issued by U.S. corporations; the U.S. Government; and federally chartered banks and U.S. branches of foreign banks. 30. MFS Emerging Growth Series: Seeks to provide long-term growth by investing primarily in the common stocks of companies the managers believe are in the early stages of their life cycle but which have the potential to become major enterprises. 31. MFS Research Series: Seeks long-term growth and future income by investing primarily in equity companies believed to possess better than average prospects for long-term growth. A committee of investment research analysts selects the securities for the fund, with individual analysts responsible for choosing securities within an assigned industry. 32. MFS Total Return Series: Seeks to provide above-average income consistent with the prudent employment of capital and to provide a reasonable opportunity for capital growth and income. The fund invests in a broad range of securities, including short-term obligations, and may be diversified not only by company and industry, but also by security type. 33. MFS Utilities Series: Seeks capital growth and current income by investing the majority of its assets in equity and debt securities of both domestic and foreign companies in the utilities industry. 34. Templeton International Fund (class 2): Seeks long-term capital growth. It invests primarily in stocks of companies outside the United States, including emerging markets. Any income realized will be incidental. 35. Templeton Global Growth Fund (class 2): Seeks long-term capital growth. It invests primarily in equity securities issued by companies, large and small, in various nations throughout the world, including the United States and emerging markets. FUND SHARES We will purchase shares of the funds at net asset value and direct them to the appropriate SUBACCOUNTS of the VAA. We will redeem sufficient shares of the appropriate funds to pay ANNUITY PAYOUTS, DEATH BENEFITS, surrender/ withdrawal proceeds or for other purposes described in the contract. If you want to transfer all or part of your investment from one SUBACCOUNT to another, we may redeem shares held in the first and purchase shares of the other. Redeemed shares are retired, but they may be reissued later. Shares of the funds are not sold directly to the general public. They are sold to LNY, and may be sold to other insurance companies, for investment of the assets of the SUBACCOUNTS established by those insurance companies to fund variable annuity and variable life insurance contracts. REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS All dividends and capital gain distributions of the funds are automatically reinvested in shares of the distributing funds at their net asset value on the date of distribution. Dividends are not paid out to CONTRACTOWNERS as additional units, but are reflected as changes in unit values. ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS We reserve the right, within the law, to make additions, deletions and substitutions for the funds in which the VAA participates. We may substitute shares of other funds for shares already purchased, or to be purchased in the future, under the contract. This substitution might occur if shares of a fund should no longer be available, or if investment in any fund's shares should become inappropriate, in the judgment of our management, for the purposes of the contract. We cannot substitute shares of one fund for another without the approval by the SEC. We will also notify you. 12 CHARGES AND OTHER DEDUCTIONS We will deduct the charges described below to cover our costs and expenses, services provided and risks assumed under the contracts. We incur certain costs and expenses for the distribution and administration of the contracts and for providing the benefits payable thereunder. More particularly, our administrative services include: processing applications for and issuing the contracts, processing purchases and redemptions of fund shares as required (including dollar cost averaging, account rebalancing and automatic withdrawal services), maintaining records, administering ANNUITY PAYOUTS, furnishing accounting and valuation services (including the calculation and monitoring of daily SUBACCOUNT values), reconciling and depositing cash receipts, providing contract confirmations, providing toll-free inquiry services and furnishing telephone fund transfer services. The risks we assume include: the risk that ANNUITANTS receiving ANNUITY PAYOUTS under contract live longer than we assumed when we calculated our guaranteed rates (these rates are incorporated in the contract and cannot be changed); the risk that more owners than expected will qualify for waivers of the surrender charge; and the risk that our costs in providing the services will exceed our revenues from the contract charges (which we cannot change). The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the description of the charge. For example, the surrender charge collected may not fully cover all of the sales and distribution expenses actually incurred by us. DEDUCTIONS FROM THE VAA FOR DELAWARE-LINCOLN NEW YORK CHOICEPLUS We deduct from the VAA an amount, computed daily, which is equal to an annual rate of 1.40% of the average daily net assets. The charge consists of a 0.15% administrative charge and a 1.25% mortality and expense risk charge. SURRENDER CHARGE A surrender charge applies (except as described below) to surrenders and withdrawals of PREMIUM PAYMENTS that have been invested for the periods indicated as follows:
Number of complete CONTRACT YEARS that a PREMIUM PAYMENT has been invested - --------------------------------------------------------------- Less than At least One year 1 2 3 4 5 6 7+ Surrender charge as a percentage of the PREMIUM PAYMENTS surrendered or withdrawn 6% 6 5 4 3 2 1 0
A surrender charge does not apply to: 1. A surrender or withdrawal of PREMIUM PAYMENTS that have been invested for more than seven full CONTRACT YEARS; 2. Withdrawals of ANNUITY ACCOUNT VALUE during a CONTRACT YEAR to the extent that the total ANNUITY ACCOUNT VALUE withdrawn during the current contract year does not exceed 15% of PREMIUM PAYMENTS; 3. Electing an annuity option available within the contract; 4. The surviving spouse's assuming ownership of the contract as a result of the death of the original owner; 5. A surrender amount equal to a maximum of 75% of the ANNUITY ACCOUNT VALUE as a result of 180 days of continuous confinement of the CONTRACTOWNER in an accredited nursing home or equivalent health care facility subsequent to the effective date of the contract; 6. A surrender of the contract as a result of the death of the CONTRACTOWNER. However, the surrender charge is not waived as a result of the death of an ANNUITANT who is not the CONTRACTOWNER; and The surrender charge is calculated separately for each CONTRACT YEAR'S PREMIUM PAYMENTS to which a charge applies. (FOR PURPOSES OF CALCULATING THIS CHARGE, WE ASSUME THAT PREMIUM PAYMENTS ARE WITHDRAWN ON A FIRST IN-FIRST OUT BASIS, AND THAT ALL PREMIUM PAYMENTS ARE WITHDRAWN BEFORE ANY EARNINGS ARE WITHDRAWN.) TRANSFER FEE We reserve the right to impose a $10 fee for transfers over 12 times during any CONTRACT YEAR. Automatic dollar cost averaging and automatic rebalancing transfers are not included in the limit of twelve transfers. RIDER CHARGES A fee or expense may also be deducted in connection with any benefits added to the contract by rider or endorsement. See the rider for any applicable fee or expense. DEDUCTIONS FOR PREMIUM TAXES Any premium tax or other tax levied by any government entity with respect to the contracts will be deducted from the ANNUITY ACCOUNT VALUE when incurred, or at another time of our choosing. The applicable premium tax rates that states and other governmental entities impose on the purchase of an annuity are subject to change by legislation, by administrative interpretation or by judicial action. These premium taxes generally depend upon the law of your state of residence. The tax ranges from 0% to 4.0%. 13 OTHER CHARGES AND DEDUCTIONS Deductions from and expenses paid out of the assets of each underlying fund are more fully described in the Prospectus for each fund. ADDITIONAL INFORMATION We may reduce or eliminate the administrative and surrender charges and the account fees described previously for any particular contract. However, we will do so only to the extent that we anticipate lower distribution and/or administrative expenses, or that we perform fewer sales or administrative services than those originally contemplated in establishing the level of those charges. THE CONTRACTS PURCHASE OF CONTRACTS If you wish to purchase a contract, you must apply for it through a sales representative authorized by us. We review the completed application and decide whether to accept or reject it. If we accept it, a CONTRACT is prepared and executed by our legally authorized officers. We then send the CONTRACT to you through your sales representative. See Distribution of the contracts. When a completed application and all other information necessary for processing a purchase order is received, an initial PREMIUM PAYMENT will be priced no later than two business days after we receive the order. While attempting to finish an incomplete application, we may hold the initial PREMIUM PAYMENT for no more than five business days. If the incomplete application cannot be completed within those five days, you will be informed of the reasons, and the PREMIUM PAYMENT will be returned immediately. Once the application is complete, the initial PREMIUM PAYMENT must be priced within two business days. WHO CAN INVEST? To apply for a contract, you must be of legal age in New York where the contracts may be lawfully sold and also be eligible to participate in any of the qualified or nonqualified plans for which the contracts are designed. The CONTRACTOWNER cannot be older than age 85 at the time of application. The maximum annuitization age is 90. PREMIUM PAYMENTS PREMIUM PAYMENTS are payable to us at a frequency and in an amount selected by you in the application. The minimum initial PREMIUM PAYMENT is $1,500 for nonqualified contracts and Section 403(b) transfers/rollovers to IRAs; and $1,000 for other qualified contracts. The minimum annual amount for additional PREMIUM PAYMENTS for nonqualified and qualified contracts is $25 if transmitted electronically; otherwise the minimum amount is $100. There is no set maximum for additional PREMIUM PAYMENTS. However, PREMIUM PAYMENTS in excess of $1,000,000 require pre-approval by LNY. LNY also reserves the right to limit aggregate premium payments to $2,000,000. If you stop making PREMIUM PAYMENTS for three consecutive years, and the ANNUITY ACCOUNT VALUE decreases to less than $2,000, we may terminate the contract as allowed by New York non-forfeiture law for deferred annuities and pay the CONTRACTOWNER an adjusted ANNUITY ACCOUNT VALUE. We will notify the CONTRACTOWNER at least 30 days in advance of the intended action. During the notification period, the CONTRACTOWNER may make additional PREMIUM PAYMENTS to meet the minimum value requirements and to avoid cancellation of the contract. VALUATION DATE ACCUMULATION and ANNUITY units will be valued once daily at the close of trading (currently 4:00 p.m., New York time) on each day the New York Stock Exchange is open (VALUATION DATE). On any date other than a VALUATION DATE, the ACCUMULATION UNIT value and the ANNUITY UNIT value will not change. ALLOCATION OF PREMIUM PAYMENTS PREMIUM PAYMENTS are placed, according to your instructions into either (a) one or more fixed account(s), or (b) one or more of the VAA'S SUBACCOUNTS, each of which invests in shares of its corresponding fund. The minimum amount of any PREMIUM PAYMENT that can be put into any one variable SUBACCOUNT is $50, or $2,000 for a fixed account. No allocation can be made that would result in a variable SUBACCOUNT of less than $50, or that would result in a fixed account of less than $2,000. Upon allocation to a VAA SUBACCOUNT, PREMIUM PAYMENTS are converted into ACCUMULATION UNITS. The number of ACCUMULATION UNITS credited is determined by dividing the amount allocated to each SUBACCOUNT by the value of an ACCUMULATION UNIT for that SUBACCOUNT on the VALUATION DATE on which the PREMIUM PAYMENT is received at our servicing office if received before 4:00 p.m., New York time. If the PREMIUM PAYMENT is received at or after 4:00 p.m., New York time, we will use the ACCUMULATION UNIT value computed on the next VALUATION DATE. The number of ACCUMULATION UNITS determined in this way is not changed by any subsequent change in the value of an ACCUMULATION UNIT. However, the dollar value of an ACCUMULATION UNIT will vary depending not only upon how well the underlying fund's investments perform, but also upon the expenses of the VAA and the underlying funds. VALUATION OF ACCUMULATION UNITS PREMIUM PAYMENTS allocated to the VAA are converted into ACCUMULATION UNITS. This is done by dividing each PREMIUM PAYMENT by the value of an ACCUMULATION UNIT for the VALUATION PERIOD during which the PREMIUM PAYMENT is allocated to the VAA. The ACCUMULATION UNIT value for each SUBACCOUNT was or will be established at the inception of the SUBACCOUNT. It may increase or decrease from 14 VALUATION PERIOD to VALUATION PERIOD. The ACCUMULATION UNIT value for a SUBACCOUNT for a later VALUATION PERIOD is determined as follows: (1) The total value of the fund shares held in the SUBACCOUNT is calculated by multiplying the number of fund shares owned by the SUBACCOUNT at the beginning of the VALUATION PERIOD by the net asset value per share of the fund at the end of the VALUATION PERIOD, and adding any dividend or other distribution of the fund if an ex-dividend date occurs during the VALUATION PERIOD; minus (2) The liabilities of the SUBACCOUNT at the end of the valuation period; these liabilities include daily charges imposed on the SUBACCOUNT, and may include a charge or credit with respect to any taxes paid or reserved for by us that we determine result from the operations of the VAA; and (3) The result of (2) is divided by the number of SUBACCOUNT units outstanding at the beginning of the valuation period. The charges imposed on a SUBACCOUNT for any VALUATION PERIOD are equal to the sum of the daily mortality and expense risk charge and the daily administrative charge, multiplied by the number of calendar days in the VALUATION PERIOD. TRANSFERS BETWEEN SUBACCOUNTS ON OR BEFORE THE ANNUITY DATE You may transfer all or a portion of your investment from one SUBACCOUNT to another. A transfer involves the surrender of ACCUMULATION UNITS in one SUBACCOUNT and the purchase of ACCUMULATION UNITS in the other SUBACCOUNT. A transfer will be done using the respective ACCUMULATION UNIT values determined at the end of the VALUATION DATE on which the transfer request is received. We reserve the right to impose a $10 fee for transfers after the first 12 times during a CONTRACT YEAR. The minimum amount that may be transferred between subaccounts is $100 per SUBACCOUNT. If the transfer from a SUBACCOUNT would leave you with less than $50 in the SUBACCOUNT, we may transfer the entire balance of the SUBACCOUNT. Transfers will also be subject to any restrictions that may be imposed by the funds themselves. A transfer request may be made in writing to our Servicing Office. When thinking about a transfer of ANNUITY ACCOUNT VALUE, you should consider the inherent risk involved. Frequent transfers based on short-term expectations may increase the risk that a transfer will be made at an inopportune time. LNY may refuse to permit more than twelve transfers in any year and may modify the transfer provisions of the contract. This contract is not designed for professional market timing organizations or other entities using programmed and frequent transfers. Repeated patterns of frequent transfers are disruptive to the operation of the sub-accounts, and should LNY become aware of such disruptive practices, LNY may refuse to permit more than 12 transfers in any year and may modify the transfer provisions of the contract. We may delay transfer as permitted by the 1940 Act. TRANSFERS TO AND FROM A FIXED ACCOUNT ON OR BEFORE THE ANNUITY DATE You may transfer all or any part of the ANNUITY ACCOUNT VALUE from the SUBACCOUNT(S) to the fixed side of the contract. The minimum amount which can be transferred to a fixed account is $2,000 or the total amount in the SUBACCOUNT if less than $2,000. However, if a transfer from a SUBACCOUNT would leave you with less than $50 in the SUBACCOUNT, we may transfer the total amount to the fixed side of the contract. You may also transfer all or any part of the ANNUITY ACCOUNT VALUE from a fixed account to the various SUBACCOUNT(S) subject to the following restrictions: (1) the sum of the percentages of a fixed account transferred is limited to 15% of the value of that fixed account in any contract year and, (2) the minimum amount transferred is $2,000 (or the amount in the fixed account, if less). Currently, there is no charge to you for a transfer. However, we reserve the right to impose a charge in the future for any transfers in excess of 12 times per contract year. Transfers of all or a portion of a fixed account (other than dollar cost averaging) may be subject to a MVA. We may delay transfer as permitted by the 1940 Act. TRANSFERS AFTER THE ANNUITY DATE You may transfer all or a portion of your investment in one SUBACCOUNT to another SUBACCOUNT in the VAA or to the fixed side of the contract. Those transfers will be limited to three times per CONTRACT YEAR. Currently, there is no charge for those transfers. However, we reserve the right to impose a charge. NO TRANSFERS ARE ALLOWED FROM THE FIXED SIDE OF THE CONTRACT TO THE SUBACCOUNTS. DEATH BENEFIT BEFORE THE ANNUITY DATE You may designate a BENEFICIARY during your lifetime and change the BENEFICIARY by filing a written request with our Servicing Office. Each change of beneficiary revokes any previous designation. We reserve the right to request that you send us the contract for endorsement of a change of BENEFICIARY. If you die before the annuity date, the DEATH BENEFIT will be equal to the greatest of: the VALUE for the valuation period during which the death benefit election becomes effective; the sum of all PREMIUM PAYMENTS less the sum of all withdrawals; or the highest ANNUITY ACCOUNT VALUE as of any contract anniversary occurring on or before 15 the CONTRACTOWNER'S 80th birthday, adjusted for any subsequent PREMIUM PAYMENTS, withdrawals and charges made since the contract anniversary. On or after your 90th birthday, the amount of any DEATH BENEFIT will be the greater of: the ANNUITY ACCOUNT VALUE for the valuation period during which the death benefit election becomes effective; or the sum of all PREMIUM PAYMENTS less the sum of all withdrawals. The amount of the DEATH BENEFIT will be determined as of the date on which we receive all of the following requirements: (1) proof, satisfactory to us, of the death of the CONTRACTOWNER; (2) written election of a method of settlement; and (3) our receipt of any other required claim forms, fully completed. Unless you have already selected a settlement option, the BENEFICIARY may elect to receive payment of the DEATH BENEFIT either in the form of a lump settlement or an annuity payout. If a lump sum settlement is requested, the proceeds will be mailed within seven days of receipt of satisfactory claim documentation as discussed previously, subject to laws and regulations governing payment of DEATH BENEFITS. If an election has not been made by the end of a 60-day period, a lump sum settlement will be made to the BENEFICIARY at that time. This payment may be postponed as permitted by the 1940 Act. We will follow the applicable laws and regulations governing payment of DEATH BENEFITS. Unless otherwise provided in the BENEFICIARY designation, one of the following procedures will take place on the death of a BENEFICIARY. 1. The interest of any BENEFICIARY who dies before the CONTRACTOWNER will go to any other BENEFICIARIES named, according to their respective interests (there are no restrictions on the BENEFICIARY'S use of the proceeds); and/ or 2. If no BENEFICIARY survives the CONTRACTOWNER, the proceeds will be paid to the CONTRACTOWNER'S estate. The DEATH BENEFIT payable to the BENEFICIARY must be distributed within five years after the contractowner dies unless the BENEFICIARY begins receiving it within one year of the CONTRACTOWNER'S death in the form of a life annuity over an annuity for a designated period not extending beyond the BENEFICIARY'S life expectancy. This payment may be postponed as permitted by the 1940 Act. If the BENEFICIARY is the spouse of the CONTRACTOWNER, then the spouse may elect to continue as owner. If the CONTRACTOWNER is a corporation or other non-individual (non-natural person), the death of the annuitant will be treated as death of the CONTRACTOWNER and the above distribution rules will apply. DEATH OF ANNUITANT If the ANNUITANT dies before the ANNUITY DATE, and the annuitant is not the CONTRACTOWNER, then the CONTRACTOWNER (if a natural person) may select a new ANNUITANT. The CONTRACTOWNER will become the new ANNUITANT until a new person has been selected. If the CONTRACTOWNER is not a natural person, then the death benefit will be based on the ANNUITANT and will be paid upon due proof of the ANNUITANT'S death. If the ANNUITANT dies after the ANNUITY DATE, the death benefit, if any, will be paid based on the annuity option selected. LNY will require proof of the ANNUITANT'S death. Under any option providing for guaranteed payouts, the number of payouts which remain unpaid at the date of the ANNUITANT'S death (or surviving ANNUITANT'S death in the case of a joint life annuity) will be paid to your BENEFICIARY as payouts become due. SURRENDERS AND WITHDRAWALS Before the ANNUITY DATE, we will allow the surrender of the contract or a withdrawal of the ANNUITY ACCOUNT upon your written request, subject to the rules discussed below. Surrender or withdrawal rights after the ANNUITY DATE depend upon the annuity option you select. The amount available upon the surrender/withdrawal is the cash surrender value (ANNUITY ACCOUNT, plus or minus any market value adjustment, less any applicable surrender charges, account fees and premium tax charges) at the end of the VALUATION PERIOD during which the written request for surrender/withdrawal is received at our Servicing Office. Unless a request for withdrawal specifies otherwise, withdrawals will be made from all SUBACCOUNTS within the VAA and from the fixed account in the same proportion that the amount of withdrawal bears to the total ANNUITY ACCOUNT. As long as surrender charges apply, the maximum amount which can be withdrawn is 15% of your PREMIUM PAYMENTS per contract year without incurring any surrender charges and the remaining ANNUITY ACCOUNT VALUE must be at least $1,000. Unless prohibited, surrender/withdrawal payments will be mailed within seven days after we receive a valid written request at the Servicing Office. The payment may be postponed as permitted by the 1940 Act. The tax consequences of a surrender/withdrawal are discussed later in this booklet. See Federal tax matters. We may terminate the contract, if your PREMIUM PAYMENT frequency or your ANNUITY ACCOUNT VALUE falls below New York's minimum standards. DELAY OF PAYMENTS Contract proceeds from the VAA will be paid within seven days, except (i) when the NYSE is closed (except weekends and holidays); (ii) times when the market trading is restricted or the SEC declares an emergency, and we cannot value units or the funds cannot redeem 16 shares; or (iii) when the SEC so orders to protect CONTRACTOWNERS. REINVESTMENT PRIVILEGE You may, only once, elect to make a reinvestment purchase with any part of the proceeds of a surrender/withdrawal, and we will recredit the surrender/withdrawal charges previously deducted. You must make this election within 30 days of the date of the surrender/withdrawal, and the repurchase must be of a contract covered by this Prospectus. You must represent that the proceeds being used to make the purchase have retained their tax-favored status under an arrangement for which the contracts offered by this Prospectus are designed. The number of ACCUMULATION UNITS which will be credited when the proceeds are reinvested will be based on the value of the ACCUMULATION UNIT(S) on the next VALUATION DATE. This computation will occur following receipt of the proceeds and request for reinvestment at the Servicing Office. You may use the reinvestment privilege only once. For tax reporting purposes, we will treat a surrender/withdrawal and a subsequent reinvestment purchase as separate transactions. You should consult a tax advisor before you request a surrender/withdrawal or subsequent reinvestment purchase. AMENDMENT OF CONTRACT We reserve the right to amend the contract to meet the requirements of the 1940 Act or other applicable federal or state laws or regulations. Any changes are subject to prior approval by the New York Superintendent of Insurance. You will be notified in writing of any changes, modifications or waivers. COMMISSIONS The commissions paid to dealers are a maximum of 7.0% of each PREMIUM PAYMENT. In some instances, commissions on deposits may be lowered by as much as 2.50% and replaced by a commission of up to .65% of annual ANNUITY ACCOUNT VALUES. LNY will incur all other promotional or distribution expenses associated with the marketing of the contracts. These commissions are not deducted from PREMIUM PAYMENTS or ANNUITY ACCOUNT VALUE, they are paid by us. OWNERSHIP As CONTRACTOWNER, you have all rights under the contract. According to New York law, the assets of the VAA are held for the exclusive benefit of all CONTRACTOWNERS and their designated BENEFICIARIES; and the assets of the VAA are not chargeable with liabilities arising from any other business that we may conduct. Qualified CONTRACTS may not be assigned or transferred except as permitted by the Employee Retirement Income Security Act (ERISA) of 1974 and upon written notification to us. Non-qualified CONTRACTS may not be collaterally assigned. We assume no responsibility for the validity or effect of any assignment. An assignment affects the death benefit calculated under the contract. Consult your tax advisor about the tax consequences of an assignment. For non-qualified contracts, in accordance with Code Section 72(u), a deferred annuity contract held by a corporation or other entity that is not a natural person is not treated as an annuity contract for tax purposes. Income on the contract is treated as ordinary income received by the owner during the taxable year. But in accordance with Code Section 72(u), an annuity contract held by a trust or other entity as agent for a natural person is considered held by a natural person. CONTRACTOWNER QUESTIONS The obligations to purchasers under the contracts are those of LNY. Questions about your contract should be directed to us at 1-888-868-2583 ANNUITY PAYOUTS When you apply for a contract, you may select any ANNUITY DATE permitted by law which must be on or before the CONTRACTOWNER'S 90th birthday. (PLEASE NOTE THE FOLLOWING EXCEPTION: Contracts issued under qualified employee pension and profit-sharing trusts [described in the Section 401(a) and tax exempt under Section 501(a) of the tax code] and qualified annuity plans [described in Section 403(a) of the tax code], including H.R. 10 trusts and plans covering self-employed individuals and their employees, provide for annuity payouts to start at the date and under the option specified.) The contract provides optional forms of payouts of annuities (annuity options), which are payable on a variable basis, fixed basis or a combination of both as you specify. The contract provides that all or part of the ANNUITY ACCOUNT VALUE may be used to purchase an annuity. You may elect ANNUITY PAYOUTS in monthly, quarterly, semiannual or annual installments. If the payouts from any SUBACCOUNT would be or become less than $50, we have the right to reduce their frequency until the payouts are at least $50 each. Following are explanations of the annuity options available. ANNUITY OPTIONS CONTRACT CALLS THIS "SETTLEMENT OPTIONS" LIFE ANNUITY. A periodic payout during the lifetime of the ANNUITANT and ends with the last payout before the death of the ANNUITANT. This option offers the highest periodic payout since there is no guarantee of a minimum number of payments or provision for a DEATH BENEFIT for BENEFICIARIES. HOWEVER, THERE IS THE RISK UNDER THIS OPTION THAT THE RECIPIENT WOULD RECEIVE NO PAYMENTS IF THE ANNUITANT DIES BEFORE THE DATE SET 17 FOR THE FIRST PAYMENT; ONLY ONE PAYMENT IF DEATH OCCURS BEFORE THE SECOND SCHEDULED PAYMENT, AND SO ON. LIFE ANNUITY WITH GUARANTEED PERIOD. Guaranteed periodic payouts during a designated period, usually 10 or 20 years, which then continue throughout the lifetime of the ANNUITANT. The guarantee period is selected by the CONTRACTOWNER. JOINT LIFE ANNUITY. A periodic payout during the joint lifetime of the ANNUITANT and a joint ANNUITANT until the survivor of them dies. JOINT LIFE AND TWO-THIRDS SURVIVOR ANNUITY. A periodic payout during the joint lifetime of the ANNUITANT and a designated joint ANNUITANT. When one of the joint ANNUITANTS dies, the survivor receives two-thirds of the periodic payout made when both were alive. JOINT LIFE ANNUITY WITH GUARANTEED PERIOD. Guaranteed periodic payouts during a period, usually 10 or 20 years, which continue during the joint lifetime of the ANNUITANT and a joint ANNUITANT until the survivor of them dies. The payout continues during the lifetime of the survivor. The designated period is elected by the CONTRACTOWNER. JOINT LIFE AND TWO-THIRDS SURVIVOR ANNUITY WITH GUARANTEED PERIOD. A periodic payout during the joint lifetime of the ANNUITANT and a joint ANNUITANT. When one of the joint ANNUITANTS dies, the survivor receives two-thirds of the periodic payout made when both were alive. This option further provides that should one or both of the ANNUITANTS die during the elected guaranteed period, usually 10 or 20 years, full benefit payment will continue for the rest of the guaranteed period. LIFE ANNUITY WITH UNIT REFUND. VARIABLE ANNUITY benefit payments that will be made for the lifetime of the ANNUITANT with the guarantee that upon death, should (a) the number of ANNUITY UNITS purchased, as determined by dividing the total dollar amount applied to purchase this option by the ANNUITY UNIT VALUE at the ANNUITY DATE be greater than (b) the number of ANNUITY UNITS paid in each variable annuity benefit payment multiplied by the number of annuity benefit payments paid prior to death, then a refund payment equal to the number of ANNUITY UNITS determined by (a) minus (b) will be made. The refund payment value will be determined using the ANNUITY UNIT VALUE on the date the death claim is approved by us and payment is made after LNY is in receipt of: (1) proof, satisfactory to LNY, of the death; (2) written authorization for payment; and (3) all claim forms, fully completed. LIFE ANNUITY WITH CASH REFUND. Fixed ANNUITY benefit payments that will be made for the lifetime of the ANNUITANT with the guarantee that upon death, should (a) the total dollar amount applied to purchase this option be greater than (b) the fixed annuity benefit payment multiplied by the number of ANNUITY benefit payments paid prior to death, then a refund payment equal to the dollar amount of (a) minus (b) will be made after LNY is in receipt of: (1) proof, satisfactory to LNY, of the death; (2) written authorization for payment; and (3) all claim forms, fully completed. GENERAL INFORMATION Under the options listed above, you may not make withdrawals. We may make available other options, with or without withdrawal features. Options are only available to the extent they are consistent with the requirements of the contract as well as Sections 72(s) and 401(a)(9) of the Code, if applicable. We will assess the mortality and expense risk charge and the charge for administrative services on all variable ANNUITY PAYOUTS, including options that do not have a life contingency and therefore no mortality risk. The ANNUITY DATE must be on or before the CONTRACTOWNER'S 90th birthday. You may change the ANNUITY DATE, change the annuity option or change the allocation of the investment among SUBACCOUNTS up to 30 days before the scheduled ANNUITY DATE, upon written notice to the Servicing Office. You must give us at least 30 days notice before the date on which you want payouts to begin. If you have not already chosen an annuity payout option, the BENEFICIARY of the death benefit may choose any annuity payout option. Unless you select another option, the contract automatically provides for a life annuity with ANNUITY PAYOUTS guaranteed for 10 years (on a fixed, variable or combination fixed and variable basis, in proportion to the account allocation at the time of annuitization) except when a joint life payout is required by law. Under any option providing for guaranteed period payouts, the number of payouts which remain unpaid at the date of the ANNUITANT'S death (or surviving ANNUITANT'S death in case of joint life annuity) will be paid to your BENEFICIARY as payouts become due. VARIABLE ANNUITY PAYOUTS Variable ANNUITY PAYOUTS will be determined using: 1. The ANNUITY ACCOUNT VALUE on the ANNUITY DATE; 2. The annuity purchase rate tables contained in the contract; 3. The annuity option selected; and 4. The investment performance of the fund(s) selected. 18 To determine the amount of variable payouts, we make this calculation: 1. Determine the dollar amount of the first periodic payout; then 2. Credit the contract with a fixed number of ANNUITY UNITS equal to the first periodic payout divided by the ANNUITY UNIT value; and 3. Calculate the value of the ANNUITY UNITS each period thereafter. We assume an investment return of 4% per year, as applied to the applicable mortality table. The amount of each variable payout after the initial payout will depend upon how the underlying fund(s) perform, relative to the 4% assumed rate. If the actual net investment rate (annualized) exceeds 4%, the variable annuity payout will increase at a rate proportional to the amount of such excess. Conversely, if the actual rate is less than 4%, annuity variable payouts will decrease. There is a more complete explanation of this calculation in the SAI. FIXED SIDE OF THE CONTRACT PREMIUM PAYMENTS allocated to the fixed side of the contract become part of LNY'S general account, and DO NOT participate in the investment experience of the VAA. The general account is subject to regulation and supervision by the New York Insurance Department. In reliance on certain exemptions, exclusions and rules, LNY has not registered interests in the general account as a security under the Securities Act of 1933 and has not registered the general account as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests in it are regulated under the 1933 Act or the 1940 Act. LNY has been advised that the staff of the SEC has not made a review of the disclosures which are included in this Prospectus which relate to our general account and to the fixed account under the contract. These disclosures, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in Prospectuses. This Prospectus is generally intended to serve as a disclosure document only for aspects of the contract involving the VAA, and therefore contains only selected information regarding the fixed side of the contract. Complete details regarding the fixed side of the contract are in the contract. GUARANTEED PERIODS The owner may allocate PREMIUM PAYMENTS to one or more fixed accounts with guaranteed periods of 1, 3, 5, 7, or 10 years. LNY may offer a fixed account for a period of less than one year for the purpose of dollar cost averaging. Each PREMIUM PAYMENT allocated to a fixed account will start its own guaranteed period and will earn a guaranteed interest rate. The duration of the guaranteed period affects the guaranteed interest rate of the fixed account. A fixed account guarantee period ends on the date after the number of calendar years in the fixed account's guaranteed period. Interest will be credited daily at a guaranteed rate that is equal to the compound annual rate determined on the first day of the fixed account guaranteed period. Amounts transferred or withdrawn from a fixed account prior to the end of the guaranteed period will be subject to the MVA. Each guaranteed period PREMIUM PAYMENT amount will be treated separately for purposes of determining any applicable market value adjustment. Any amount withdrawn from a fixed account may be subject to any applicable surrender charges, account fees or premium taxes. LNY will notify the CONTRACTOWNER in writing at least 15 but not more than 45 days prior to the expiration date for any guaranteed period amount. A new fixed account guaranteed period of the same duration as the previous fixed account guaranteed period will begin automatically at the end of the previous guaranteed period, unless LNY receives, prior to the end of a guaranteed period, a written election by the contractowner. The written election may request the transfer of the guaranteed period amount to a different fixed account or to a variable subaccount from among those being offered by LNY. Transfers of any guaranteed period amount which become effective upon the date of expiration of the applicable guaranteed period are not subject to the limitation of twelve transfers per CONTRACT YEAR or the additional fixed account transfer restrictions. MARKET VALUE ADJUSTMENT Any surrender or transfer of a fixed account guaranteed period amount before the end of the guaranteed period (other than Dollar Cost Averaging transfers) will be subject to a market value adjustment (MVA). A surrender or transfer effective upon the expiration date of the guaranteed period will not be subject to an MVA. The MVA will be added to the amount being surrendered or transferred. The MVA will be added after the deduction of any applicable account fees and before any applicable surrender or transfer charges. In general, the MVA reflects the relationship between the index rate in effect at the time a PREMIUM PAYMENT is allocated to a fixed account's guaranteed period under the contract and the index rate in effect at the time of the PREMIUM PAYMENT'S surrender or transfer. It also reflects the time remaining in the fixed account's guaranteed period. If the index rate at the time of the surrender or transfer is lower than the index rate at the time the PREMIUM PAYMENT was allocated, then the addition of the MVA will generally result in a higher payment at the time of the surrender or transfer. Similarly, if the index rate at the time of surrender or transfer is higher than the index 19 rate at the time of the allocation of the PURCHASE PAYMENT, then the application of the MVA will generally result in a lower payment at the time of the surrender or transfer. The amount of the MVA is calculated by multiplying the dollar amount of the cash withdrawal or transfer by the following amount: 1 subtracted from the result of (1 + a)TO THE POWER OF n divided by (1 + b)TO THE POWER OF n where: a = The yield rate for a Treasury security with time to maturity equal to the Guaranteed Period, determined at the beginning of the Guaranteed Period. b = The yield rate for a Treasury security with time to maturity equal to Guaranteed Period, determined at the time of transfer or withdrawal plus, if yield rates "a" and "b" differ by more than 0.25%, 0.25%. This adjustment builds into the formula a factor representing direct and indirect costs to LNY associated with liquidating general account assets in order to satisfy surrender requests. This adjustment of 0.25% has been added to the denominator of the formula because it is anticipated that a substantial portion of applicable general account portfolio assets will be in relatively illiquid securities. Thus, in addition to direct transaction costs, if such securities must be sold (e.g., because of surrenders), the market price may be lower. As used herein "The yield rate for a Treasury security" means the applicable yield rate for United States Treasury Bonds, Notes or Bills as published in the Wall Street Journal. If such yields are no longer published, the Company will substitute an appropriate index of publicly traded obligations subject to approval by the Superintendent of Insurance of the State of New York. Straight-line interpolation is used for periods to maturity not quoted. n = The number of years, including fractional years, remaining in the Guaranteed Period (e.g. 1 year and 73 days = 1 + (73 divided by 365) = 1.2 years) We guarantee an interest rate of not less than 3.0% per year on amounts held in a fixed account. Any amount withdrawn from or transferred out of a fixed account prior to the expiration of the guaranteed period is subject to a MVA (see Market value adjustment below) and Charges and other deductions -- Surrender charge. The Market Value Adjustment will NOT reduce the amount available for a surrender, withdrawal or transfer to an amount less than the initial amount allocated or transferred to a fixed account plus interest of 3.0% per year, less surrender charges and account fees, if any. ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE AT LNY'S SOLE DISCRETION, CONTRACTOWNERS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0% WILL BE DECLARED. FEDERAL TAX MATTERS INTRODUCTION The Federal income tax treatment of the contract is complex and sometimes uncertain. The Federal income tax rules may vary with your particular circumstances. This discussion does not include all the Federal income tax rules that may affect you and your contract. This discussion also does not address other Federal tax consequences or state or local tax consequences, associated with the contract. As a result, you should always consult a tax adviser about the application of tax rules to your individual situation. TAXATION OF NONQUALIFIED ANNUITIES This part of the discussion describes some of the Federal income tax rules applicable to nonqualified annuities. A nonqualified annuity is a contract not issued in connection with a qualified retirement plan receiving special tax treatment under the tax law, such as an IRA. TAX DEFERRAL ON EARNINGS The Federal income tax law generally does not tax any increase in your contract value until you receive a contract distribution. However, for this general rule to apply, certain requirements must be satisfied: - - An individual must own the contract (or the tax law must treat the contract as owned by an individual). - - The investments of the VAA must be "adequately diversified" in accordance with IRS regulations. - - Your right to choose particular investments for a contract must be limited. - - The ANNUITY DATE must not occur near the end of the ANNUITANT'S life expectancy. CONTRACTS NOT OWNED BY THE INDIVIDUAL If a contract is owned by an entity (rather than an individual), the tax law generally does not treat it as an annuity contract for Federal income tax purposes. This means that the entity owning the contract pays tax currently on the excess of the contract value over the purchase payments for the contract. Examples of contracts where the owner pays current tax on the contract's earnings are contracts issued to a corporation or a trust. Exceptions to this rule exist. For example, the tax law treats a contract as owned by an individual if the named owner is a trust or other entity that holds the contract as an agent for an individual. However, this exception does not apply in the case of any employer that owns a contract to provide deferred compensation for its employees. 20 INVESTMENTS IN THE VAA MUST BE DIVERSIFIED For a contract to be treated as an annuity for Federal Income tax purposes, the investments of the VAA must be "adequately diversified." IRS regulations define standards for determining whether the investments of the VAA are adequately diversified. If the VAA fails to comply with these diversification standards, you could be required to pay tax currently on the excess of the CONTRACT VALUE over the contract PREMIUM PAYMENTS. Although we do not control the investments of the underlying investment options, we expect that the underlying investment options will comply with the IRS regulations so that the VAA will be considered "adequately diversified." RESTRICTIONS Federal income tax law limits your right to choose particular investments for the contract. Because the IRS has not issued guidance specifying those limits, the limits are uncertain and your right to allocate ANNUITY ACCOUNT VALUES among the SUBACCOUNTS may exceed those limits. If so, you would be treated as the owner of the assets of the VAA and thus subject to current taxation on the income and gains from those assets. We do not know what limits may be set by the IRS in any guidance that it may issue and whether any such limits will apply to existing contracts. We reserve the right to modify the contract without your consent to try to prevent the tax law from considering you as the owner of the assets of the VAA. AGE AT WHICH ANNUITY PAYOUTS BEGIN Federal income tax rules do not expressly identify a particular age by which ANNUITY PAYOUTS must begin. However, those rules do require that annuity contract provide for amortization, through ANNUITY PAYOUTS, of the contract's PREMIUM PAYMENTS and earnings. If ANNUITY PAYOUTS under the contract begin or are scheduled to begin on a date past the ANNUITANT'S 85th birthday, it is possible that the tax law will not treat the contract as an annuity for Federal income tax purposes. In that event, you would be currently taxable on the excess of the ANNUITY ACCOUNT VALUE over the PREMIUM PAYMENTS of the contract. TAX TREATMENT OF PAYMENTS We make no guarantees regarding the tax treatment of any contract or of any transaction involving a contract. However, the rest of this discussion assumes your contract will be treated as an annuity for Federal income tax purposes and that the tax law will not tax any increase in your ANNUITY ACCOUNT VALUE until there is a distribution from your contract. TAXATION OF WITHDRAWALS AND SURRENDERS You will pay tax on withdrawals to the extent your ANNUITY ACCOUNT VALUE exceeds your PREMIUM PAYMENTS in the contract. This income (and all other income from your contract) is considered ordinary income. A higher rate of tax is paid on ordinary income than on capital gains. You will pay tax on a surrender to the extent the amount you receive exceeds your PREMIUM PAYMENTS. In certain circumstances, your PREMIUM PAYMENTS are reduced by amounts received from your contract that were not included in income. TAXATION OF ANNUITY PAYOUTS The tax law imposes tax on a portion of each ANNUITY PAYOUT (at ordinary income tax rates) and treats a portion as a nontaxable return of your PREMIUM PAYMENTS in the contract. We will notify you annually of the taxable amount of your ANNUITY PAYOUT. Once you have recovered the total amount of the PREMIUM PAYMENTS in the contract, you will pay tax on the full amount of your ANNUITY PAYOUTS. If ANNUITY PAYOUTS end because of the ANNUITANT'S death and before the total amount of the PREMIUM PAYMENTS in the contract has been received, the amount not received generally will be deductible. TAXATION OF DEATH BENEFITS We may distribute amounts from your contract because of the death of a CONTRACTOWNER or an ANNUITANT. The tax treatment of these amounts depends on whether you or the ANNUITANT dies before or after the ANNUITY DATE. - - Death prior to the ANNUITY DATE - If the beneficiary receives DEATH BENEFITS under an ANNUITY PAYOUT option, they are taxed in the same manner as ANNUITY PAYOUTS. - If the BENEFICIARY does not receive DEATH BENEFITS under an ANNUITY PAYOUT option, they are taxed in the same manner as a withdrawal. - - Death after the ANNUITY DATE - If DEATH BENEFITS are received in accordance with the existing ANNUITY PAYOUT option, they are excludible from income if they do not exceed the PURCHASE PAYMENTS not yet distributed from the contract. All ANNUITY PAYOUTS in excess of the PURCHASE PAYMENTS not previously received are included in income. - If DEATH BENEFITS are received in a lump sum, the tax law imposes tax on the amount of DEATH BENEFITS which exceeds the amount of PREMIUM PAYMENTS not previously received. PENALTY TAXES PAYABLE ON WITHDRAWALS, SURRENDERS OR ANNUITY PAYOUTS The tax law may impose a 10% penalty tax on any distribution from your contract which you must include in 21 your gross income. The 10% penalty tax does not apply if one of several exceptions exists. These exceptions include withdrawals, surrenders or ANNUITY PAYOUTS that: - - You receive on or after you reach age 59 1/2, - - You receive because you became disabled (as defined in the tax law), - - A beneficiary receives on or after your death, or - - You receive as a series of substantially equal periodic payments for your life (or life expectancy). SPECIAL RULES IF YOU OWN MORE THAN ONE ANNUITY CONTRACT In certain circumstances, you must combine some or all of the nonqualified annuity contracts you own in order to determine the amount of an ANNUITY PAYOUT, a surrender or a withdrawal that you must include in income. For example, if you purchase two or more deferred annuity contracts from the same life insurance company (or its affiliates) during any calendar year the tax law treats all such contracts as one contract. Treating two or more contracts as one contract could affect the amount of a surrender, a withdrawal or an ANNUITY PAYOUT that you must include in income and the amount that might be subject to the penalty tax described above. LOANS AND ASSIGNMENTS Except for certain qualified contracts, the tax law treats any amount received as a loan under a contract, and any assignment or pledge (or agreement to assign or pledge) any portion of your ANNUITY ACCOUNT VALUE, as a withdrawal of such amount or portion. GIFTING A CONTRACT If you transfer ownership of your contract to a person other than your spouse (or to your former spouse incident to divorce), and receive a payment less than your contract's value to the extent that it exceeds your PREMIUM PAYMENTS not previously received, the new owner's PREMIUM PAYMENTS in the contract would then be increased to reflect the amount included in your income. LOSS OF INTEREST DEDUCTION After June 8, 1997, if a contract is issued to a taxpayer that is not an individual, or if a contract is held for the benefit of an entity, the entity will lose a portion of its deduction for otherwise deductible interest expenses. This disallowance does not apply if you pay tax on the annual increase in the ANNUITY ACCOUNT VALUE. Entities that are considering purchasing a contract, or entities that will benefit from someone else's ownership of a contract, should consult a tax advisor. QUALIFIED RETIREMENT PLANS We are also designed the contracts for use in connection with certain types of retirement plans that receive favorable treatment under the tax law. Contracts issued to or in connection with a qualified retirement plan are called "qualified contracts". We issue contracts for use with different types of qualified plans. The Federal income tax rules applicable to those plans are complex and varied. As a result, this Prospectus does not attempt to provide more than general information about use of the contract with the various types of qualified plans. Persons planning to buy the contract in connection with a qualified plan should obtain advice from a competent tax advisor. TYPES OF QUALIFIED CONTRACTS AND TERMS OF CONTRACTS Currently, we issue contracts in connection with the following types of qualified plans: - - Individual Retirement Accounts and Annuities ("Traditional IRAs") - - Roth IRAs We may in the future issue contracts in connection with the following types of qualified plans: - - Simplified Employee Pensions ("SEPs") - - Savings Incentive Matched Plan for Employees ("Simple 401(k) plans") - - Public school system and tax-exempt organization annuity plans ("403(b) plans") - - Qualified corporate employee pension and profit sharing plans ("401(a)") and qualified annuity plans ("403(a) plans") - - Self-employed individual plans ("H.R. 10 plans" or Keogh Plans") - - Deferred compensation plans of state and local governments and tax-exempt organizations ("457 plans") We may issue contracts for use with other types of qualified plans in the future. We will amend contracts to be used with a qualified plan as generally necessary to conform to tax law requirements for the type of plan. However, the rights of a person to any qualified plan benefits may be subject to the plan's terms and conditions, regardless of the contract's terms and conditions. In addition, we are not bound by the terms and conditions of qualified plans to the extent such terms and conditions contradict the contract, unless we consent. TAX TREATMENT OF QUALIFIED CONTRACTS The Federal income tax rules applicable to qualified plans and qualified contracts vary with the type of plan and contract. For example, 22 - - Federal tax rules limit the amount of PREMIUM PAYMENTS that can be made and the tax deduction or exclusion that may be allowed for the PREMIUM PAYMENTS. These limits vary depending on the type of qualified plan and the plan participant's specific circumstances, e.g., the participant's compensation. - - Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the ANNUITANT must begin receiving payments from the contract in certain minimum amounts by a certain age, typically age 70 1/2. However, these "minimum distribution rules" do not apply to a Roth IRA. - - Loans are allowed under certain types of qualified plans, but Federal income tax rules permit loans under some section 403(b) plans, but prohibit loans under Traditional and Roth IRAs. If allowed, loans are subject to a variety of limitations, including restrictions as to the loan amount, the loan duration, and the manner of repayment. Your contract or plan may not permit loans. TAX TREATMENT OF PAYMENTS Federal income tax rules generally include distributions from a qualified contract in the recipient's income as ordinary income. These taxable distributions will include PREMIUM PAYMENTS that were deductible or excludible from income. Thus, under many qualified contracts the total amount received is included in income since a deduction or exclusion from income was taken for PREMIUM PAYMENTS. There are exceptions. For example, you do not include amounts received from a Roth IRA in income if certain conditions are satisfied. Failure to comply with the minimum distribution rules applicable to certain qualified plans, such as Traditional IRAs, will result in the imposition of an excise tax. This excise tax generally equals 50% of the amount by which a minimum required distribution exceeds the actual distribution from the qualified plan. FEDERAL PENALTY TAXES PAYABLE ON DISTRIBUTIONS The tax law may impose a 10% penalty tax on the amount received from the qualified contract that must be included in income. The tax law does not impose the penalty tax if one of several exceptions applies. The exceptions vary depending on the type of qualified contract you purchase. For example, in the case of an IRA, exceptions provide that the penalty tax does not apply to a withdrawal, surrender or ANNUITY PAYOUT: - - received on or after the annuitant reaches age 59 1/2, - - received on or after the ANNUITANT'S death or because of the ANNUITANT'S disability (as defined in the tax law), - - received as a series of substantially equal periodic payments for the ANNUITANT'S life or (life expectancy), or - - received as reimbursement for certain amounts paid for medical care. These exceptions, as well as certain others not described here, generally apply to taxable distributions from other qualified plans. However, the specific requirements of the exception may vary. TRANSFERS AND DIRECT ROLLOVERS In many circumstances, money may be moved between qualified contracts and qualified plans by means of a rollover or a transfer. Special rules apply to such rollovers and transfers. If the applicable rules are not followed, you may suffer adverse Federal income tax consequences, including paying taxes which might not otherwise have had to be paid. A qualified advisor should always be consulted before you move or attempt to move funds between any qualified plan or contract and another qualified plan or contract. The direct rollover rules apply to certain payments (called "eligible rollover distributions") from section 401(a) plans, section 403(a) or (b) plans, HR 10 plans, and contracts used in connection with these types of plans. (The direct rollover rules do not apply to distributions from IRAs or section 457 plans). The direct rollover rules require that we withhold Federal income tax equal to 20% of the eligible rollover distribution from the distribution amount unless you elect to have the amount directly transferred to certain qualified plans or contracts. Before we send a rollover distribution, we will provide the recipient with a notice explaining these requirements and how the 20% withholding can be avoided by electing a direct rollover. FEDERAL INCOME TAX WITHHOLDING We will withhold and remit to the IRS a part of the taxable portion of each distribution made under a contract unless the distributee notifies us at or before the time of distribution that tax is not to be withheld. In certain circumstances, Federal income tax rules may require us to withhold tax. At the time a withdrawal, surrender or ANNUITY PAYOUT is requested, we will give the recipient an explanation of the withholding requirements. TAX STATUS OF LINCOLN NEW YORK Under existing Federal income tax laws, LNY does not pay tax on investment income and realized capital gains of the VAA. LNY does not expect that it will incur any Federal income tax liability on the income and gains earned by the VAA. We, therefore, do not impose a charge for Federal income taxes. If Federal income tax law changes and we must pay tax on some or all of the 23 income and gains earned by the VAA, we may impose a charge against the VAA to pay the taxes. CHANGES IN THE LAW The above discussion is based on the tax law existing on the date of this Prospectus. However, Congress, the IRS and the courts may modify these authorities, sometimes retroactively. VOTING RIGHTS As required by law, we will vote the fund shares held in the VAA at meetings of the shareholders of the fund. The voting will be done according to the instructions of CONTRACTOWNERS who have interests in the SUBACCOUNTS which invest in classes of funds. If the 1940 Act or any regulation under it should be amended or if present interpretations should be amended or if present interpretations should change, and if as a result we determine that we are permitted to vote the fund shares in our own right, we may elect to do so. The number of votes which you have the right to cast will be determined by applying your percentage interest in a SUBACCOUNT to the total number of votes attributable to the SUBACCOUNT. In determining the number of votes, fractional shares will be recognized. Fund shares of a class held in a SUBACCOUNT for which no timely instructions are received will be voted by us in proportion to the voting instructions which are received for all contracts participating in that SUBACCOUNT. Voting instructions to abstain on any item to be voted on will be applied on a pro-rata basis to reduce the number of votes eligible to be cast. Whenever a shareholders meeting is called, each person having a voting interest in a SUBACCOUNT will receive proxy voting material, reports and other materials relating to the trust. Since the fund engages in shared funding, other persons or entities besides LNY may vote fund shares. See Sale of fund shares by the fund. DISTRIBUTION OF THE CONTRACTS LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), an Indiana corporation registered with the Securities and Exchange Commission as a broker-dealer, is the distributor and principal underwriter of the contracts. Under an agreement with LFA, Delaware Distributors, L.P. ("DDLP") will act as wholesaler and will assist LFA in forming the selling group. DDLP will also perform certain enumerated marketing and ancillary functions in support of the selling group. The contracts will be sold by LFA registered representatives and by properly licensed registered representatives of independent broker-dealers which in turn have selling agreements with LFA and have been licensed by state insurance departments to represent us. LNY will offer the contracts in New York only. RETURN PRIVILEGE Within the 10-day free-look period after you receive the contract, you may cancel it for any reason by delivering or mailing it postage prepaid, to the Servicing Office at P.O. Box 7866, Fort Wayne, Indiana, 46801. A contract canceled under this provision will be void. With respect to the fixed portion of a contract, we will return PREMIUM PAYMENTS. With respect to the VAA, except as explained in the following paragraph, we will return the ANNUITY ACCOUNT VALUE as of the date of receipt of the cancellation, plus any premium taxes which had been deducted. No surrender charge will be assessed. A PURCHASER WHO PARTICIPATES IN THE VAA IS SUBJECT TO THE RISK OF A MARKET LOSS DURING THE FREE-LOOK PERIOD. STATE REGULATION As a life insurance company organized and operated under New York law, we are subject to provisions governing life insurers and to regulation by the New York Superintendent of Insurance. Our books and accounts are subject to review and examination by the New York Insurance Department at all times. A full examination of our operations is conducted by that Department at least every five years. RECORDS AND REPORTS As presently required by the 1940 Act and applicable regulations, we are responsible for maintaining all records and accounts relating to the VAA. We have entered into an agreement with the Delaware Management Company, 2005 Market Street, Philadelphia, PA 19203, to provide accounting services to the VAA. We will mail to you, at your last known address of record at the Servicing Office, at least semiannually after the first contract year, reports containing information required by that Act or any other applicable law or regulation. Administration services necessary for the operation of the VAA and the contracts are currently provided by Lincoln Life. However, neither the assets of Lincoln Life nor the assets of LNC support the obligations of LNY under the contracts. OTHER INFORMATION A Registration Statement has been filed with the SEC, under the Securities Act of 1933 as amended, for the contracts being offered here. This Prospectus does not contain all the information in the Registration Statement, its amendments and exhibits. Please refer to the 24 Registration Statement for further information about the VAA, LNY and the contracts offered. Statements in this Prospectus about the content of contracts and other legal instruments are summaries. For the complete text of those contracts and instruments, please refer to those documents as filed with the SEC. We are a member of the Insurance Marketplace Standards Association ("IMSA") and may include the IMSA logo and information about IMSA membership in our advertisements. Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and services for individually sold life insurance and annuities. PREPARING FOR YEAR 2000 Many existing computer programs use only two digits in the date field to identify the year. If left uncorrected these programs, which were designed and developed without considering the impact of the upcoming change in the century, could fail to operate or could produce erroneous results when processing dates after December 31, 1999. For example, for a bond with a stated maturity date of July 1, 2000, a computer program could read and store the maturity date as July 1, 1900. This problem is known by many names, such as the "Year 2000 Problem", "Y2K", and the "Millenium Bug". The Year 2000 problem affects virtually all computer programs worldwide. It can cause a computer system to suddenly stop operating. It can also result in a computer corrupting vital company records, and the problem could go undetected for a long time. For our products, if left unchecked it could cause such problems as purchase payment collection and deposit errors; claim payment difficulties; accounting errors; erroneous unit values; and difficulties or delays in processing transfers, surrenders and withdrawals. In a worst case scenario, this could result in a material disruption to the operations of LNY and of Lincoln Life and Delaware Service Company Inc. (Delaware), affiliates of LNY and providers of the accounting and valuation services for the VA Account. However, both provider companies are wholly owned by Lincoln National Corporation (LNC), which has had Year 2000 processes in place since 1996. LNC projects aggregate expenditures in excess of $92 million for its Y2K efforts through the year 2000. Both Lincoln Life and Delaware have dedicated Year 2000 teams and steering committees that are answerable to their counterparts in LNC. LNY also has a dedicated Year 2000 team and is coordinating its activities with those of Lincoln Life, Delaware and LNC. In light of the potential problems discussed above, LNY, as part of its Year 2000 updating process, has assumed responsibility for correcting all high-priority internal Information Technology (IT) systems which service the VA Account. Delaware is responsible for updating all its high-priority internal IT systems to support these vital services. The Year 2000 effort, for both IT and non-IT systems, is organized into four phases: - - awareness-raising and inventory of all assets (including third-party agent and vendor relationships); - - assessment and high-level planning and strategy; - - remediation of affected systems and equipment; and - - testing to verify Year 2000 readiness. The high-priority IT processes and systems--those LNY uses to maintain its customers' records and accounts--have been assessed and repaired, and testing of those processes and systems is more than 99% complete. Our efforts will continue through the end of 1999 to work on keeping our business dealings uninterrupted. And, we continue to work closely with our key business partners and suppliers so they can provide the information and service we need from them. All three companies are currently on schedule and remediation and testing of their high-priority non-IT systems (elevators, heating and ventilation, security systems, etc.) was completed by October 31, 1999. The work on Year 2000 issues has not suffered significant delays; however, some uncertainty remains. Specific factors that give rise to this uncertainty include (but are certainly not limited to) a possible loss of technical resources to perform the work; failure to identify all susceptible systems; and non-compliance by third parties whose systems and operations impact LNY. In a report dated February 26, 1999, entitled, INVESTIGATING THE IMPACT OF THE YEAR 2000 TECHNOLOGY PROBLEM; S. Rpt. 106-10, the U.S. Senate Special. Committee on the Year 2000 Technology Problem expressed its concern that "Financial services firms...are particularly vulnerable to...the risk that a material customer or business partner will fail, as a result of the computer problems, to meet its obligations". One important source of uncertainty is the extent to which the key trading partners of LNY, Lincoln Life and of Delaware will be successful in their own remediation and testing efforts. LNY, Lincoln Life and Delaware have been monitoring the progress of their trading partners; however, the efforts of these partners are beyond our control. LNY, Lincoln Life and Delaware expect to have completed their necessary remediation and testing efforts prior to December 31, 1999. However, given the nature and complexity of the problem, there can be no guarantee by either company that there will not be significant computer problems in and around December 31, 1999. 25 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS FOR LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES (REGISTRANT) LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK (DEPOSITOR) ITEM Page ---------------------------------------------- Lincoln Life & Annuity Company of New York B-2 ---------------------------------------------- Special terms B-2 ---------------------------------------------- Services B-2 ---------------------------------------------- Principal underwriter B-2 ITEM Page ---------------------------------------------- Purchase of securities being offered B-2 ---------------------------------------------- Calculation of investment results B-2 ---------------------------------------------- Annuity payouts B-5 ---------------------------------------------- Advertising and sales literature B-6 ---------------------------------------------- Financial statements B-8
[LOGO] DELAWARE-LINCOLN NEW YORK CHOICEPLUS-SM- VARIABLE ANNUITY IS ISSUED AND DISTRIBUTED BY LFA (FORM AN426NY), AND WHOLESALED P-CP SAI BY DELAWARE DISTRIBUTORS, L.P.
LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES (REGISTRANT) LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK (DEPOSITOR) STATEMENT OF ADDITIONAL INFORMATION (SAI) This SAI should be read along with the Prospectus of Lincoln New York Account N for Variable Annuities (Delaware-Lincoln New York ChoicePlus) dated 2000. You may obtain a copy of the Delaware-Lincoln New York ChoicePlus Prospectus on request and without charge. Please write Delaware-Lincoln New York ChoicePlus, P.O. Box 7866, Fort Wayne, Indiana 46801 or call 1-888-868-2583. LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK TABLE OF CONTENTS
ITEM PAGE - ------------------------------------------ Lincoln Life & Annuity Company of New York B-2 Special terms B-2 Services B-2 Principal underwriter B-2
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ITEM PAGE Purchase of securities being offered B-2 Calculation of investment results B-2 Annuity payouts B-5 Advertising and sales literature B-6 Financial statements B-8
THIS SAI IS NOT A PROSPECTUS. The date of this SAI is B-1 GENERAL INFORMATION AND HISTORY OF LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LNY") LNY is a life insurance company founded in New York on June 6, 1996. LNY is a subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life insurance companies in the United States. Lincoln Life is owned by Lincoln National Corp. (LNC). LNC and Lincoln Life are organized under Indiana law. LNC's primary businesses are insurance and financial services. SPECIAL TERMS The special terms used in this SAI are the ones defined in the Prospectus. In connection with the term VALUATION DATE the New York Stock Exchange is currently closed on weekends and on these holidays: New Year's Day, Martin Luther King's Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of these holidays occurs on a weekend day, the Exchange may also be closed on the business day occurring before or just after the holiday. SERVICES INDEPENDENT AUDITORS The statutory-basis financial statements of LNY appearing in this SAI and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports also appearing elsewhere in this document and in the Registration Statement. The financial statements audited by Ernst & Young LLP have been included in this document in reliance on their reports given on their authority as experts in accounting and auditing. KEEPER OF RECORDS All accounts, books, records and other documents which are to be maintained for the VAA are maintained by LNY or by third parties responsible to LNY. We have entered into an agreement with Delaware Management Company, 2005 Market Street, Philadelphia, PA 19203, to provide accounting services to the VAA. No separate charge against the assets of the VAA is made by LNY for this service. PRINCIPAL UNDERWRITER LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), an Indiana corporation registered with the Securities and Exchange Commission as a broker-dealer, is the principal underwriter for the contracts, which are offered continuously. Delaware Distributors, L.P. will perform certain marketing and other ancillary functions as described in the Prospectus. Sales charges and exchange privileges under the contracts are described in the Prospectus. PURCHASE OF SECURITIES BEING OFFERED The variable annuity contracts are offered to the public through licensed insurance agents who specialize in selling LNY products; through independent insurance brokers; and through certain securities brokers/dealers selected by LNY whose personnel are legally authorized to sell annuity products. There are no special purchase plans for any class of prospective buyers. However, under certain limited circumstances described in the Prospectus under the section Charges and other deductions, the contract and/or surrender charges may be waived. There are exchange privileges between subaccounts, and between the VAA and LNY'S general account (see The Contract--Transfers of accumulation units between SUBACCOUNTS in the Prospectus.) No exchanges are permitted between the VAA and other separate accounts. The offering of the contract is continuous. CALCULATION OF INVESTMENT RESULTS The paragraphs set forth below represent performance information for the VAA and the SUBACCOUNTS calculated in several different ways. MONEY MARKET SUBACCOUNT 1. Seven-day yield: 2.82%. Length of base period used in computing yield: 7 days 2. The yield reported above and in the table of condensed information in the Prospectus is determined by calculating the change in unit value for the base period (the 7-day period ended December 31, 1998;) then dividing this figure by the account value at the beginning of the period; then annualizing this result by the factor 365/7. B-2 This yield includes all deductions charged to the CONTRACTOWNER'S account, and excludes any realized gain and losses from the sale of securities. PERFORMANCE OF THE VAA AND SUBACCOUNTS Paragraph A is commonly referred to as "standard performance" because it is the formula used to calculate performance in accordance with that prescribed by the SEC. Under rules issued by the SEC, standard performance must be included in certain advertising material that discusses the performance of the VAA and the SUBACCOUNTS. Paragraph B below shows non-standard performance of the SUBACCOUNTS over the periods indicated in the tables set forth in the paragraph, adjusted to reflect the recurring charges and expenses associated with the contracts. (A) STANDARD PERFORMANCE -- FORMULAS: Average annual return for each period is determined by finding the average annual compounded rate of return over each period that would equate the initial amount invested to the ending redeemable value for that period, according to the following formula-- P(1+T)TO THE POWER OF n = ERV Where: P = a hypothetical initial PREMIUM PAYMENT of $1,000 T = average annual total return for the period in question n = number of years ERV = ending redeemable value (as of the end of the period in question) of a hypothetical $1,000 PURCHASE PAYMENT made at the beginning of the 1-year, 5-year, or 10-year period in questions (or fractional portion thereof) The formula assumes that: (1) all recurring fees have been charged to CONTRACTOWNER accounts; (2) all applicable non-recurring charges are deducted at the end of the period in question; and 3) there will be a complete redemption at the end of the period in question. (B) NON-STANDARD SUBACCOUNT PERFORMANCE ADJUSTED FOR NON-RECURRING CONTRACT EXPENSE CHARGES The examples below show, for the various SUBACCOUNTS of the VAA, non-standard performance for the stated periods. These figures are calculated as if the SUBACCOUNTS had commenced activity at the same time as the underlying funds WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT EXAMPLES The following example illustrates the detailed calculations for a $50,000 deposit into the fixed account with a guaranteed rate of 4.5% for a duration of five years. The intent of the example is to show the effect of the "MVA" and the 3% minimum guarantee under various interest rates on the calculation of the cash surrender (withdrawal) values. Any charges for optional death benefit risks are not taken into account in the example. The effect of the MVA is reflected in the index rate factor in column (2) and the minimum 3% guarantee is shown under column (4) under the "Surrender Value Calculation". The "Market Value Adjustment Tables" and "Minimum Value Calculation" contain the explicit calculation of the index factors and the 3% minimum guarantee respectively. WITHDRAWAL CHARGE EXAMPLE SAMPLE CALCULATIONS FOR MALE 35 ISSUE CASH SURRENDER VALUES Single Premium.............................................. $50,000 Premium Taxes............................................... None Withdrawals................................................. None Guaranteed Period........................................... 5 years Guaranteed Interest Rate.................................... 4.50% Annuity Date................................................ Age 70 Index Rate A................................................ 5.00% Index Rate B................................................ 6.00% End of contract year 1 5.50% End of contract year 2 5.00% End of contract year 3 4.00% End of contract year 4 Percentage Adjustment to Index Rate B....................... 0.50%
B-3 SURRENDER VALUE CALCULATION
(5) (1) (2) (3) (4) GREATER (6) (7) ANNUITY INDEX RATE ADJUSTED MINIMUM OF SURRENDER SURRENDER CONTRACT YEAR VALUE FACTOR ANNUITY VALUE VALUE (3) & (4) CHARGE VALUE - ------------- -------- ---------- ------------- -------- --------- --------- --------- 1.................... $52,250 0.944841 $49,368 $51,500 $51,500 $3,000 $48,500 2.................... $54,601 0.971964 $53,070 $53,045 $53,070 $3,000 $50,070 3.................... $57,058 0.990544 $56,519 $54,636 $56,519 $2,500 $54,019 4.................... $59,626 1.004785 $59,911 $56,275 $59,911 $2,000 $57,911 5.................... $62,309 NA $62,309 $57,964 $62,309 $1,500 $60,809
ANNUITY VALUE CALCULATION
CONTRACT YEAR - ------------- 1............................... $50,000 X 1.045 = $52,250 2............................... $52,250 X 1.045 = $54,601 3............................... $54,601 X 1.045 = $57,058 4............................... $57,058 X 1.045 = $59,626 5............................... $59,626 X 1.045 = $62,309
SURRENDER CHARGE CALCULATION
CONTRACT YEAR SC FACTOR SURRENDER CHG - ------------- --------- ------------- 1........................................................... 0.06 $3,000 2........................................................... 0.06 $3,000 3........................................................... 0.05 $2,500 4........................................................... 0.04 $2,000 5........................................................... 0.03 $1,500
B-4 MARKET VALUE ADJUSTMENT EXAMPLE INTEREST RATE FACTOR CALCULATION
CONTRACT YEAR INDEX A INDEX B ADJ. INDEX B N RESULT - ------------- -------- -------- ------------ -------- -------- 1........................................... 5.00% 6.00% 6.50% 4 0.944841 2........................................... 5.00% 5.50% 6.00% 3 0.971964 3........................................... 5.00% 5.00% 5.50% 2 0.990544 4........................................... 5.00% 4.00% 4.50% 1 1.004785 5........................................... 5.00% N/A N/A N/A N/A
MINIMUM VALUE CALCULATION
CONTRACT YEAR - ------------- 1......................................... $50,000 X 1.03 = $51,500 2......................................... $51,500 X 1.03 = $53,045 3......................................... $53,045 X 1.03 = $54,636 4......................................... $54,636 X 1.03 = $56,275 5......................................... $56,275 X 1.03 = $57,964
ANNUITY PAYOUTS VARIABLE ANNUITY PAYOUTS Variable ANNUITY PAYOUTS will be determined on the basis of: (1) the dollar value of the contract on the ANNUITY DATE; (2) the annuity tables contained in the CONTRACT; (3) the type of ANNUITY OPTION selected; and (4) the investment results of the fund(s) selected. In order to determine the amount of variable ANNUITY PAYOUTS, LNY makes the following calculation: first, it determines the dollar amount of the first payout; second, it credits the contract with a fixed number of ANNUITY UNITS based on the amount of the first payout; and third, it calculates the value of the ANNUITY UNITS each period thereafter. These steps are explained below. The dollar amount of the first periodic variable ANNUITY PAYOUT is determined by applying the total value of the ACCUMULATION UNITS credited under the contract valued as of the ANNUITY DATE (less any premium taxes) to the annuity tables contained in the contract. The first variable annuity payout will be paid 14 days after the ANNUITY DATE. This day of the month will become the day on which all future ANNUITY PAYOUTS will be paid. Amounts shown in the tables are based on the 1983 Table "a" Individual Annuity Mortality Tables, modified, with an assumed investment return at the rate of 4% per annum. The first ANNUITY PAYOUT is determined by multiplying the benefit per $1,000 of value shown in the contract tables by the number of thousands of dollars of value accumulated under the contract. These annuity tables vary according to the form of annuity selected and the age of the ANNUITANT at the ANNUITY DATE. The 4% interest rate stated above is the measuring point for subsequent ANNUITY PAYOUTS. If the actual net investment rate (annualized) exceeds 4%, the payout will increase at a rate equal to the amount of such excess. Conversely, if the actual rate is less than 4%, ANNUITY PAYOUTS will decrease. If the assumed rate of interest were to be increased, ANNUITY PAYOUTS would start at a higher level but would decrease more rapidly or increase more slowly. LNY may use sex distinct annuity tables in contracts that are not associated with employer sponsored plans and where not prohibited by law. At an ANNUITY DATE, the contract is credited with ANNUITY UNITS for each SUBACCOUNT on which variable ANNUITY PAYOUTS are based. The number of ANNUITY UNITS to be credited is determined by dividing the amount of the first periodic payout by the value of an ANNUITY UNIT in each subaccount selected. Although the number of ANNUITY UNITS is fixed by this process, the value of such units will vary with the value of the underlying fund. The amount of the second and subsequent periodic payout is determined by multiplying the CONTRACTOWNER'S fixed number of ANNUITY UNITS in each SUBACCOUNT by the appropriate ANNUITY UNIT value for the valuation date ending 14 days prior to the date that payout is due. The value of each subaccount's ANNUITY UNIT will be set initially at $1.00. The ANNUITY UNIT value for each SUBACCOUNT at the end of any VALUATION DATE is determined by multiplying the SUBACCOUNT ANNUITY UNIT value for the immediately preceding VALUATION DATE by the product of: (a) The net investment factor of the SUBACCOUNT for the VALUATION PERIOD for which the ANNUITY UNIT value is being determined, and (b) A factor to neutralize the assumed investment return in the annuity table. The value of the ANNUITY UNITS is determined as of a VALUATION DATE 14 days prior to the payment date in order to B-5 permit calculation of amounts of ANNUITY PAYOUTS and mailing of checks in advance of their due dates. Such checks will normally be issued and mailed at least three days before the due date. PROOF OF AGE, SEX AND SURVIVAL LNY may require proof of age, sex, or survival of any payee upon whose age, sex, or survival payments depend. ADVERTISING AND SALES LITERATURE As set forth in the Prospectus, LNY may refer to the following organizations (and others) in its marketing materials. A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors affecting the overall performance of an insurance company in order to provide an opinion as to an insurance company's relative financial strength and ability to meet its contractual obligations. The procedure includes both a quantitative and qualitative review of each company. A.M. Best also provides certain rankings, to which LNY intends to refer. DUFF & PHELPS insurance company claims paying ability (CPA) service provides purchasers of insurance company policies and contracts with analytical and statistical information on the solvency and liquidity of major U.S. licensed companies, both mutual and stock. EAFE INDEX is prepared by Morgan Stanley Capital International (MSCI). It measures performance of equity securities in Europe, Australia and the Far East. The index reflects the movements of world stock markets by representing the evolution of an unmanaged portfolio. The EAFE Index offers international diversification representing 1,000 companies across 20 different countries. LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher of statistical data covering the investment company industry in the United States and overseas. Lipper is recognized as the leading source of data on open-end and closed-end funds. Lipper currently tracks the performance of over 5,000 investment companies and publishes numerous specialized reports, including reports on performance and portfolio analysis, fee and expense analysis. MOODY'S INVESTORS SERVICE insurance financial strength rating is a an opinion of an insurance company's financial strength, market leadership, and ability to meet financial obligations. The purpose of Moody's ratings is to provide investors with a simple system of gradation by which the relative quality of insurance companies may be noted. MORNINGSTAR is an independent financial publisher offering comprehensive statistical and analytical coverage of open-end and closed-end funds and variable annuities. STANDARD & POOR'S insurance claims-paying ability rating is an opinion of an operating insurance company's financial capacity to meet obligations under an insurance policy in accordance with the terms. The likelihood of a timely flow of funds from the insurer to the trustee for the bondholders is a key element in the rating determination for such debt issues. VARDS (VARIABLE ANNUITY RESEARCH DATA SERVICE) provides a comprehensive guide to variable annuity contract features and historical fund performance. The service also provides a readily understandable analysis of the comparative characteristics and market performance of funds inclusive in variable contracts. STANDARD & POOR'S INDEX -- A broad-based measurement of U.S. stock-market performance based on the weighted performance of 500 common stocks of leading company's and leading industries, commonly known as the Standard & Poor's (S&P 500). The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares, and publication of the index itself are services of Standard & Poor's Corporation, a financial advisory, securities rating, and publishing firm. RUSSELL 1000 INDEX -- Measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the Russell 3000 that measures 3000 of the largest US companies. RUSSELL 2000 INDEX -- Measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 that measures 3000 of the largest US companies. LEHMAN BROTHERS AGGREGATE BOND INDEX -- Composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Indexes are rebalanced monthly by market capitalization. LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX -- This is a measurement of the movement of approximately 4,200 corporate, publicated traded, fixed-rate, nonconvertible, domestic debt securities, as well as the domestic debt securities issued by the U.S. government or its agencies. LEHMAN BROTHERS GOVERNMENT INTERMEDIATE BOND INDEX -- Composed of all bonds covered by the Lehman Brothers Government Bond Index (all publicly issued, nonconvertible, domestic debt of the US government or any agency thereof, quasi-federal corporations, or corporate debt guaranteed by the US government) with maturities between one and 9.99 years. B-6 MERRILL LYNCH HIGH YIELD MASTER INDEX -- This is an index of high yield debt securities. High yield securities are those below the top four quality rating categories and are considered more risky than investment grade. Issues must be rated by Standard & Poor's or by Moody's Investors Service as less than investment grade (i.e., BBB or Baa) but not in default (i.e. DDD1 or less). Issues must be in the form of publicly placed nonconvertible, coupon-bearing US domestic debt and must carry a term to maturity of at least one year. MORGAN STANLEY EMERGING MARKETS FREE INDEX -- A market capitalization weighted index composed of companies representative of the market structure of 22 Emerging Market countries in Europe, Latin America, and the Pacific Basin. This index excludes closed markets and those shares in otherwise free markets, which are not purchasable by foreigners. MORGAN STANLEY WORLD CAPITAL INTERNATIONAL WORLD INDEX -- A market capitalization weighted index composed of companies representative of the market structure of 22 Developed Market countries in North America, Europe and the Asia/Pacific Region. MORGAN STANLEY PACIFIC BASIN (EX-JAPAN) INDEX -- An arithmetic, market value-weighted average of the performance of securities listed on the stock exchanges of the following Pacific Basin Countries: Australia, Hong Kong, Malaysia, New Zealand and Singapore. NAREIT EQUITY REIT INDEX -- All of the data is based on the last closing price of the month for all tax-qualified REITs listed on the New York Stock Exchange, American Stock Exchange, and the NASDAQ National Market System. The data is market weighted. SALOMON BROTHERS WORLD GOVERNMENT BOND (NON US) INDEX -- A market capitalization weighted index consisting of government bond markets of the following 13 countries: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Italy, Japan, The Netherlands, Spain, Sweden, and The United Kingdom. SALOMON BROTHERS 90 DAY TREASURY-BILL INDEX -- Equal dollar amounts of three-month Treasury bills are purchased at the beginning of each of three consecutive months. As each bill matures, all proceeds are rolled over or reinvested in a new three-month bill. STANDARD AND POOR'S INDEX (S&P 400) -- Consists of 400 domestic stocks chosen for market size, liquidity, and industry group representations. STANDARD AND POOR'S UTILITIES INDEX -- The utility index is one of several industry groups within the broader S&P 500. Utility stocks include electric, natural gas, and telephone companies included in the S&P 500. NASDAQ-QTC PRICE INDEX -- this index is based on the National Association of Securities Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-counter stocks except those traded on exchanges and those having only one market maker, a total of some 3,500 stocks. It is market value-weighted and was introduced with a base of 100.00 on February 5, 1971. DOW JONES INDUSTRIAL AVERAGE (DJIA) -- A price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including American Express Company and American Telephone and Telegraph Company. Prepared and published by Dow Jones & Company, it is the oldest and most widely quoted of all the market indicators. The average is quoted in points, not dollars. In its advertisements and other sales literature for the VAA and the SERIES funds, LNY intends to illustrate the advantages of the contracts in a number of ways: COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several advantages of the variable annuity contract. For example, but not by way of illustration, the literature may emphasize the potential tax advantage of the VARIABLE ANNUITY ACCOUNT over the fixed account; and the compounding effect when a client makes regular deposits to his or her contract. INTERNET. An electronic communications network which may be used to provide information regarding LNY, performance of the subaccounts and advertisement literature. DOLLAR-COST AVERAGING. (DCA) -- You may systematically transfer on a monthly basis amounts from certain SUBACCOUNTS, or the fixed side of the contract into the SUBACCOUNTS. You may elect to participate in the DCA program at the time of application or at anytime before the ANNUITY DATE by completing an election form available from us and sending it to our Servicing Office. The minimum amount to be dollar cost averaged is $2,000 over any period between six and 60 months. Once elected, the program will remain in effect until the earlier of: (1) the ANNUITY DATE; (2) the value of the amount being dollar cost averaged is depleted; or (3) you cancel the program by written request or by telephone if we have your telephone authorization on file. Currently, there is no charge for this service. However, we reserve the right to impose one. A transfer under this program is not considered a transfer for purposes of limiting the number of transfers that may be made, or assessing any charges or MVA which may apply to transfers. We reserve the right to discontinue this program at any time. DCA does not assure a profit or protect against loss. AUTOMATIC WITHDRAWAL SERVICE. (AWS) -- AWS provides an automatic, periodic withdrawal of ANNUITY ACCOUNT VALUE to you. You may elect to participate in AWS at the time of application or at any time before the ANNUITY DATE by sending a written request to our Servicing Office. The minimum ANNUITY ACCOUNT VALUE required B-7 to establish AWS is $10,000. You may cancel or make changes to your AWS program at any time by sending a written request to us at our Servicing Office. If telephone authorization has been elected, certain changes may be by telephone. Notwithstanding the requirements of the program, any withdrawal must be permitted by Section 401(a)(9) of the Code for qualified plans or permitted under Section 72 for non-qualified contracts. To the extent that withdrawals under AWS do not qualify for an exemption from the contingent deferred sales charge, we will assess any applicable surrender charges on those withdrawals. See Charges and other deductions -- Surrender charge. Currently, there is no charge for this service. However, we reserve the right to impose one. If a charge is imposed, it will not exceed $25 per transaction or 2% of the amount withdrawn, whichever is less. We reserve the right to discontinue this service at any time. ACCOUNT REBALANCING. Account rebalancing is an option which, if elected by the CONTRACTOWNER, restores to a pre-determined level the percentage of ANNUITY ACCOUNT VALUE allocated to each variable account SUBACCOUNT (e.g., 20% Money Market, 50% Growth, 30% Utilities). This pre-determined level will be the allocation initially selected when the contract was purchased, unless subsequently changed. The account rebalancing allocation may be changed at any time by submitting a request to us at our Servicing Office. If account rebalancing is elected, all PREMIUM PAYMENTS allocated to the variable account SUBACCOUNTS must be subject to account rebalancing. The fixed account SUBACCOUNT is not available for account rebalancing. Account rebalancing may take place on either a quarterly, semi-annual or annual basis, as selected by the CONTRACTOWNER. Once the account rebalancing option is activated, any variable account SUBACCOUNT transfers executed outside of the account rebalancing option will terminate the account rebalancing option. Any subsequent PREMIUM PAYMENT or withdrawal that modifies the account balance within each variable account SUBACCOUNT may also cause termination of the account rebalancing option. Any such termination will be confirmed to the CONTRACTOWNER. The CONTRACTOWNER may terminate the account rebalancing option or re-enroll at any time by calling or writing LNY at our Servicing Office. The account rebalancing program is not available following the ANNUITY DATE. Currently, there is no charge for this service. However, we reserve the right to impose one. LNY'S CUSTOMERS. More than 145,000 individuals and 400 employers trust LNY to help them plan for retirement. They're in good company with a good company, a company known for financial strength and superior service. As a member of the Insurance Marketplace Standards Association (IMSA), we are committed to upholding strong business ethics. LNY'S ASSETS, SIZE. LNY may discuss its general financial condition (see, for example, the reference to A.M. Best Company, above); it may refer to its assets; it may also discuss its relative size and/or ranking among companies in the industry or among any sub-classification of those companies, based upon recognized evaluation criteria (see reference to A.M. Best Company above). For example, at December 31, 1998 LNY had statutory-basis admitted assets of over $2 billion. FINANCIAL STATEMENTS The statutory-basis financial statements of LNY appear on the following pages (This will be filed by amendment). B-8 PART C--OTHER INFORMATION ITEM 24. (a) LIST OF FINANCIAL STATEMENTS (1) Part A The Table of Condensed Financial Information is included in Part A of this Registration Statement. Not applicable. (2) Part B The following financial statements of Account N are included in the SAI: Not Applicable. (3) Part B The following Statutory Financial Statements and Schedules of Lincoln Life & Annuity Company of New York are included in the SAI: (TO BE FILED BY AMENDMENT.) 24(b) LIST OF EXHIBITS (1) (a) Resolution of Board of Directors and Memorandum authorizing establishment of Account N. (b) Amendment to that Certain Memorandum. (4) (a) Form of Contract (5) (a) Form of application (6) (a) Articles of Incorporation and By-laws of Lincoln Life & Annuity Company of New York are incorporated herein by reference to Registration Statement on Form N-4 (333-10863) filed on 8/27/96. (8) (a) Amended and Restated Principal Underwriting Agreement--Lincoln Financial Advisors/Lincoln Life & Annuity Company of New York (b) Form of Wholesaling Agreement (c) Form of Delaware Service Agreement is incorporated herein by reference to Pre-Effective Amendment No. 1 (333-38007) filed on 10/11/99. (d) Form of Services Agreement is incorporated herein by reference to Pre-Effective Amendment No. 1 (333-38007) filed on 10/11/99. (e) Participation Agreement between Lincoln Life & Annuity Company of New York and AIM Insurance Funds, Inc. is incorporated herein by reference to Post-Effective Amendment No. 1 (333-46113) filed on February 26, 1999. (f) Participation Agreement between Lincoln Life & Annuity Company of New York and the Capital Research Funds. (TO BE FILED BY AMENDMENT) (g) Participation Agreement between Lincoln Life & Annuity Company of New York and the Delaware Funds. (TO BE FILED BY AMENDMENT) (h) Participation Agreement between Lincoln Life & Annuity Company of New York and Variable Insurance Products and Fidelity Insurance Funds And Fidelity Distributors Corporation is incorporated herein by reference to Post-Effective No. 5 (333-10863) filed on April 26, 1999 (i) Amendment to Fidelity FPA as of October 15, 1999.
C-1 (i) Participation Agreement between Lincoln Life & Annuity Company of New York and Variable Insurance Products Fund II and Fidelity Distributors Corporation is incorporated herein by reference to Post-Effective No. 5 (333-10863) filed on April 26, 1999. (j) Form of Participation Agreement between Lincoln Life & Annuity Company of New York and Variable Insurance Products Fund III and Fidelity Distributors Corporation. (k) Participation Agreement between Lincoln Life & Annuity Company of New York and Franklin/Templeton Funds is incorporated herein by reference to Post-Effective Amendment No. 1 (333-46113) filed on February 26, 1999. (l) Participation Agreement between Lincoln Life & Annuity Company of New York and MFS Variable Insurance Funds is incorporated herein by reference to Post-Effective Amendment No. 1 (333-46113) filed on February 26, 1999. (m) Participation Agreement between Lincoln Life & Annuity Company of New York and Alliance Variable Products Series Fund (TO BE FILED BY AMENDMENT) (n) Participation Agreement between Lincoln Life & Annuity Company of New York and BT Insurance Funds is incorporated herein by reference to Post-Effective Amendment No. 1 (333-46113) filed on February 26, 1999. (o) Participation Agreement between Lincoln Life & Annuity Company of New York and the Liberty Variable Investment Trust Fund (TO BE FILED BY AMENDMENT) (p) Form of Participation Agreement between Lincoln Life & Annuity Company of New York and the Lincoln National Bond Fund (q) Form of Participation Agreement between Lincoln Life & Annuity Company of New York and the Lincoln National Money Market Fund. (9) Opinion and Consent of Robert O. Sheppard, Corporate Counsel (TO BE FILED BY AMENDMENT) (10) Opinion and Consent of Ernst & Young LLP, Independent Auditors (TO BE FILED BY AMENDMENT) (11) Not applicable. (13) Schedule of Performance Computation. (TO BE FILED BY AMENDMENT) (14) Not applicable. (15) (a) Organizational Chart of Lincoln National Life Insurance Holding Company System incorporated herein by reference to Pre-Effective Amendment No. 1 (333-38007) filed on 10/11/99. (b) Memorandum Concerning Books and Records incorporated herein by reference to Pre-Effective Amendment No. 1 (333-38007) filed on 10/11/99.
C-2 ITEM 25. The following list contains the officers and directors of Lincoln Life & Annuity Company of New York who are engaged directly or indirectly in activities relating to the Lincoln New York Account N for Variable Annuities Variable Annuity Account N as well as the contracts, funded through Account N. The list also shows Lincoln Life & Annuity Company of New York's executive officers.
NAME POSITIONS AND OFFICES WITH LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK - ---- --------------------------------------------------------------------- Joanne B. Collins* ....................... President, Treasurer and Director Troy D. Panning* ......................... Second Vice President and Chief Financial Officer Roland C. Baker .......................... Director 1801 S. Meyers Road Oakbrook Terrace, IL 60161 J. Patrick Barrett ....................... Director Chairman & CEO Carpat Investments 4605 Watergap Manlius, NY 13104 Thomas D. Bell, Jr. ...................... Director President & CEO Young & Rubicam Advertising 285 Madison Avenue New York, NY 10017 Jon A. Boscia*** ......................... Director Kathleen R. Gorman* ...................... Assistant Vice President John H. Gotta***** ....................... Director Barbara S. Kowalczyk*** .................. Director M. Leanne Lachman ........................ Director Managing Director Boston Financial 437 Madison Avenue - 18th Floor New York, NY 10022 Louis G. Marcoccia ....................... Director Senior Vice President Syracuse University Skytop Office Building Skytop Road Syracuse, NY 13244-5300 John M. Pietruski ........................ Director One Penn Plaza Suite 3408 New York, NY 10119 Lawrence T. Rowland**** .................. Director
C-3
NAME POSITIONS AND OFFICES WITH LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK - ---- --------------------------------------------------------------------- Robert O. Sheppard* ...................... Assistant Vice President Richard C. Vaughan*** .................... Director C. Suzanne Womack*** ..................... Secretary
- ------------------------ * Principal business address of each person is 120 Madison Street, 17th Floor, Syracuse, New York 13202. ** Principal business address of each person is 1300 S. Clinton Street, Fort Wayne, Indiana 46802. *** Principal business address of each person is Centre Square, West Tower, 1500 Market St., Suite 3900, Philadelphia, PA 19102. **** Principal business address of each person is 1700 Magnovox Way, One Reinsurance Place, Fort Wayne, Indiana 46804. ***** Principal business address of each person is 350 Church Street, Hartford, CT 06103. C-4 ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT See Exhibit 15(a): The Organizational Chart of The Lincoln National Insurance Holding Company System is hereby incorporated herein by this reference. ITEM 27. NUMBER OF CONTRACT OWNERS Not applicable. ITEM 28. INDEMNIFICATION--UNDERTAKING (a) Brief description of indemnification provisions. In general, Article VII of the By-Laws of Lincoln Life & Annuity Co. of NY (LNY) provides that LNY will indemnify certain persons against expenses, judgments and certain other specified costs incurred by any such person if he/she is made a party or is threatened to be made a party to a suit or proceeding because he/she was a director, officer, or employee of LNY, as long as he/she acted in good faith and in a manner he/she reasonably believed to be in the best interests of, or not opposed to the best interests of, LNY. Certain additional conditions apply to indemnification in criminal proceedings. In particular, separate conditions govern indemnification of directors, officers, and employees of LNY in connection with suits by, or in the rights of LNY. Please refer to Article VII of the By-Laws of LNY (Exhibit No. 6(b) hereto) for the full text of the indemnification provisions. Indemnification is permitted by, and is subject to the requirements of, Indiana law. (b) Undertaking pursuant to Rule 484 of Regulation C under the Securities Act of 1933: Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 28(a) above or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any such action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. C-5 ITEM 29.
(1) (2) (3) (4) (5) NET UNDERWRITING COMPENSATION NAME OF PRINCIPAL DISCOUNTS AND ON BROKERAGE UNDERWRITER COMMISSIONS REDEMPTION COMMISSIONS COMPENSATION - ----------- ---------------- ------------- ------------ ------------- Lincoln Financial Advisors Corporation............. None a None b
Notes: (a) These figures represent compensation received by Lincoln Life & Annuity Company of New York for surrender, withdrawal and contract charges. See Charges and other deductions, in the Prospectus. (b) These figures represent compensation received by Lincoln Life & Annuity Company of New York for mortality and expense guarantees. See Charges and other deductions, in the Prospectus. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS Exhibit 15(b) is hereby expressly incorporated herein by this reference. ITEM 31. Not applicable. ITEM 32. UNDERTAKINGS (a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes that it will include either (1) as part of any application to purchase an Individual Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statement required to be made available under this Form promptly upon written or oral request to LNY at the address or phone number listed in the Prospectus. (d) LNY hereby represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by LNY. (e) Registrant hereby represents that it is relying on the American Council of Life Insurance (avail. Nov. 28, 1988) no-action letter with respect to Contracts used in connection with retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code, and represents further that it will comply with the provisions of paragraphs (1) through (4) set forth in that no-action letter. C-6 SIGNATURES (a) As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, in the City of Syracuse, and State of New York on this 28th day of December, 1999. Lincoln New York Account N for Variable Annuities (Registrant) By: /s/ Joanne B. Collins ----------------------------------------- Joanne B. Collins, PRESIDENT Lincoln Life & Annuity Company of New York (Depositor) By: /s/ Joanne B. Collins ----------------------------------------- Joanne B. Collins, PRESIDENT
(b) As required by the Securities Act of 1933, this Registration Statement has been signed for the Depositor by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Joanne B. Collins President, Treasurer and December 28, 1999 ------------------------------------------- Director (Principal Joanne B. Collins Executive Officer) Second Vice President and December 28, 1999 /s/ Troy D. Panning Chief Financial Officer ------------------------------------------- (Principal Financial Troy D. Panning Officer and Principal Accounting Officer) /s/ Roland C. Baker ------------------------------------------- Director December 28, 1999 Roland C. Baker ------------------------------------------- Director J. Patrick Barrett /s/ Thomas D. Bell, Jr. ------------------------------------------- Director December 28, 1999 Thomas D. Bell, Jr.
C-7
SIGNATURE TITLE DATE --------- ----- ---- /s/ Jon A. Boscia ------------------------------------------- Director December 28, 1999 Jon A. Boscia /s/ John H. Gotta ------------------------------------------- Director December 28, 1999 John H. Gotta /s/ Barbara S. Kowalczyk ------------------------------------------- Director December 28, 1999 Barbara S. Kowalczyk /s/ M. Leanne Lachman ------------------------------------------- Director December 28, 1999 M. Leanne Lachman ------------------------------------------- Director Louis G. Marcoccia /s/ John M. Pietruski ------------------------------------------- Director December 28, 1999 John M. Pietruski /s/ Lawrence T. Rowland ------------------------------------------- Director December 28, 1999 Lawrence T. Rowland /s/ Richard C. Vaughan ------------------------------------------- Director December 28, 1999 Richard C. Vaughan /s/ C. Suzanne Womack ------------------------------------------- Secretary December 28, 1999 C. Suzanne Womack
C-8 EX-99.(1)(A) 2 EXHIBIT 99.(1)(A) BOARD RESOLUTION OF LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ADOPTED JULY 24, 1996 96-21 RESOLVED, That the chief executive officer of Lincoln Life & Annuity Company of New York (the "Company") is hereby authorized in his discretion from time to time to establish one or more separate investment accounts in accordance with the provisions of the New York Insurance Law, for such purpose or purposes as he may determine and as may be appropriate under the New York Insurance Law; and RESOLVED FURTHER, That if in the opinion of legal counsel of the Company, it is necessary or desirable to register any of such accounts under the Investment Company Act of 1940 or to register a security issued by any such account under the Securities Act of 1933, or to make application for exemption from registration, the chief executive officer or such other officers as he may designate are hereby authorized to accomplish any such registration or to make any such application for exemption, and to perform all other acts as may be desirable or necessary in connection with the conduct of business of the Company with respect to any such account. ESTABLISHMENT OF SEPARATE INVESTMENT ACCOUNT OF LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK Pursuant to the authority given me by Resolution Number 96-21 adopted by the Board of Directors of Lincoln Life & Annuity Company of New York (LLANY) on July 24, 1996, I establish a separate investment account designated as "LLANY Separate Account N for Variable Annuities" (the "Account"). The Account is to be used in connection with the issuance by LLANY of variable life insurance policies (the "Policies"). The Account will be registered as a unit investment trust with the Securities and Exchange Commission ("SEC") and shall invest in shares of the investment companies which are registered with the SEC. The establishment and operation of the Account will be in accordance with the applicable provisions of New York Insurance Law and all rules and regulations issued pursuant thereto ("New York Insurance Law"), and subject to the approval of the Superintendent of the Insurance Department of the State of New York. The Account's investment objectives, policies, and limitations shall be in accordance with (1) the registration statement for the policies filed with the SEC under the Securities Act of 1933, and (2) applicable provisions of New York Insurance Law and any other applicable legal requirements. /s/ PHILIP L. HOLSTEIN -------------------------------------- PHILIP L. HOLSTEIN, PRESIDENT DATED: March 11, 1999 EX-99.(1)(B) 3 EXHIBIT 99.(1)(B) AMENDMENT TO THAT CERTAIN MEMORANDUM EXECUTED MARCH 11, 1999 REGARDING: ESTABLISHMENT OF SEPARATE INVESTMENT ACCOUNT (LLANY SEPARATE ACCOUNT N FOR VARIABLE ANNUITIES) of LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK Pursuant to the authority given me by Resolution Number 96-21 adopted by the Board of Directors of Lincoln Life & Annuity Company of New York on July 24, 1996, I hereby amend that certain memorandum executed on March 11, 1999 by Philip L. Holstein (the "Organizing Memorandum") of which is attached hereto, for the sole purpose of changing the name of the Account. Henceforth, the name of the Account shall be: "Lincoln New York Account N for Variable Annuities." All other terms and provisions of the Organizing Memorandum remain in effect. /s/ JOANNE B. COLLINS -------------------------------------- JOANNE B. COLLINS, PRESIDENT Effective Date: 12/23/99 EX-99.(4)(A) 4 EXHIBIT 99.(4)(A) Abraham Lincoln XX-0123456 LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK A Stock Company Home Office: 120 Madison Street, Suite 1700, Syracuse, New York 13202 Servicing Office: 1300 South Clinton Street, P. 0. Box 7866, Fort Wayne, IN 46802 1-888-868-2583 VARIABLE ANNUITY CONTRACT Lincoln Life & Annuity Company of New York (the Company) agrees to provide the benefits and other rights described in this Contract in accordance with its terms. RIGHT TO EXAMINE CONTRACT. Within 10 days after this contract is first received (60 days after its receipt for a contract issued in replacement of another contract), it may be cancelled for any reason without penalty (e.g., no withdrawal charges will be deducted) by delivering or mailing it to our Servicing Office. Upon cancellation, the Company will return any premium payments paid under the Fixed Account of the contract and/or the value of any payments made to the Variable Account on the appropriate Valuation Date as follows: if the contract is personally delivered to the Company's Servicing Office or authorized representative, such Valuation Date will be the date of delivery. If the contract is mailed to the Company's Servicing Office, such Valuation Date will be the date the contract is mailed. The contract is governed by the laws of the State of New York; it is issued and accepted subject to the terms set forth on this page and on the following pages which are made a part of this contract. In consideration of the application for it, and the Premium Payment(s) as provided this contract is executed by the Company as of its Date of Issue. /s/ Joanne B. Collins PRESIDENT PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS AND TRANSFERS. PAYMENTS MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH BECOMES EFFECTIVE AT THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE "ANNUITY BENEFIT" PROVISIONS AND UNDER THE "PENALTY-FREE ANNUITIZATION" PROVISION ARE NOT SUBJECT TO THE MARKET VALUE ADJUSTMENT. PAYMENTS MADE UNDER THE "DEATH BENEFIT" PROVISIONS ARE NOT SUBJECT TO ANY MARKET VALUE ADJUSTMENT. ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. WITH THE CONTRACT ASSET CHARGES OF 1.40%, THE SMALLEST ANNUAL RATE OF INVESTMENT RETURN WHICH WOULD HAVE TO BE EARNED ON THE ASSETS OF THE SEPARATE ACCOUNT SO THAT THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE IS 5.40%. USE OF CONTRACT. This contract is available for retirement and deferred compensation plans, some of which may qualify for special tax treatment under various sections of the Internal Revenue Code. FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT WITH FIXED AND VARIABLE ACCOUNTS - NONPARTICIPATING THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY READ YOUR CONTRACT CAREFULLY. AN426NY TABLE OF CONTENTS
Page CONTRACT SPECIFICATIONS 3 DEFINITIONS 4 PREMIUM PAYMENT PROVISIONS 5 Premium Payments Allocation of Premium Payments Annuity Account Continuation Minimum Value Requirements OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS 6 Owner Rights of Owner Transfer of Ownership Assignment Beneficiary Change of Beneficiary FIXED AND VARIABLE ACCOUNTS PROVISIONS 7 Fixed Account and Sub-Accounts Variable Account and Sub-Accounts Investment Risk Investments of the Variable Account Sub-Accounts Substituted Securities CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS 8 Part A - Fixed Account Value Guaranteed Periods Guaranteed Interest Rates Fixed Accumulation Value Minimum Surrender Value Part B - Variable Account Value Acquisition and Redemption of Variable Accumulation Units Variable Accumulation Unit Value Variable Accumulation Value Net Investment Factor Part C - General Annuity Account Transfer Privilege Transfer Fee CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT PROVISIONS 11 Cash Withdrawals Withdrawal Charges Market Value Adjustment AN426NY PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS 12 Penalty-Free Partial Withdrawals or Transfers Full or Partial Withdrawals and Transfers at the End of a Guaranteed Period Waiver of Withdrawal Charge and Market Value Adjustment on Death or Annuity Date Penalty-Free Surrender on Disability Penalty-Free Annuitization BENEFIT PROVISIONS 13 Annuity Benefit Annuity Date Election and Effective Date of Election with Respect to Annuity Benefit Determination of Amount Income Payment Benefits Death Benefits Election and Effective Date of Election with Respect to Death Benefit Payment of Death Benefit Amount of Death Benefit Section 72(s) SETTLEMENT OPTIONS 15 GENERAL PROVISIONS 18 The Contract Modification of Contract Non-Participation Loans Determination of Values Endorsement of Income Payments Misstatement of Age and/or Sex Claims of Creditors Periodic Reports
AN426NY CONTRACT SPECIFICATIONS CONTRACT NUMBER XX-0123456 DATE OF ISSUE 04/01/1999 ANNUITANT Abraham Lincoln ANNUITY DATE APRIL 1, 2067 AGE AT ISSUE 35
FORM BENEFIT INITIAL PREMIUM PAYMENT - ------------------------------------------------------------------------------------------------------- AN426NY FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY $50,000 WITH FIXED AND VARIABLE ACCOUNTS INITIAL PREMIUM PAYMENT ALLOCATION PERCENTAGE FIXED ACCOUNT - SUB-ACCOUNTS GUARANTEED MINIMUM INTEREST RATE: 3.00% PERCENTAGE ADJUSTMENT TO INDEX RATE "B': 0.25% INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [1 YEAR/ 5.00%] 25% INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [3 YEARS/] % INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [5 YEARS/] % INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [7 YEARS/] % INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [10 YEARS/] % DOLLAR COST AVERAGING FIXED ACCOUNT INITIAL GUARANTEED INTEREST PERIOD/INTEREST RATE: [6 MONTHS]/[4.00%] VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS) [AIM CAPITAL APPRECIATION FUND] % [AIM V. I. GROWTH FUND] 25% [AIM V. I. VALUE FUND] % [AIM V. I. INTERNATIONAL EQUITY FUND] % [ALLIANCE PREMIER GROWTH PORTFOLIO - CLASS B] % [ALLIANCE GROWTH AND INCOME PORTFOLIO - CLASS B] % [ALLIANCE GROWTH PORTFOLIO - CLASS B] % [ALLIANCE TECHNOLOGY PORTFOLIO - CLASS B] % [BT INSURANCE TRUST EQUITY 500 INDEX FUND] % [AVIS GLOBAL SMALL CAPITALIZATION FUND - CLASS 2] % [AVIS GROWTH FUND - CLASS 2] % [AVIS INTERNATIONAL FUND - CLASS 2] % [AVIS GROWTH AND INCOME FUND - CLASS 2] % [DELAWARE PREMIUM AGGRESSIVE GROWTH SERIES] % [DELAWARE PREMIUM GROWTH AND INCOME SERIES] % [DELAWARE REIT SERIES] % (DELAWARE SMALL CAP VALUE SERIES] % [DELAWARE TREND SERIES] % [DELAWARE EMERGING MARKETS SERIES] % [DELAWARE DELCHESTER SERIES] % [FIDELITY VIP EQUITY-INCOME PORTFOLIO] % [FIDELITY VIP GROWTH PORTFOLIO] % [FIDELITY VIP OVERSEAS PORTFOLIO] % [FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO] 25% [FRANKLIN SMALL CAP INVESTMENTS FUND - CLASS 2] % [FRANKLIN MUTUAL SHARES INVESTMENTS FUND - CLASS 2] % [LIBERTY TRUST NEWPORT TIGER FUND] % [LINCOLN NATIONAL BOND FUND] % [LINCOLN NATIONAL MONEY MARKET FUND] % [MFS VARIABLE TRUST EMERGING GROWTH SERIES] 25% [MFS VARIABLE TRUST RESEARCH SERIES] % [MFS VARIABLE TRUST TOTAL RETURN SERIES] % [MFS VARIABLE TRUST UTILITIES SERIES] % [TEMPLETON GLOBAL GROWTH FUND) % [TEMPLETON INTERNATIONAL FUND) % TOTAL 100%
AN426NY Page 3 Limitations on transfers from fixed accounts (other than dollar cost averaging Fixed Account: in each contract year, an Owner is allowed to make one or more transfers from each Fixed Account Sub-account, and the amount(s) transferred in aggregate may not exceed more than 15% of the then current value of the Fixed Account applicable Sub-account(s). THIS CONTRACT IS FOR USE WITH "LNY ACCOUNT N FOR VARIABLE ANNUITIES". OWNER: Abraham Lincoln BENEFICIARY: The person(s) designated by the Owner and recorded by the Company MINIMUM SUBSEQUENT PREMIUM PAYMENTS: $2,000 PER FIXED ACCOUNT GUARANTEED PERIOD $ 100 PER VARIABLE ACCOUNT SUB-ACCOUNT SCHEDULE OF CHARGES AND FEES Withdrawal Charges: The Withdrawal charges applicable under this contract are as follows.
Withdrawal Charge Number of Against Premium Contract Anniversaries Payment Withdrawn Since Premium Payment ----------------- --------------------- 6% 0 6% 1 5% 2 4% 3 3% 4 2% 5 1% 6 0% 7+
Each Subsequent Premium Payment will be subject to its own 7-year period. Any Withdrawal from the Fixed Account prior to the end of a Guaranteed Period may also be subject to a Market Value Adjustment as described on page 11 which may increase, decrease, or have no effect on the applicable account value(s). A Market Value Adjustment would not apply to a withdrawal effective at the end of a Guaranteed Period. Penalty-free Partial Withdrawal Charges: The Withdrawal charges are not applicable to certain partial withdrawals of 15% or less of Premium Payments annually (see page 12). Withdrawal charges and a Market Value Adjustment are not applicable to annuitization of the contract at any time. Withdrawal charges and a Market Value Adjustment are not applicable to payment of the Death Benefit. (See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions.") AN426NY Page 3.1 Asset Charges: The Company imposes a mortality and expense ("M&E") risk charge and an administrative expense charge, each of which is calculated as a percentage of asset value of each Variable Account Subaccount, to cover mortality and expense risk and other administrative costs. The percentages applied to asset value to determine these charges are the Daily M&E Rate and the Daily Administrative Rate. These charges are deducted from each Variable Account Sub-Account by reducing the Variable Accumulation Unit Value at the end of each Valuation Period. The Daily M&E Rate is equal to the daily rate equivalent of the annual rate of 1.25% and the Daily Administrative Rate is equal to the daily rate equivalent of the annual rate of 0.15%. In addition, Daily Fund Operating Expenses will be applied by each Fund as a percent of the daily fund balance as set forth in the prospectus for the applicable Fund(s). Taxes: Premium tax equivalents (including any related retaliatory taxes), if any, and any other taxes due under this contract will be deducted if applicable. It is currently the Company's practice to deduct such taxes, if any, at the time the Annuity Account Value, or any portion thereof, becomes payable. (Refer to Definition of 'Annuity Account Value'.) AN426NY Page 3.2 DEFINITIONS ACCUMULATION PERIOD. The period from the Date of Issue to (a) the Annuity Date, (b) the date on which the Death Benefit becomes payable, or (c) the date on which the contract is surrendered or annuitized, whichever is earliest. ANNUITANT(S). The person or persons on whose life the first Income Payment is to be made upon the annuitization of the contract. The Annuitant(s) on the Date of Issue is/are the person(s) designated in the Contract Specifications and will remain the Annuitant(s) under the contract unless the Owner exercises the right to change the Annuitant(s) as set forth in the "Rights of Owner" provision. If prior to the Annuity Date, the Annuitant predeceases the Owner, the Owner will then become the Annuitant until such time as the Owner exercises the right to designate a new Annuitant as set forth in the "Rights of Owner" provision. (Provided that the Owner is a natural person.) If joint Annuitants are named and if one of the Annuitants predeceases the Owner prior to the Annuity Date, the contract will thereupon become an annuity contract on the surviving Annuitant until such time that the Owner exercises the right to designate another joint Annuitant as set forth in the "Rights of Owner" provision. A request for change of Annuitant(s) must be in writing to the Company at its Servicing Office; once received by the Company, the change will be effective as of the date the request was signed. ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable Accounts with respect to this contract. ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of all the then current values of the Fixed and Variable Accounts with respect to this contract. Applicable premium taxes, if any, will be deducted when the Annuity Account Value amount to be applied under the Annuity Benefit, Death Benefit, Cash Withdrawals or PenaltyFree Withdrawal and Annuitization provisions is determined. ANNUITY DATE. The date on which Income Payments begin upon annuitization of the contract. THE COMPANY. Lincoln Life & Annuity Company of New York, issuer of the variable annuity contract. CONTRACT YEARS AND CONTRACT ANNIVERSARIES. All Contract Years and Contract Anniversaries are 12 month periods measured from the Date of Issue. DAILY M&E RATE. The rate applied by the Company as a percentage of each Variable Account Sub-Account's asset value to determine the M&E charge for its assumption of mortality and expense risks for a 24-hour period. DATE OF ISSUE. The date on which the contract becomes effective. The Date of Issue is shown in the Contract Specifications. DUE PROOF OF DEATH. An original certified copy of an official death certificate, an original certified copy of a decree of a court of competent jurisdiction as to the finding of death, or any other written proof of death satisfactory to the Company. EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end. FIXED ACCOUNT. The term 'Fixed Account' under this contract means all Sub-Account(s) associated with Guaranteed Period(s) and Guaranteed Interest Rate(s). Fixed Account assets are general assets of the Company and are distinguishable from those allocated to a separate account of the Company. FUND(S). The Variable Account Sub-Accounts in which Premium Payments, or Transfers in accordance with the "Transfer Privilege" provision, may be invested. GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at either an initial or subsequent Guaranteed Interest Rate will be credited to an amount under a Fixed Account Sub-Account. HOME OFFICE. The term 'Home Office' means Lincoln Life & Annuity Company of New York, 120 Madison Street, Suite 1700, Syracuse, NY 13202. AN426NY Page 4 IN WRITING. The term "in writing" means in a written form satisfactory to the Company and received by the Company at its Servicing Office. INCOME PAYMENTS. Income Payments are the amounts payable under this contract as determined by the "Settlement Options" provisions of the contract. OWNER. The person or entity designated in the Contract Specifications. PAYOUT PERIOD. The period during which Income Payments are made under this contract. SEC. The Securities and Exchange Commission. SERVICING OFFICE. The Servicing Office of Lincoln Life & Annuity Company of New York is located at 1300 S. Clinton Street, P. 0. Box 2348, Fort Wayne, Indiana 46801. SUB-ACCOUNT. That portion of the Fixed Account associated with specific Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the Variable Account which invests in shares of a specific Fund. VALUATION DATE. Any day on which the New York Stock Exchange ("NYSE") is open for business, except a day during which trading on the NYSE is restricted or on which an emergency exists as a result of which the valuation or disposal of securities is not reasonably practicable. VALUATION PERIOD. The period beginning immediately after the close of business on a Valuation Date and ending at the close of business on the next Valuation Date. VARIABLE ACCOUNT. The term "Variable Account" under this contract means all Sub-Account(s) associated with investments in the Fund(s). Variable Account assets are separate account assets of the Company, the investment performance of which is kept separate from that of the general assets of the Company and are not chargeable with general liabilities of the Company. VARIABLE ANNUITY UNITS. A unit of measure used in the calculation of the value of the variable portion of the Annuity Account during the Payout Period. VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the value of the variable portion of the Annuity Account before the Payout Period. PREMIUM PAYMENT PROVISIONS PREMIUM PAYMENTS. Premium Payments are payable to the Company at its Servicing Office or to an authorized agent of the Company. A Company receipt will be furnished upon request. The Initial Premium Payment is the amount paid to the Company as consideration for the benefits provided under the contract on the Date of Issue. (The Dollar Cost Averaging Option may be utilized with the Initial Premium Payment). Subsequent Premium Payments may be paid to the Company from time to time after the Date of Issue and prior to the Annuity Date. No premium payments after the Initial Premium Payment are required. The minimum Initial Premium Payment is $1,500 for Non-qualified plans, and $1,000 for Qualified plans. The minimum annual amount of subsequent Premium Payments is $100 per Variable Account Sub-account, or $2,000 per Fixed Account Guaranteed Period. The minimum payment at any one time must be at least $25 if transmitted electronically; otherwise the minimum amount is $100. The Company reserves the right to limit aggregate Premium Payments to $2 million. (The Dollar Cost Averaging Option may be utilized with a Subsequent Premium Payment if it is sufficient). All Premium Payments must meet the allocation requirements specified under the "Allocation of Premium Payments" provision. The payment of any amount under the contract which is derived, all or in part, from any Premium Payments made by check or draft may be postponed until such check or draft has been honored by the financial institution upon which it is drawn. The Initial Premium Payment attributable to the contract is shown on the Contract Specifications page. AN426NY Page 5 ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Servicing Office, each Premium Payment will be added to the Annuity Account established under the contract. The Annuity Account is described under the "Annuity Account" provision and is comprised of Fixed Account Sub-Account(s) and Variable Account Sub-Account(s). The Initial Premium Payment will be allocated to one or more such Sub-Accounts in accordance with the allocation percentages specified by the Owner and shown in the Contract Specifications, provided such allocations to Fixed and/or Variable Accounts conform to the Company's minimum deposit requirements in effect as of the Date of Issue. (The Dollar Cost Averaging Option may be utilized with the Initial Premium Payment). Subsequent Premium Payments will be allocated as directed by the Owner. If no direction is given, the allocation percentages will be that which has been most recently directed for payments by the Owner. If a portion of the most recent previous Premium Payment was allocated to the Fixed Account and the allocation percentages when applied to a Subsequent Premium Payment does not produce an amount which meets the Fixed Account minimum requirements, the Company will promptly seek further instructions from the Owner regarding allocation of the premium or otherwise return the applicable portion of such Premium Payment as provided by law. (The Dollar Cost Averaging Option may be utilized with a Subsequent Premium Payment if it is sufficient). Each Premium Payment allocated to the Fixed Account is treated separately for purposes of guaranteed interest rates, withdrawal charges, specified time intervals, and guaranteed benefit dates. DOLLAR COST AVERAGING. All or part of the Initial Premium Payment may be allocated to the Dollar Cost Averaging Fixed Account or any other Sub-Account made available for the purpose of Dollar Cost Averaging. Any amount so allocated will be transferred from the Sub-Account used for Dollar Cost Averaging to the designated variable Sub-Accounts in monthly installments over a period chosen by the Owner. Transfers will occur on the same day each month until the end of the chosen period or, if sooner, until the account value in the Sub-Account used for Dollar Cost Averaging has been exhausted. Transfers from the Dollar Cost Averaging Fixed Account are not subject to any Market Value Adjustment. ANNUITY ACCOUNT CONTINUATION. The Annuity Account shall be continued automatically in full force from the Date of Issue until the Annuity Date or until the contract is surrendered or annuitized, the Death Benefit is paid, or the Annuity Account Value no longer meets the requirements specified in the "Minimum Value Requirements" provision, whichever occurs first. MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made for three consecutive years and the Annuity Account Value decreases to less than $2,000 during that period, or if any partial withdrawal decreases the Annuity Account Value to less than $2,000, the Company reserves the right to cancel the contract and pay to the Owner an adjusted value of the Annuity Account as would be calculated under the "Determination of Amount" provision. The Company will, however, provide at least 30 days advance notice to the Owner of its intended action. During the notification period an additional Premium Payment may be made to meet the minimum value requirements. OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS OWNER. The Owner on the Date of Issue will be the person designated in the Contract Specifications. If no Owner is designated, the Annuitant(s) will be the Owner. RIGHTS OF OWNER. The Owner may exercise all rights and privileges under the contract including the right to: (a) agree with the Company to any change in or amendment to the contract, (b) transfer all rights and privileges to another person, (c) change the Beneficiary, (d) change the Annuitant(s) any time prior to the Annuity Date or name a new Annuitant if the Annuitant, or one of the Annuitants named under a joint life annuity, predeceases the Owner, (e) name the payee to whom Income Payments are to be directed, and (f) assign the contract. All rights and privileges of the Owner may be exercised without the consent of any designated transferee, or any Beneficiary if the Owner has reserved the right to change the Beneficiary. TRANSFER OF OWNERSHIP. The Owner may transfer all rights and privileges of ownership. On the effective date of transfer, (a) the transferee will become the Owner and will have all the rights and privileges of the Owner, and (b) the amount of Death Benefit applicable under the contract will change as set forth under the "Amount of Death Benefit" provision. The Owner may revoke any transfer prior to its effective date. AN426NY Page 6 Unless provided otherwise, a transfer will not affect the interest of any Beneficiary designated prior to the effective date of the transfer. A transfer of Ownership, or a revocation of transfer, must be in writing to the Company at its Servicing Office. A transfer or a revocation will not take effect until received in writing by the Company at its Servicing Office. When a transfer or revocation has been so received, it will take effect as of the effective date specified by the Owner. Any payment made or any action taken or allowed by the Company before the transfer or the revocation is received will be without prejudice to the Company. ASSIGNMENT. The contract may not be sold, assigned, discounted, or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose. BENEFICIARY. The Beneficiary is the person who has the right to receive the Death Benefit set forth in the contract and, for Non-Qualified Contracts, who is the 'designated beneficiary' for purposes of Section 72(s) of the Internal Revenue Code in the event of the Owner's death. The Beneficiary on the Date of Issue will be the person designated in the Contract Specifications. Unless provided otherwise, the interest of any Beneficiary who dies before the Owner will vest in the Owner or the Owner's administrators or assigns. CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A request for change of Beneficiary must be in writing to the Company at its Servicing Office. The request must be signed by the Owner. The request must also be signed by the Beneficiary if the right to change the Beneficiary has not been reserved to the Owner. A change of Beneficiary will not take effect until received by the Company. When a change of Beneficiary has been so received, whether or not the Owner is then alive, it will take effect as of the date the request was signed. Any payment made or any action taken or allowed by the Company before the change of Beneficiary is received will be without prejudice to the Company. Unless provided otherwise, the right to change any Beneficiary is reserved by the Owner. FIXED AND VARIABLE ACCOUNTS PROVISIONS FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the Company and are distinguishable from those allocated to a separate account of the Company. Any portion of Premium Payments allocated by the Owner to a Fixed Account Sub-Account will become part of the Fixed Account. VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable accumulation values, if any, under this contract relate is shown in the Contract Specifications. It was established pursuant to a resolution of its Board of Directors as a 'separate account' under governing law of New York, the Company's state of domicile, and registered as a unit investment trust under the 1940 Act. Under New York law, the Variable Account assets (except assets in excess of its reserves and other contract liabilities) cannot be charged with the general liabilities from any other business of the Company and the income, gains or losses from the Variable Account assets are credited or charged against the Variable Account without regard to the income, gains or losses of the Company. The Variable Account assets are owned and controlled exclusively by the Company, and the Company is not a trustee with respect to those assets. The Variable Account is divided into Sub-Accounts. Each Variable Account Sub-Account's assets are invested in shares of a particular Fund made available as a funding vehicle under this contract. For each Variable Account Sub-Account, the Company maintains Variable Accumulation Units whose values reflect the investment performance of the Fund whose shares are held in that Sub-Account. Subject to any vote by persons having the right under the 1940 Act to vote thereon, the Company may elect to operate the Variable Account as a management company rather than a unit investment trust under the 1940 Act, or, if registration is no longer required, to deregister the Variable Account. In such event, the Company may endorse this contract to reflect such change and any necessary or appropriate action taken to effect the change. Any changes in Variable Account investment policy shall have been approved by the New York Superintendent of Insurance. AN426NY Page 7 INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully invested in the shares of the particular Fund purchased for that Sub-Account. Each Variable Account Sub-Account's investment performance reflects the investment performance of the Fund. Fund share values fluctuate, reflecting the risks of changing economic conditions and the ability of a Fund's investment advisor or sub-adviser to manage that Fund and anticipate changes in economic conditions. As to the Variable Account assets, the Owner bears the entire investment risk of gain or loss. INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated to a Variable Account Sub-Account will be used to purchase shares of a specific Fund. The Funds available on the Date of Issue are shown in the Contract Specifications; more may be subsequently added. The Fund is an open-end management investment company registered under the Investment Company Act of 1940. Any and all distributions made by the Fund(s) will be reinvested to purchase additional shares of that Fund at net asset value. Deductions from the Variable Account Sub-Accounts will, in effect, be made by redeeming a number of Fund shares at net asset value equal in total value to the amount to be deducted. Assets of Variable Account Sub-Accounts will be fully invested in Fund shares at all times. SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always be available for purchase or the Company may decide that further investment in such Fund is no longer appropriate in view of the purposes of the Variable Account, or in view of legal, regulatory or federal income tax restrictions. In such event, shares of another registered openend investment company or unit investment trust may be substituted both for Fund shares already purchased and/or as the securities to be purchased in the future, provided that these substitutions meet applicable Internal Revenue Service diversification guidelines and have been approved by the Securities and Exchange Commission and such other regulatory authorities as may be necessary. In the event of any substitution pursuant to this provision, the Company may make appropriate endorsement(s) to this contract to reflect the substitution. Any substitution shall be subject to the approval of the Superintendent of Insurance of the State of New York. CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS Any paid-up annuity, cash surrender value, or death benefits available under this contract shall not be less than the minimum benefits required by the New York Insurance Law. PART A - FIXED ACCOUNT VALUE GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by the Owner and are shown in the Contract Specifications. The duration of the Initial Guaranteed Period(s) will affect the Initial Guaranteed Interest Rate(s). Any Premium Payment or the portion thereof (or amount transferred in accordance with the "Transfer Privilege" provision described below) allocated to a particular Guaranteed Period will earn interest at the specified Guaranteed Interest Rate during the Guaranteed Period. Initial Guaranteed Periods begin on the date a Premium Payment is accepted (or, in the case of a transfer, on the effective date of the transfer) and end on the Expiration Date for each duration selected. Any portion of the Annuity Account Value comprising a particular Fixed Account Sub-Account (including interest earned thereon) will be referred to in this contract as the "Guaranteed Period Amount." As a result of renewals, Subsequent Payments, and transfers of portions of the Annuity Account Value, Guaranteed Amounts for Guaranteed Periods of the same duration may have different Expiration Dates, and each Guaranteed Period Amount will be treated separately for purposes of determining any Market Value Adjustment. The Company will automatically notify the Owner in writing at least 15 but not more than 45 days prior to the Expiration Date of a Guaranteed Period with respect to a Fixed Account Sub-Account of the guaranteed period durations available and the then currently quoted interest rates. A subsequent Guaranteed Period of the same duration will begin automatically at the end of the previous Guaranteed Period unless the Company receives, in writing at its Servicing Office within the 60-day period immediately preceding the end of such Guaranteed Period, an election by the Owner of a different Guaranteed Period from among those being offered by the Company at such time, or instructions to transfer all or a portion of the applicable Guaranteed Period Amount to one or more Fixed Account or Variable Account Sub-Accounts in accordance with the 'Transfer Privilege' provision. GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed Interest Rate that will be used to determine the interest with respect to a Fixed Account Sub-Account for each Guaranteed Period at the beginning of the Guaranteed Period. This rate will be guaranteed for the duration of the applicable Guaranteed Period. The Initial or AN426NY Page 8 Subsequent Guaranteed Interest Rate will never be less than 3% per year, compounded annually. Subsequent Guaranteed Interest Rate(s) will also be determined at the beginning of Guaranteed Period(s) and may be higher or lower than the previous rate, but will never be less than 3% per year, compounded annually. (See "Minimum Surrender Value" provision.) The Company will automatically notify the Owner of the new Guaranteed Interest Rate as soon as possible after the beginning of each subsequent Guaranteed Period. FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at its Servicing Office, all or that portion, if any, of the Premium Payment which is allocated to the Fixed Account will be credited to the Fixed Account and allocated to the Fixed Account Sub-Accounts selected by the Owner. The Fixed Accumulation Value, if any, at any time, is equal to the sum of the then current values of all Guaranteed Period Amounts with respect to this contract. MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for a given contract year will be determined by: crediting an effective annual rate of interest of 3.0% on the sum of the values of the Fixed Account Subaccounts at the end of each Valuation Period during the Contract Year at a daily rate adjusted for the number of days in each Valuation Period; less the applicable withdrawal charge(s), any prior withdrawals or transfers out of the Fixed Account, and premium taxes (if any). PART B - VARIABLE ACCOUNT VALUE ACQUISITION AND REDEMPTION OF VARIABLE ACCUMULATION UNITS. Any dollar amounts allocated to a Variable Account Sub-Account shall be converted into Variable Accumulation Units and credited to the Variable Account Sub-Account on a unit basis. The number of Variable Accumulation Units into which a dollar amount would be converted is calculated by dividing the dollar amount by the Variable Accumulation Unit Value for the particular Sub-Account. Any redemption of units from a Variable Account Sub-Account will be processed at the end of a Valuation Period, including any units redeemed to fund a monthly deduction, and shall result in the redemption and cancellation of Variable Accumulation Units having an aggregate dollar value equal to the amount of such withdrawal. VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value at the beginning of the first Valuation Period of each Variable Account Sub-Account was established at $10.00. The Variable Accumulation Unit value in any later Valuation Period is equal to the net asset value per unit of the particular Sub-Account as of the end of such Valuation Period. VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity Account, if any, for any Valuation Period is equal to the sum of the value of all Variable Accumulation Units of each Variable Account Sub-Account credited to the Variable Account with respect to this contract at the end of such Valuation Period. The Variable Accumulation Value of each Variable Account Sub-Account is determined by multiplying the number of Variable Accumulation Units, if any, credited to each Variable Account Sub-Account with respect to this contract at the end of a Valuation Period, by the Variable Accumulation Unit Value of the particular Variable Account Sub-Account for such Valuation Period. NET INVESTMENT FACTOR. An index, calculated as described below, that provides a measure of the investment performance of a Variable Account Sub-Account for each Valuation Period. The Net Investment Factor is equal to A+B-C minus E ----- D where: A is the net asset value per unit of the Fund held in the Variable Account Sub-Account (such net asset value being determined as described in the prospectus for the Fund) as of the end of the Valuation Period; B is the per unit amount of any dividend or other distribution payable with respect to units held of record during the Valuation Period; C is the per unit amount of any tax determined by the Company to be attributable to the operation of the Variable Account Sub-Account during such Valuation Period; D is the net asset value of each unit of the Fund as of the close of business on the Valuation Date immediately preceding the Valuation Period; and AN426NY Page 9 E is the sum of the Daily M&E Rate plus the Daily Administrative Rate, multiplied by the number of 24-hour periods included in the Valuation Period. The Net Investment Factor may be 1.0 or may be greater or less than 1.0, reflecting the possibility that the Variable Accumulation Unit Value of a particular Variable Account Sub-Account may remain the same, increase or decrease. PART C - GENERAL ANNUITY ACCOUNT. The Company will establish an Annuity Account under the contract and will maintain the Annuity Account during the Accumulation Period. The Annuity Account Value at any time equals the sum of all the then current values of the Fixed and Variable Accounts with respect to this contract. TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than during the "Right to Examine Contract" period, the Owner may transfer all or part of the Annuity Account Value to one or more of the Fixed or Variable Account Sub-Accounts then available under the contract, subject to the provisions set forth below. Transfer requests must be made in writing. Transfer requests must be received at the Company's Servicing Office prior to the time of day set forth in the prospectus, and provided the New York Stock Exchange is open for business, in order to be processed as of the close of business on the date the request is received; otherwise, the transfer will be processed on the next business day the New York Stock Exchange is open for business. Transfers involving Variable Account Sub-Accounts will reflect the purchase or cancellation of Variable Accumulation Units having an aggregate value equal to the dollar amount being transferred to or from a particular Variable Account Sub-Account. The purchase or cancellation of such units shall be made using Variable Accumulation Unit Values of the applicable Variable Account Sub-Account at the end of the Valuation Period for which the transfer is effective. Transfers to a Fixed Account Sub-Account will result in a new Guaranteed Period for the amount being transferred. Any such Guaranteed Period will begin on the effective date of the transfer. The amount transferred into such Fixed Account Sub-Account will earn interest at the Guaranteed Interest Rate declared by the Company for that Guaranteed Period as of the effective date of the transfer. Transfers shall be subject to the following conditions: (a) Not more than 12 transfers may be made per Contract Year (including the frequency limitation shown in the Contract Specifications with respect to transfers from the Fixed Account), unless otherwise authorized in writing by the Company. (b) No withdrawal charge will be imposed on transferred amounts; however, transfers of all or a portion out of a Fixed Account Sub-Account may be subject to the Market Value Adjustment set forth below unless such transfer is made in accordance with the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed Period" provision. (c) The amount being transferred may not be less than $100 unless the entire value of the Fixed or Variable Account Sub-Account is being transferred. (d) The amount being transferred may not exceed the Company's maximum amount limit then in effect. (e) The amount transferred to any Fixed Account Sub-Account may not be less than $2,000, or $100 to a Variable Sub-Account. (f) Unless a transfer out of a Fixed Account Sub-Account is made in accordance with the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed Period" provision, the amount transferred from each Fixed Account Sub-Account during any Contract Year may not exceed the limits shown in the Contract Specifications. (g) Any value remaining in a Fixed Account Sub-Account may not be less than $2,000, or a Variable Account Sub-Account may not be less than $50. (h) The Company reserves the right to defer transfers of amounts from the Fixed Account for a period not to exceed six months from the date the request for such transfer is received by the Company in writing at its Servicing Office. (i) Transfers involving Variable Account Sub-Account(s) shall be subject to such terms and conditions as may be imposed by the Funds. TRANSFER FEE. The Company reserves the right to charge a fee up to $ 10 for each transfer prior to the Annuity Date if there have been more than twelve transfers made in the Contract Year. AN426NY Page 10 CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT PROVISIONS CASH WITHDRAWALS. At any time before the Annuity Date, the Owner may elect to receive a cash withdrawal payment from the Company by filing with the Company at its Servicing Office a written election in such form as the Company may require. Any such election shall specify the amount of the withdrawal and will be effective on the date that it is received at the Company's Servicing Office. Any cash withdrawal payment will be paid within seven days of the Company's receipt of such request, except as the Company may be permitted to defer the payment of amounts withdrawn from the Variable Account in accordance with the Investment Company Act of 1940. The Company reserves the right to defer the payment of amounts withdrawn from the Fixed Account for a period not to exceed six months from the date written request for such withdrawal is received by the Company at its Servicing Office. If payment from the Fixed Account is deferred for more than 10 working days from the date the request is received, the Company will pay annual interest on the amount deferred in accordance with the interest rate then required by law from the date the Company receives the request. The amount of the cash withdrawal payment may be for any amount not to exceed the Annuity Account Value at the end of the Valuation Period during which the election becomes effective, plus or minus any applicable Market Value Adjustment, and less any applicable withdrawal charge and premium taxes. In the case of a full surrender, the Annuity Account will be canceled and the contract will terminate. A partial withdrawal will result in a decrease in the Annuity Account Value by an amount with an aggregate dollar value equal to the dollar amount of the cash withdrawal payment, plus or minus any applicable Market Value Adjustment, any applicable withdrawal charge and premium taxes. This will also result in a pro rata reduction in any Death Benefit payable under this Contract. In the case of a partial withdrawal, the Owner must instruct the Company as to the amounts to be withdrawn from each Fixed and/or Variable Account Sub-Account. If not so instructed, the Company will effect such withdrawal from each Fixed and/or Variable Sub-Account in proportion to the then current Sub-Account values. Partial withdrawals cannot reduce any Fixed Account Sub-Account below $2,000 or any Variable Account Sub-Account below $50. Such partial withdrawals will be treated as a full surrender of that Sub-Account and the balance will be transferred to the largest Variable Account Sub-Account, if any. Partial withdrawals may not reduce the total Annuity Account Value below $1,000. (See "Minimum Value Requirements" provision.) Such partial withdrawals may be treated as a full surrender. Cash withdrawals from a Variable Account Sub-Account will result in the cancellation of Variable Accumulation Units attributable to the Annuity Account with an aggregate value on the effective date of the withdrawal equal to the total amount by which the Variable Account Sub-Account is reduced. The cancellation of such units will be based on the Variable Accumulation Unit values of the Variable Account Sub-Account at the end of the Valuation Period during which the cash withdrawal is effective. All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts, except those specified otherwise under "Penalty-Free Withdrawals, Transfers and Annuitization Provisions," will be subject to the Market Value Adjustment described below. WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be assessed by the Company. The length of time between the Company acceptance of the Premium Payment(s) and the receipt of a withdrawal request determines the withdrawal charge. For this purpose each withdrawal is deemed to represent a withdrawal of a Premium Payment previously accepted (or a portion thereof). Premium Payments will be deemed to have been withdrawn in the order in which the Premium Payments were received by the Company (i.e., oldest premium first). After all Premium Payments have been deemed withdrawn, the Company will deem further withdrawals to be from net investment results attributable to such Premium Payments, if any. The schedule of withdrawal charges is set forth in the "Schedule of Charges, Expenses and Fees." On withdrawal, any applicable Annuity Account Fee and Market Value Adjustment will be deducted before application of any withdrawal charge. Withdrawal charges are deducted proportionately from the Fixed and/or Variable Account Sub-Account(s) from which the withdrawal is to be made, provided such Sub-Account(s) have sufficient account value(s) for making such deduction(s). If any of the account value(s) of such Sub-Account(s), however, are insufficient, its remaining withdrawal charges will be deducted on a pro rata basis from all Fixed and/or Variable Account Sub-Accounts in proportion to the then-current account value(s) of such Sub-Account(s). AN426NY Page 11 See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions" for situations in which a withdrawal charge is not imposed. For the purpose of any qualified plan riders which may be attached to this contract, the term 'Surrender Charge' wherever referenced therein, shall mean 'withdrawal charge' as set forth above. MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer from a Fixed Account Sub-Account, except those specified otherwise under the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed Period" provision, will be increased or decreased by a Market Value Adjustment described in the following paragraphs. The amount of the Market Value Adjustment is calculated by multiplying the dollar amount of such cash withdrawal or transfer by the following amount: 1 subtracted from the result of (1 + a) to the power of n divided by (1 + b) to the power of n where: a = The yield rate for a Treasury security with time to maturity equal to the Guaranteed Period, determined at the beginning of the Guaranteed Period. b = The yield rate for a Treasury security with time to maturity equal to Guaranteed Period, determined at the time of transfer or withdrawal plus (if yield rates 'a' and 'b' differ by more than 0.25%) 0.25%. As used herein, 'The yield rate for a Treasury security' means the applicable yield rate for United States Treasury Bonds, Notes or Bills as published in the Wall Street Journal. If such yields are no longer published, the Company will substitute an appropriate index of publicly traded obligations subject to approval by the Superintendent of Insurance of the State of New York. Straight-line interpolation is used for periods to maturity not quoted. n = The number of years, including fractional years, remaining in the Guaranteed Period (e.g. 1 year and 73 days = 1 + (73 divided by 365) = 1.2 years) A positive Market Value Adjustment increases the cash withdrawal or transfer while a negative Market Value Adjustment decreases the cash withdrawal or transfer. PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the Owner may, during any Contract Year prior to the Annuity Date, withdraw up to 15% of the Premium Payment(s) or portion remaining thereof, without incurring a withdrawal charge. For this purpose each withdrawal is deemed to represent a withdrawal of a portion of a Premium Payment previously accepted. Premium Payments will be deemed to be withdrawn in the order in which they were received by the Company (i.e., the oldest premium first). Any such withdrawal from a Fixed Account Sub-Account may be subject to a Market Value Adjustment unless the withdrawal is made at the end of a Guaranteed Period as set forth below. The Owner must specify from which Fixed and/or Variable Account Sub-Accounts the withdrawal is to be made, otherwise the Company may effect such withdrawal on a proportionate basis from all Fixed and/or Variable Account Sub-Accounts in which the Annuity Account is invested. Such partial withdrawals may be either taken as a lump sum or, upon consent of the Company, paid in equal installments. No withdrawal charge will be imposed on any withdrawal with respect to a Premium Payment after the end of the seventh Contract Anniversary following the Company's acceptance of that Premium Payment. The Owner may also transfer amounts within the Annuity Account during the Accumulation Period without the application of a withdrawal charge; however, any transfers would be subject to any terms and conditions as may be imposed under the "Transfer Privilege" provision. AN426NY Page 12 FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No Market Value Adjustment will be imposed on a full or partial withdrawal or transfer made from a Fixed Account Sub-Account which becomes effective at the end of the applicable initial or subsequent Guaranteed Period. In such event, the Owner's proper request for withdrawal or transfer must be received at the Company's Servicing Office within a 45-day period immediately preceding the end of such Guaranteed Period. WAIVER OF WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY DATE. No withdrawal charge or Market Value Adjustment will be imposed upon payments made under the Annuity Benefit or Death Benefit provisions of this contract. PENALTY-FREE SURRENDER ON DISABILITY. No withdrawal charge or Market Value Adjustment will be imposed on a partial withdrawal or full surrender made as a result of "permanent and total disability" of the Owner. Such disability must: (i) prevent the Owner from engaging in any occupation for remuneration or profit; (ii) have started prior to the 65th birthday of the Owner; and (iii) have existed continuously for a period of at least 12 months. Written proof of disability must be provided to the Company at its Servicing Office. PENALTY-FREE ANNUITIZATION. At any time the Owner may request in writing payment of the then current Annuity Account Value in accordance with any one of the settlement options set forth in this contract. In such event, no withdrawal charge or Market Value Adjustment will be imposed at the time such settlement is made. Such annuitization will automatically result in a change in the Annuity Date to the date Income Payments commence under the settlement option elected. BENEFIT PROVISIONS ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the adjusted value of the Annuity Account (as set forth below) or apply it in accordance with the settlement option(s) elected by the Owner. However, if the amount to be applied under any settlement option is less than $5,000, or if the first Income Payment payable in accordance with such option is less than $50, the Company will pay the adjusted value in a single payment to the payee designated by the Owner. If the Owner dies on or after the Annuity Date and before the entire interest in the Contract has been distributed, then the remaining portion of the Annuity Account must be distributed to the Beneficiary at least as rapidly as under the settlement option chosen. If the Beneficiary is the surviving spouse of the Owner, then the beneficiary will be treated as the new Owner of the Contract. ANNUITY DATE. The Annuity Date selected by each Owner is shown in the Contract Specifications. The Annuity Date may be changed from time to time by the Owner by notifying the Company in writing. The notice must be received at the Company's Servicing Office at least 45 days prior to the Annuity Date then in effect. The new Annuity Date selected must be at least 30 days after the effective date of the change and not later than the Annuitant's 90th birthday (if more than one annuitant is named, the 90th birthday of the oldest annuitant). After the Annuity Date, no change of a settlement option is permitted, no payments may be requested under the "Cash Withdrawals" provision of the contract, and no Death Benefit is payable under the contract except as otherwise specified under the settlement option selected. ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT. During the lifetime of the Owner and prior to the Annuity Date, the Owner may elect to have the adjusted value of the Annuity Account applied on the Annuity Date under one or more of the settlement options set forth in this contract, or under any other settlement option as agreed to by the Company. The Owner may also change any election, but any election or change of election must be received at the Company's Servicing Office at least 45 days prior to the Annuity Date. The election or change of election may be made by filing with the Company at its Servicing Office written notice in such form as the Company may require. If no such election is in effect on the 30th day prior to the Annuity Date, the adjusted value of the Annuity Account will be applied under a Life Annuity with 120 months guaranteed. In such situation, the portion of the adjusted value of the Annuity Account to be applied for a Fixed Life Annuity under the Second Option and/or a Variable Life Annuity under Option II will be determined on a pro rata basis from the composition of the Annuity Account on the Annuity Date. AN426NY Page 13 DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account will be canceled and the adjusted value of the Annuity Account to be applied under the settlement options provisions shall be equal to the Annuity Account Value for the Valuation Period which ends immediately preceding the Annuity Date, minus any applicable premium or similar tax. For the purposes of any qualified plan riders which may be attached to this contract, the term 'Annuity Value,' wherever referenced therein, shall mean the 'adjusted value of the Annuity Account' as defined above. INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity Account as determined under the "Determination of Amount" provision may be applied, as elected by the Owner, under one or more of the settlement options set forth in the contract to effect: (a) a Fixed Income Payment Benefit or a Variable Income Payment Benefit; or (b) a combination of the Fixed Income Payment Benefit and the Variable Income Payment Benefit. If a combination Fixed and Variable Income Payment Benefit is elected, the Owner may specify the amount to be allocated to the Fixed Income Payment Benefit and the amount to be allocated to the Variable Income Payment Benefit. Such election and allocation may also be made by a Beneficiary to the extent provided in the "Election and Effective Date of Election with Respect to Death Benefit Provision". DEATH BENEFIT. If the Owner dies before the Annuity Date, the Company will pay the Death Benefit to the Beneficiary upon receipt of due proof of the death of the Owner in accordance with the "Payment of Death Benefit" provision. If there is no designated Beneficiary living on the date of death of the Owner, the Company will pay the Death Benefit, upon receipt of due proof of the death of both the Owner and the designated Beneficiary, in one lump sum to the estate of the Owner. If the death of the Owner occurs on or after the Annuity Date, no death benefit will be payable under the contract except as may be provided under the settlement option elected. ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During the lifetime of the Annuitant and prior to the Annuity Date, the Owner may elect one or more of the settlement options set forth in this contract to effect an annuity for the Beneficiary as payee after the death of the Owner. This election may be made or subsequently revoked by filing with the Company at its Servicing Office a written election or revocation of an election in such form as required by the Company. Any election or revocation of an election of a method of settlement of the Death Benefit will become effective on the date it is received by the Company at its Servicing Office. Unless otherwise specified in writing by the Owner, the Beneficiary may elect (a) to receive the Death Benefit as a lump sum cash payment, in which event the Annuity Account will be canceled, or (b) to have the Death Benefit applied under one or more of the settlement options set forth under the contract. This election may be made by filing with the Company a written request in a form as required by the Company. Any written request for an election of a settlement option for the Death Benefit by the Beneficiary will become effective on the later of (a) the date the request is received by the Company at its Servicing Office; or (b) the date due proof of the death of the Owner is received by the Company at its Servicing Office. If a written request for a settlement option by the Beneficiary is not received by the Company within 60 days following the date due proof of the death of the Owner is received by the Company, the Beneficiary shall be deemed to have elected a lump sum cash payment as of the last day of the 60-day period. Notwithstanding the above, the Owner or Beneficiary may only elect a settlement option which provides for the distribution of the entire Death Benefit to the Beneficiary within five years of the Owner's death unless: (a) the entire interest in the contract is distributed over the life of the Beneficiary, with distributions beginning within one year of the Owner's death; (b) the entire interest in the contract is distributed over a period not extending beyond the life expectancy of the Beneficiary, with distributions beginning within one year of the Owner's death; or (c) the Beneficiary is the deceased Owner's spouse and elects to continue the contract and become the new Owner, but in no event may such an election be made under the contract more than once. For purposes of Section 72(s) of the Internal Revenue Code, if any Owner is not an individual, the death or change of any Annuitant is treated as the death of a Owner, and if the Owner is grantor trust within the meaning of the Internal Revenue Code, the death of the grantor of such trust is also treated as the death of a Owner. AN426NY Page 14 PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the Beneficiary, payment will be made within 7 days of the date the election becomes effective or is deemed to become effective, provided due proof of the death of the Owner is received by the Company at its Servicing Office, except as the Company may be permitted to defer any such payment of amounts derived from the Variable Account in accordance with the Investment Company Act of 1940. If the Death Benefit is to be paid in one sum to the estate of the deceased Owner, payment will be made within 7 days of the date due proof of the death of the Owner and/or Beneficiary is received by the Company at its Servicing Office, except as the Company may be permitted to defer any such payment of amounts derived from the Variable Account in accordance with the Investment Company Act of 1940. If settlement under the settlement option provisions is elected, the Income Payments will commence 30 days following the effective date or the deemed effective date of the election and the Annuity Account will be maintained in effect until such Income Payments commence. AMOUNT OF DEATH BENEFIT. The Death Benefit is determined as of the effective date or deemed effective date of the Death Benefit election and is equal to the greatest of:(a) the Annuity Account Value for the Valuation Period during which the Death Benefit election is effective or is deemed to become effective (see Example 1 below); (b) the sum of all the Premium Payment(s) made under the contract adjusted for any partial withdrawals (see Example 2 below); or (c) the highest Annuity Account Value ever attained on a Contract Anniversary Date, occurring on or before the then Owner's 80th birthday (or the Annuitant's 80th birthday in the case of a non-natural Owner), with adjustments for any subsequent Premium Payments, partial withdrawals made since such Contract Anniversary Date, provided that if there has been a transfer of ownership, the highest Annuity Account Value must occur on a Contract Anniversary Date after the date of such transfer of ownership. Example 1: Example 2: - ---------- ---------- Premium 280 Annuity Account Value Annuity Account Value before Withdrawal 200 before Withdrawal 200 Highest AV 300 Partial Withdrawal 50 Partial Withdrawal 50 AV after Withdrawal 150 AV after Withdrawal 150 Death Benefit 210 Death Benefit 225 However, the Death Benefit on or after the then current Owner's 90th birthday (if a natural person) is the greater of (a) the Annuity Account Value for the Valuation Period during which the Death Benefit election is effective or is deemed to become effective, or (b) the sum of all the Premium Payment(s) with adjustments for any partial withdrawals made under the contract since the Date of Issue. SECTION 72(s). The provisions above will be interpreted so as to comply with the requirements of Section 72(s) of the Internal Revenue Code. SETTLEMENT OPTIONS ANNUITY PAYMENTS An election to receive payments under a Settlement Option must be made by the Annuity Date. If a Settlement Option is not chosen prior to the Annuity Date, payments will commence to the Owner on the Annuity Date under the Settlement Option providing a Life Annuity with annuity payments guaranteed for 10 years. If no election is made, the value of the Owner's Variable Account shall be used to provide a variable annuity payment, and the value of the Owner's Fixed Account shall be used to provide a fixed annuity payment. The Annuity Date is set forth in each Contract. Upon written request by the Owner and any Beneficiary who cannot be changed, the Annuity Date may be deferred. However, the Annuity Date may not be deferred past the Annuitant's age 90. Purchase Payments may be made until the new Annuity Date. CHOICE OF SETTLEMENT OPTION By Owner Prior to the Annuity Date, the Owner may choose or change any Option. For a 100% fixed annuity payment, the Annuity Date must be at least thirty days prior to the time Income Payments are to begin. By Beneficiary At the time proceeds are payable to a Beneficiary, a Beneficiary may choose or change any Settlement Option that meets the requirements of Code Section 72(s) or 401(a)(9) if proceeds are available to the Beneficiary in a lump sum. The Beneficiary then becomes the Annuitant. AN426NY Page 15 A choice or change must be in writing to the Company at its Servicing Office. Once Income Payments have begun, no surrender of the Annuity Account Value can be made and the Annuitant(s) cannot be changed, nor can the settlement option be changed. SETTLEMENT OPTIONS a. Life Annuity / Life Annuity with Guaranteed Period -- Payments will be made for the lifetime of the Annuitant with no certain period, or life and a 10 year certain period, or life and a 20 year certain period. b. Unit Refund Life Annuity -- Payments will be made for the lifetime of the Annuitant with the guarantee that upon death a payment will be made of the value of the number of Variable Annuity Units equal to the excess, if any, of (a) over (b) where (a) is the total amount applied under the option divided by the Annuity Unit Value at the Annuity Date and (b) is the product of the number of Variable Annuity Units represented by each payment and the number of payments paid prior to death. c. Joint Life Annuity / Joint Life Annuity with Guaranteed Period -- Payments will be made during the joint life of the Annuitant and a Joint Annuitant of the Owner's choice. Payments will be made for life with no certain period, or life and a 10 year certain period, or life and a 20 year certain period. Payments continue for the life of the survivor at the death of the Annuitant or Joint Annuitant. d. Other options may be available as agreed upon in writing by the Company. At the time a Settlement Option is selected, the Owner may elect to have the total Value applied to provide a variable annuity payment, a fixed annuity payment, or a combination fixed and variable annuity payment. If no election is made, the value of the Owner's Variable Account shall be used to provide a variable annuity payment, and the value of the Owner's Fixed Account shall be used to provide a fixed annuity payment. At the time Income Payments commence, they will not be less than those that would be provided by a specific amount for any single premium immediate annuity contract offered by the Company at the time to the same class of annuitants. The specific amount is the greater of the surrender value or 95% of the accumulation value. The amount of Income Payment will depend on the age and sex (except in cases where unisex rates are required) of the Annuitant as of the Annuity Date. A choice may be made to receive payments once each month, four times each year, twice each year, or once each year. The Annuity Account Value used to effect benefit payments will be calculated as of the Annuity Date. Table 1 of this Contract illustrates the minimum payment amounts and the age adjustments which will be used to determine the first monthly payment under a variable annuity settlement option. The tables show the dollar amount of the first monthly payment which can be purchased with each $1,000 of Annuity Account Value, after deduction of any applicable premium taxes. Amounts shown in Table 1 use an Individual Annuity Mortality Table on file with the New York Superintendent of Insurance, with an assumed rate of return of 4% per year. Table 2 of this Contract illustrates the minimum payment amounts and the age adjustments which will be used to determine the monthly payments under a fixed annuity settlement option. The tables show the dollar amount of the guaranteed monthly payments which can be purchased with each $1,000 of Annuity Account Value, after deduction of any applicable premium taxes. Amounts shown in Table 2 use an Individual Annuity Mortality Table on file with the New York Superintendent of Insurance, with an interest rate of 2.75% per year. The minimum payment amounts shown for Joint and Survivor Annuities under both Tables 1 and 2 are for Joint Ages; that is, for a male and a female both of the same age. Minimum payment amounts for other age and sex combinations on Joint and Survivor Annuities are available, but are not illustrated in Tables 1 and 2. AN426NY Page 16 DETERMINATION OF THE AMOUNT OF VARIABLE ANNUITY PAYMENTS AFTER THE FIRST PAYMENT The first variable annuity payment is sub-divided into components each of which represents the product of: (a) the percentage elected by the Owner of a specific Sub-account the performance of which will determine future variable annuity payments, and (b) the entire first variable annuity payment. Each variable annuity payment after the first payment attributable to a specific Sub-account will be determined by multiplying the Variable Annuity Unit value for that Sub-account for the date each payment is due by a constant number of Variable Annuity Units. This constant number for each specific Sub-account is determined by dividing the component of the first payment attributable to such Sub-account as described above by the Variable Annuity Unit value for that Sub-account on the Annuity Date. The total variable annuity payment will be the sum of the payments attributable to each Sub-account. The Variable Annuity Unit value for any Valuation Period for any Sub-account is determined by multiplying the Variable Annuity Unit value for the immediately preceding Valuation Period by the product of (a) 0.9998926 raised to a power equal to the number of days in the current Valuation Period and (b) the Net Investment Factor of the Sub-account for the Valuation Period for which the Variable Annuity Unit value is being determined. The valuation of all assets in the Sub-account shall be determined in accordance with the provisions of applicable laws, rules, and regulations. The method of determination by the Company of the value of an Annuity Unit will be conclusive upon the Owner and any Beneficiary. The Company guarantees that the dollar amount of each installment after the first shall not be affected by variations in mortality experience from mortality assumptions on which the first installment is based nor by expenses actually incurred, other than taxes on investment income. After the Annuity Date, if any portion of the annuity payment is a variable annuity payment, the Owner may direct a transfer of assets from one Sub-account to another Sub-account or to a fixed annuity payment. Such transfers will be limited to three (3) times per Contract Year. Assets may not be transferred from a fixed annuity payment to a variable annuity payment. A transfer from one Sub-account to another Sub-account will result in the purchase of Variable Annuity Units in one Sub-account and the redemption of Variable Annuity Units in the other Sub-account. Such a transfer will be accomplished at relative Variable Annuity Unit values as of the Valuation Date the transfer request is received. The valuation of Variable Annuity Units is described above. A transfer from one Sub-account to a fixed annuity payment will result in the redemption of Annuity Units in one Sub-account and the purchase of a minimum fixed annuity payment based on Table 2. PROOF OF AGE Payment will be subject to proof of age that the Company will accept such as a certified copy of a birth certificate. MINIMUM ANNUITY PAYMENT REQUIREMENTS If the Annuity Payment Option chosen results in payments of less than $50 per Sub-account, the frequency will be changed so that payments will be at least $50. For the purposes of this Section, the fixed annuity payment of the Contract is considered a Sub-account. EVIDENCE OF SURVIVAL The Company has the right to ask for proof that the person on whose life the payment is based is alive when each payment is due. CHANGE IN ANNUITY PAYMENT OPTION The Annuity Payment Option may not be changed after the Annuity Commencement Date. AN426NY Page 17 GENERAL PROVISIONS THE CONTRACT. The contract and the application therefore constitute the entire contract between the Company and the Owner. Only the President, a Vice President, an Assistant Vice President, or a Secretary, of the Company may make or modify this contract. The Contract is executed at the Company's Home Office. MODIFICATION OF CONTRACT. The Company reserves the right to modify this contract to meet the requirements of applicable state and federal laws or regulations. Any changes are subject to the prior approval of the New York Insurance Department. The Company will notify the Owner in writing of any changes. NON-PARTICIPATION. The contract is not entitled to share in surplus distribution. Loans. Loans are not permitted under this contract. DETERMINATION OF VALUES. The method of determination by the Company of the Net Investment Factor and the number and value of Accumulation Units and Annuity Units shall be conclusive upon the Owner, and any Beneficiary or payee. Any paid-up annuity, cash surrender or death benefits that may be available under a contract will not be less than the minimum benefits required by any statute of the state in which the is delivered. ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment at the Home Office by check. Each check must be personally endorsed by the payee/Annuitant, or the Company may require that proof of the payee/Annuitant's survival be furnished. MISSTATEMENT OF AGE AND/OR SEX. If the age and/or sex of an Annuitant is misstated, the amount payable under the contract will be adjusted to be the amount of Income which the actual premium paid would have purchased for the correct age and/or sex according to the Company's rates in effect on the Date of Issue. Any overpayment by the Company, with interest at the rate of 6% per year, compounded annually, will be charged against the payments to be made next succeeding the adjustment. Any underpayment by the Company will be paid in a lump sum, with interest at the rate of 6% per year, compounded annually. CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under this contract will be subject to the claims of creditors of any payee. PERIODIC REPORTS. At least once each calendar year, the Company will furnish the Owner a report as required by law showing the Annuity Account Value at the end of the preceding year, all transactions during the year, the current Annuity Account Value, the number of Accumulation Units in each Variable Accumulation Account, the applicable Accumulation Unit Value as of the date of the report and the interest rate credited to the Fixed Account Sub-Account(s). The Company will also send such statements reflecting transactions in the Annuity Account as may be required by applicable laws, rules and regulations and any other information required by the Superintendent of Insurance. AN426NY Page 18 ANNUITY PURCHASE RATE TABLE 1 ----------------------------- SEPARATE FILE; HARD COPY TO BE FAXED SEPARATELY ANNUITY PURCHASE RATE TABLE 2 SEPARATE FILE, HARD COPY TO BE FAXED SEPARATELY LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK SYRACUSE, NEW YORK FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING AN426NY EX-99.(5)(A) 5 EXHIBIT 99.(5)(A)
DELAWARE-LINCOLN LINCOLN LIFE & ANNUITY CHOICE Variable Annuity Application COMPANY OF NEW YORK VARIABLE ANNUITY-SM- HOME OFFICE SYRACUSE, NEW YORK - ----------------------------------------------------------------------------------------------------------------------------------- Instructions: Please type or print. ANY ALTERATIONS TO THIS APPLICATION MUST BE INITIALED BY THE OWNER. - ----------------------------------------------------------------------------------------------------------------------------------- 1a OWNER - ----------------------------------------------------------------------------------------------------------------------------------- Social Security number/TIN / / / /-/ / /-/ / / / / --------------------------------------------- Full legal name or trust name* Home telephone number / / / / / / / /-/ / / / / --------------------------------------------- Street address Date of birth / / / / / / / / / / / / / Male / / Female Month Day Year --------------------------------------------- Date of trust* / / / / / / / / / / / Is trust revocable?* City State ZIP Month Day Year / / Yes / / No --------------------------------------------- Executor/Trustee name* NOTE: MAXIMUM AGE OF OWNER IS 85. *This information is required for trusts. - ----------------------------------------------------------------------------------------------------------------------------------- 2a ANNUITANT (if no Annuitant is specified, the Owner will be the Annuitant) - ----------------------------------------------------------------------------------------------------------------------------------- Social Security number / / / /-/ / /-/ / / / / --------------------------------------------- Full legal name Home telephone number / / / / / / / /-/ / / / / --------------------------------------------- Street address Date of birth / / / / / / / / / / / / / Male / /Female --------------------------------------------- Month Day Year City State Zip NOTE: MAXIMUM AGE OF ANNUITANT IS 85. - ----------------------------------------------------------------------------------------------------------------------------------- 2b CONTINGENT ANNUITANT - ----------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------- Social Security number / / / /-/ / /-/ / / / / Full legal name NOTE: MAXIMUM AGE OF CONTINGENT ANNUITANT IS 85. - ----------------------------------------------------------------------------------------------------------------------------------- 3 BENEFICIARY(IES) OF OWNER (List additional beneficiaries on separate sheet. If listing children, use full legal names.) - ----------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------- ---------------------------------------- --------------------- ---------- Primary: Full legal name or trust name* Relationship to Owner SSN/TIN % ---------------------------------------------- ---------------------------------------- --------------------- ---------- Primary: Full legal name Relationship to Owner SSN/TIN % ---------------------------------------------- ---------------------------------------- --------------------- ---------- Contingent: Full legal name or trust name Relationship to Owner SSN/TIN % ---------------------------------------------- Executor/Trustee name* Date of trust* / / / / / / / / / / / / / Male / / Female Month Day Year *This information is required for trusts. - ----------------------------------------------------------------------------------------------------------------------------------- 4 TYPE OF VARIABLE ANNUITY CONTRACT - ----------------------------------------------------------------------------------------------------------------------------------- NONQUALIFIED: / / Initial Contribution OR / / 1035 Exchange TAX-QUALIFIED (MUST COMPLETE PLAN TYPE): / / Initial Contribution, Tax Year OR / / Transfer OR / / Rollover -------- PLAN TYPE (CHECK ONE): / / Roth IRA / / Traditional IRA Page 1 - ------------------------------------------------------------ ------------------------------------------------------------------ 5a ALLOCATION (this section must be completed) 5b DOLLAR COST AVERAGING (complete only if electing DCA) - ------------------------------------------------------------ ------------------------------------------------------------------ $10,000 minimum required in the Holding Account Initial minimums: --------------------------------------------------------------- Nonqualified $10,000 Total amount to DCA: $ OR ---------------------------- Qualified $ 2,000 MONTHLY amount to DCA: $ ---------------------------- --------------------------------------------------------------- THE CURRENT ALLOCATION WILL APPLY TO FUTURE CONTRIBUTIONS OVER THE FOLLOWING PERIOD: UNLESS OTHERWISE SPECIFIED. MONTHS (6-60) ---------------------------- --------------------------------------------------------------- FROM THE FOLLOWING HOLDING ACCOUNT (check one): --------------------------------------------------------- PLEASE ALLOCATE MY CONTRIBUTION OF: / / 1 Year Fixed Account (Only available for 12 months or less.) $ OR $ / / Delaware Delchester Series * The DCA holding account -------------------- ------------------- / / Lincoln National Money Market and the DCA fund elected Initial contribution Approximate amount / / Lincoln National Bond Fund cannot be the same from previous carrier --------------------------------------------------------- ---------------------------------------------------------------- INTO THE FUND(S) BELOW [DOWN ARROW GRAPHIC] INTO THE FUND(S) BELOW [DOWN ARROW GRAPHIC] --------------------------------------------------------- ---------------------------------------------------------------- USE WHOLE PERCENTAGES USE WHOLE PERCENTAGES % Delaware Decatur Total Return Series % Delaware Decatur Total Return Series --------- ---------- % Delaware International Equity Series % Delaware International Equity Series --------- ---------- % Delaware Delchester Series % Delaware Delchester Series --------- ---------- % Delaware Devon Series % Delaware Devon Series --------- ---------- % Delaware Emerging Markets Series % Delaware Emerging Markets Series --------- ---------- % Delaware REIT Series % Delaware REIT Series --------- ---------- % Delaware Social Awareness Series % Delaware Social Awareness Series --------- ---------- % Delaware Small Cap Value Series % Delaware Small Cap Value Series --------- ---------- % Delaware Trend Series % Delaware Trend Series --------- ---------- % AIM V.I. Growth Fund % AIM V.I. Growth Fund --------- ---------- % AIM V.I. International Fund % AIM V.I. International Fund --------- ---------- % AIM V.I. Value Fund % AIM V.I. Value Fund --------- ---------- % BT Equity 500 Index Fund % BT Equity 500 Index Fund --------- ---------- % Newport Tiger Fund % Newport Tiger Fund --------- ---------- % Colonial U.S. Stock Fund % Colonial U.S. Stock Fund --------- ---------- % Dreyfus Small Cap Portfolio % Dreyfus Small Cap Portfolio --------- ---------- % Fidelity VIP Equity--Income Portfolio % Fidelity VIP Equity--Income Portfolio --------- ---------- % Fidelity VIP Growth Portfolio % Fidelity VIP Growth Portfolio --------- ---------- % Fidelity VIP III Growth Opportunities Portfolio % Fidelity VIP III Growth Opportunities Portfolio --------- ---------- % Fidelity VIP Overseas Portfolio % Fidelity VIP Overseas Portfolio --------- ---------- % Kemper Government Securities Portfolio % Kemper Government Securities Portfolio --------- ---------- % Kemper Small Cap Growth Portfolio % Kemper Small Cap Growth Portfolio --------- ---------- % Lincoln National Bond Fund % Lincoln National Bond Fund --------- ---------- % Lincoln National Money Market Fund % Lincoln National Money Market Fund --------- ---------- % MFS Emerging Growth Series % MFS Emerging Growth Series --------- ---------- % MFS Research Series % MFS Research Series --------- ---------- % MFS Total Return Series % MFS Total Return Series --------- ---------- % MFS Utilities Series % MFS Utilities Series --------- ---------- % OpCap Advisors OCC Global Equity Portfolio % OpCap Advisors OCC Global Equity Portfolio --------- ---------- % OpCap Advisors OCC Managed Portfolio % OpCap Advisors OCC Managed Portfolio --------- ---------- Fixed Account: % 5 years % TOTAL (must = 100%) ------ ---------- % 1 year % 7 years ---------- ------- ------ % 3 years % 10 years ------- ------ % TOTAL (must = 100%) -------- -------- ---------------------------------------------------------- ------------------------------------------------------------ Page 2 - ----------------------------------------------------------------------------------------------------------------------------------- 6 AUTOMATIC BANK DRAFT - ----------------------------------------------------------------------------------------------------------------------------------- To: ATTACH VOIDED CHECK ----------------------------------------------------------------------------------------------- Bank name ABA number ---------------------------------------------------------------------------------------------------------------------- Bank street address City State ZIP Automatic bank draft start date: / / / / / / / / / / / $ Month Day(1-28) Year -------------------------- ----------------------- Checking account number Monthly amount I/We hereby request and authorize you to pay and charge to my/our account checks or electronic fund transfer debits processed by and payable to the order of Lincoln Life & Annuity Company of New York (LL & A), P.O. Box 7866, Fort Wayne, IN 46801-7866, provided there are sufficient collected funds in said account to pay the same upon presentation. It will not be necessary for any officer or employee of LL & A to sign such checks. I/We agree that your rights in respect to each such check shall be the same as if it were a check drawn on you and signed personally by me/us. This authority is to remain in effect until revoked by me/us, and until you actually receive such notice I/we agree that you shall be fully protected in honoring any such check or electronic fund transfer debit. I/We further agree that if any such check or electronic fund transfer debit be dishonored, whether with or without cause and whether intentionally or inadvertently, you shall be under no liability whatsoever even though such dishonor results in the forfeiture of insurance or investment loss to me/us. Date / / / / / / / / / / / --------------------------------------------- --------------------------------------- Month Day Year Signature(s) EXACTLY as shown on bank records --------------------------------------------- --------------------------------------- Print full legal name(s) - ----------------------------------------------------------------------------------------------------------------------------------- 7 AUTOMATIC WITHDRAWAL $10,000 minimum account balance required. - ----------------------------------------------------------------------------------------------------------------------------------- NOTE: WITHDRAWALS IN EXCESS OF 15% OF PREMIUM PAYMENTS IN ANY CONTRACT YEAR MAY BE SUBJECT TO WITHDRAWAL CHARGES. --------------------------------------------------------------- --------------------------------------------------------------- / / Please provide me with automatic withdrawals / / Please provide me with automatic withdrawals totaling 15% of premium payments payable as follows: of $ ----------------------------------- OR / / Monthly / / Quarterly / / Semiannually / / Annually / / Monthly / / Quarterly / / Semiannually / / Annually Begin withdrawals in / / / / / / / / Begin withdrawals in / / / / / / / / Month Year Month Year --------------------------------------------------------------- --------------------------------------------------------------- NOTE: IF NO TAX WITHHOLDING SELECTION IS MADE, FEDERAL TAXES WILL BE WITHHELD AT A RATE OF 10%. ELECT ONE: / / Do withhold taxes Amount to be withheld $ OR % ------------------- ------- / / Do not withhold taxes ELECT ONE: / / Send check to address of record OR / / Send check to the following alternate address: / / Direct deposit For direct deposit into your bank account, --------------------------------------------------------- Form 27326CP Electronic Fund Transfer Authorization must be completed and submitted --------------------------------------------------------- with a VOIDED check or a savings deposit slip. --------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 8 REPLACEMENT Will the proposed policy replace any existing annuity or life insurance contract? - ----------------------------------------------------------------------------------------------------------------------------------- ELECT ONE: / / NO / / YES IF YES, COMPLETE THE 1035 EXCHANGE OR QUALIFIED RETIREMENT ACCOUNT TRANSFER FORM. (Attach a replacement form if required by the state in which the application is signed.) -------------------------------------------------------------------------------------------------------------------------------- Company name -------------------------------------------------------------------------------------------------------------------------------- Plan name Year issued Page 3 - ----------------------------------------------------------------------------------------------------------------------------------- 9 SIGNATURES - ----------------------------------------------------------------------------------------------------------------------------------- All statements made in this application are true to the best of my knowledge and belief, and I agree to all terms and conditions as shown. I acknowledge receipt of the current prospectuses for Delaware-Lincoln ChoicePlus-SM- and verify my understanding that ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF THE FUNDS IN THE SERIES, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. I understand that all payments and values based on the fixed account are subject to a market value adjustment formula that may increase or decrease the value of any transfer, partial surrender, or full surrender from the fixed account made prior to the end of a guaranteed period. Under penalty of perjury, the Owner(s) certifies that the Social Security (or taxpayer identification) number(s) is correct as it appears in this application. --------------------------------------------------------------------------------------------- Signed at (city) State Date / / / / / / / / / / / --------------------------------------------------------------------------------------------- Month Day Year SIGNATURE OF OWNER --------------------------------------------------------------------------------------------- Signed at (city) State Date / / / / / / / / / / / --------------------------------------------------------------------------------------------- Month Day Year SIGNATURE OF ANNUITANT (ANNUITANT MUST SIGN IF OWNER IS A TRUST OR CUSTODIAN) Page 4 - ----------------------------------------------------------------------------------------------------------------------------------- THE FOLLOWING SECTIONS MUST BE COMPLETED BY THE SECURITIES DEALER OR FINANCIAL ADVISER. Please type or print. - ----------------------------------------------------------------------------------------------------------------------------------- 10 INSURANCE IN FORCE Will the proposed policy replace any existing annuity or life insurance certificate or contract? - ----------------------------------------------------------------------------------------------------------------------------------- ELECT ONE: / / NO / / YES IF YES, PLEASE LIST THE INSURANCE IN FORCE ON THE LIFE OF THE PROPOSED OWNER(S) AND ANNUITANT(S): (Attach a replacement form if required by the state in which the application was signed.) $ -------------------------------------------------------------------------------------------------------------------------------- Company name Year issued Amount - ----------------------------------------------------------------------------------------------------------------------------------- 11 ADDITIONAL REMARKS - ----------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 12 DEALER INFORMATION - ----------------------------------------------------------------------------------------------------------------------------------- NOTE: LICENSING APPOINTMENT WITH LL & A IS REQUIRED FOR THIS APPLICATION TO BE PROCESSED. IF MORE THAN ONE REPRESENTATIVE, PLEASE INDICATE NAMES AND PERCENTAGES IN SECTION 12. ----------------------------------------------------------------------------------- / / / / / / / / - / / / / / Registered representative's name (print as it appears on NASD licensing) Registered representative's telephone number / / / / - / / / - / / / / / ----------------------------------------------------------------------------------- Registered representative's SSN Client account number at dealer (if applicable) -------------------------------------------------------------------------------------------------------------------------------- Dealer's name -------------------------------------------------------------------------------------------------------------------------------- Branch address City State ZIP ------------------------------------------------- / / CHECK IF BROKER CHANGE OF ADDRESS Commission Options: / / 1 / / 2 / / 3 ------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 13 REPRESENTATIVE'S SIGNATURE - ----------------------------------------------------------------------------------------------------------------------------------- The representative hereby certifies that he/she witnessed the signature(s) in section 10 and that all information contained in this application is true to the best of his/her knowledge and belief. -------------------------------------------------------------------------------------------------------------------------------- Signature - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Send completed application -- with a check made payable to Lincoln Life & Annuity Company of New York -- to your investment dealer's home office or to: EXPRESS MAIL: DELAWARE-LINCOLN LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK CHOICE P.O. Box 7866 Attention: ChoicePlus-SM- Operations VARIABLE ANNUITY-SM- Fort Wayne, IN 46801-7866 1300 South Clinton Street 888-868-2583 Fort Wayne, IN 46802
Page 5 EX-99.(8)(A) 6 EXHIBIT 99.(8)(A) AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT THIS AGREEMENT is entered into on this 1st day of August, 1999 between LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LNY"), a life insurance company organized under the laws of the State of New York, on behalf of itself and the separate accounts established by LNY pursuant to New York Insurance law and set forth in Schedule A hereto (each a "Separate Account" and collectively the "Separate Accounts"), and LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), a corporation organized under the laws of the State of Indiana. Both LNY and LFA are indirect subsidiaries of Lincoln National Corporation. WITNESSETH: WHEREAS, LNY proposes to issue to the public certain variable annuity contracts and variable life insurance policies ("Contracts") and has, by resolution of its Board of Directors, authorized the creation of segregated investment accounts in connection therewith; and WHEREAS, LNY has established each Separate Account for the purpose of issuing the Contracts and has registered (unless an exemption from registration is available) each such Separate Account with the Securities and Exchange Commission ("Commission") as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, interests in the Separate Account portion of the Contracts to be issued by LNY are registered (unless an exemption from registration is available) with the Commission under the Securities Act of 1933 as amended (the "1933 Act") for offer and sale to the public, and otherwise are in compliance with all applicable laws; and WHEREAS, LFA is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the "1934 Act") and a member of the National Association of Securities Dealers, Inc., and proposes to enter into selling agreements for the distribution of said Contracts, as well as to sell said Contracts directly; and WHEREAS, LNY desires to obtain the services of LFA as principal underwriter of the Contracts issued by LNY through the Separate Accounts; NOW THEREFORE, in consideration of the foregoing, and of the mutual covenants and conditions set forth herein, and for other good and valuable consideration, LNY and LFA hereby agree as follows: DUTIES OF LFA 1. LFA will form a selling group by entering into selling group agreements with broker-dealers which have as associated individuals persons who are licensed to sell insurance 1 pursuant to the laws of the state of New York, or any other state in which LNY determines to issue Contracts ("Relevant State"), and appointed by LNY to distribute the Contracts which are issued by LNY through the Separate Accounts and interests in the Separate Account portion of which are registered (unless an exemption from registration is available) with the Commission under the 1933 Act for offer and sale to the public. 2. LFA will enter into and maintain a selling group agreement on behalf of itself and LNY with each broker-dealer (which has as associated persons individuals who are licensed to sell insurance pursuant to the laws of the state of New York or any Relevant State and appointed by LNY to distribute the Contracts) joining such selling group ("member"). An executed copy of each such selling group agreement will be provided to LNY. Any such selling group agreement will expressly be made subject to this Agreement. Any such selling group agreement will provide: (i) that each member will distribute the Contracts only in New York or any Relevant State in which the Contracts may be legally sold and only through duly licensed registered representatives of the members who are fully licensed and appointed with LNY to sell the Contracts in New York or any Relevant State; (ii) that all applications and initial and subsequent payments under the Contracts collected by the member will be forwarded promptly by the member to LNY or its designee at such address as it may from time to time designate; and (iii) that each member will comply with all applicable federal and state laws, rules and regulations in the sale of the Contracts. 3. LFA will not distribute any prospectus, sales literature, advertising material or any other printed matter or material relating to the Contracts or the mutual funds available as funding options under the Contracts ("Funds") if, to its knowledge, it misstates any of the foregoing relating to the duties, obligations or liabilities of LNY or LFA. LFA will be responsible for filing sales literature and advertising material, if necessary, with appropriate federal regulatory authorities, including NASD Regulation, Inc. and the National Association of Securities Dealers, Inc. (collectively "NASD"). 4. LFA shall not be responsible for (i) taking or transmitting applications for the Contracts; (ii) examining or inspecting risks or approving, issuing or delivering Contracts; (iii) receiving, collecting or transmitting payments; (iv) assisting in the completion of applications for Contracts; and (v) otherwise offering and selling Contracts directly to the public, except insofar as LFA shall sell Contracts directly through its own associated persons. 5. LFA will advise LNY immediately upon LFA's becoming aware of: (a) any request by the Commission for amendment of the registration statement relating to the Contracts or the Funds or for additional information; (b) the issuance by the Commission of any stop order suspending the effectiveness of the registration statement for the Contracts or for the Funds or the initiation of any proceeding for that purpose; (c) the institution of any proceeding, investigation or hearing involving the offer or sale of the Contracts or the Funds of which it becomes aware; or (d) the happening of any material event, if known, which makes untrue any statement made in the registration statement for the Contracts or for the Funds or which requires the making of a change therein in order to make any statement made therein not misleading. 2 DUTIES OF LNY 6. LNY or its agent will receive and process applications and premium payments in accordance with the terms of the Contracts. All applications for Contracts are subject to acceptance or rejection by LNY in its sole discretion. LNY will inform LFA of any such rejection and the reason therefor. 7. LNY will be responsible for filing the Contracts, applications, forms, sales literature and advertising material, where necessary, with appropriate insurance regulatory authorities. LNY will use reasonable efforts to provide information and marketing assistance to the members, including preparing and providing members with advertising materials and sales literature, and providing members with current prospectuses for the Contracts and of the underlying Funds. LNY will use reasonable efforts to ensure that members deliver to customers and prospective customers only the currently effective prospectuses for the Contracts and the Funds. LFA and LNY will cooperate in the development of advertising and sales literature, as each may request the other. LNY will deliver to members, and use reasonable efforts to ensure that members use, only sales literature and advertising material which conforms to the requirements of federal and state laws and regulations and which has been authorized by LNY and LFA. 8. LNY will furnish to LFA such information with respect to the Separate Account and Contracts in such form and signed by such of its officers as LFA may reasonably request, and will warrant that the statements therein contained when so signed will be true or correct. LNY will advise LFA immediately of: (a) any request by the Commission for amendment of the registration statement relating to the Contracts or any Fund or for additional information; (b) the issuance by the Commission of any stop order suspending the effectiveness of the registration statement for the Contracts or of any Fund or the initiation of any proceeding for that purpose; (c) the institution of any proceeding, investigation, hearing or other action involving the offer or sale of the Contracts or the Funds of which it becomes aware; (d) the happening of any material event, if known, which makes untrue any statement made in the registration statement for the Contracts or any Fund or which requires the making of a change therein in order to make any statement made therein not misleading. 9. LNY will use reasonable efforts to register for sale an indefinite amount of units of interest in the Contracts under the 1933 Act pursuant to Rule 24f-2 under the 1940 Act, and, should it ever be required, under state securities laws and to file for approval under state insurance laws when necessary. LNY will maintain the registration of each Separate Account under the 1940 Act and of its securities under the 1933 Act, unless exemptions from registration is available. 10. LNY will pay to members of the selling group such commissions, on behalf of and as agent of LFA, as are from time to time set forth in selling group agreements. LNY shall 3 pay such commissions and any service fees in compliance with applicable state insurance laws, applicable federal securities laws and the rules and regulations of the NASD. Such selling group agreements shall provide for the return of sales commissions by the members to LNY if Contracts are tendered for redemption to LNY in accordance with the right to examine or similarly worded provisions in the Contracts. 11. LNY will bear its expenses of providing services under this Agreement, including but not limited to, the cost of preparing (including typesetting costs), printing and mailing of prospectuses for the Contracts to Contract owners, expenses and fees of registering or qualifying the Contracts or interests therein and the Separate Account under federal or state laws, and any expenses incurred by its employees in assisting LFA in performing its duties hereunder. LNY will reimburse LFA for its services and for the services of its salaried employees, and provide reimbursement for LFA's charges and expenses. WARRANTIES 12. LNY represents and warrants to LFA that (i) registration statements (including amendments thereto) under the 1933 Act and under the 1940 Act with respect to the Contracts and the Separate Accounts have been filed with the Commission in the form previously delivered to LFA, and copies of any and all amendments thereto will be forwarded to LFA within 20 days from the time that they are filed with the Commission; (ii) the registration statements and any amendments or supplements thereto which have become effective, conform in all material respects to the requirements of the 1933 Act and the 1940 Act, and the rules and regulations of the Commission thereunder, and do not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statement or omission made in reliance upon and in conformity with information furnished in writing to LNY by LFA expressly for use therein; (iii) LNY is validly existing as a stock life insurance company in good standing under the laws of the State of New York, with power (corporate or other) to own its properties and conduct its business as described in the prospectus, and has been duly qualified for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification; (vi) the Contracts to be funded through the Separate Accounts have been duly and validly authorized and, when interests therein are issued and delivered against payment therefor as provided in the prospectus and in the Contracts, will be duly and validly issued and conform to the description of such Contracts contained in the prospectus relating thereto; (vi) LNY will only accept applications submitted by and pay commissions to persons who, to the best of LNY's knowledge, are appropriately licensed or appointed to offer and sell the Contracts under applicable state insurance laws; (vi) the performance of this Agreement and the consummation of the transactions herein contemplated will not result in a breach or violation of any of the terms or provisions of, or constitute a default under any statute, any indenture, mortgage, deed of trust, note agreement or other agreement or instrument to which LNY is a party or by which LNY is bound, LNY's Charter as a stock life insurance company or By-Laws, or any order, rule or regulation of any court or governmental 4 agency or body having jurisdiction over LNY or any of its properties; and no consent, approval, authorization or order of any court or governmental agency or body which has not been obtained by the effective date of this Agreement is required for the consummation by LNY of the transactions contemplated by this Agreement; and (vii) there are no material legal or governmental proceedings pending to which LNY or any Separate Account is a party or to which any property of LNY or any Separate Account is subject, other than litigation incidental to the kind of business conducted by LNY which, if determined adversely to LNY, would not individually or in the aggregate have a material adverse effect on the financial position, surplus or operations of LNY. 13. LFA represents and warrants to LNY that: (i) it is a broker - dealer duly registered with the Commission pursuant to the 1934 Act and a member in good standing of the National Association of Securities Dealers, Inc. and is in substantial compliance with the securities laws in those states in which it conducts business as a broker-dealer; (ii) the performance of its duties under this Agreement by LFA will not result in a breach or violation of any of the terms or provisions of or constitute a default under any statute, any indenture, mortgage, deed of trust, note agreement or other agreement or instrument to which LFA is a party or by which LFA is bound, the Certificate of Incorporation or By-Laws of LFA, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over LFA or its property; and (iii) it will use reasonable efforts to ensure that no offering, sale or other disposition of the Contracts will be made until it has been notified by LNY that the applicable registration statements (including any amendments thereto) have been declared effective and the particular Contracts have been released for sale by LNY, and that such offering, sale or other disposition shall be limited to those jurisdictions that have approved or otherwise permit the offer and sale of the Contracts by LNY; (iv) it will comply in all material respects with the requirements of state broker-dealer regulations and the 1934 Act as each applies to LFA and shall conduct its affairs in accordance with the Rules of the NASD; and (v) any information furnished in writing by LFA to LNY for use in the registration statement for the Contracts will not result in the registration statement's failing to conform in all material respects to the requirements of the 1933 Act and the rules and regulations thereunder or containing any untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading. MISCELLANEOUS 14. LFA shall maintain and preserve for the periods prescribed by law or other agreement such accounts, books and other documents as are required of it by applicable law and regulation. The books, records and accounts of LNY, of each Separate Account and LFA as to all transactions hereunder shall be maintained such that they clearly and accurately disclose the nature and details of such transaction, including such accounting information as is necessary to support the reasonableness of the amounts to be paid by LNY. 15. LFA makes no representation or warranty regarding the number of Contracts to be sold by licensed broker-dealers and insurance agents or the amount to be paid thereunder. LFA 5 does, however, represent that will actively engage in its duties under this Agreement on a continuous basis while the Agreement is in effect. 16. LFA may act as principal underwriter, sponsor, distributor or dealer for issuers other than LNY or its affiliates in connection with mutual funds or insurance products and otherwise. 17. Nothing in this Agreement shall obligate LNY to appoint any member or representative of a member its agent for purposes of the distribution of the Contracts. Nothing in this Agreement shall be construed as requiring LFA to effect sales of the Contracts directly to the public or act as an insurance agent or insurance broker on behalf of LNY for purposes of state insurance laws. 18. LFA agrees to indemnify LNY (or any control person, shareholder, director, officer or employee of LNY) for any liability incurred (including costs relating to defense of any action) arising out of any LFA act or omission relating to (i) rendering services under this Agreement or (ii) the purchase, retention or surrender of a Contract by any person or entity; provided, however that indemnification will not be provided hereunder for any such liability that results from the willful misfeasance, bad faith or gross negligence of LNY or from the reckless disregard by LNY of its duties and obligations arising under this Agreement. 19. LNY agrees to indemnify LFA (or any control person, shareholder, director, officer or employee of LFA) for any liability incurred (including costs relating to defense of any action) arising out of any LNY act or omission relating to (i) rendering services under this Agreement or (ii) the purchase, retention or surrender of a Contract by any person or entity; provided, however, that indemnification will not be provided hereunder for any such liability that results from the willful misfeasance, bad faith and gross negligence of LFA or from the reckless disregard by LFA of its duties and obligations arising from this Agreement. 20. This Agreement will terminate automatically upon its assignment, as that term is defined in the 1940 Act. The parties understand that there is no intention to create a joint venture in the subject matter of this Agreement. Accordingly, the right to terminate this Agreement and to engage in any activity not inconsistent with this Agreement is absolute. This Agreement will terminate, without the payment of any penalty by either party: a. at the option of LNY upon six months advance written notice to LFA; or b. at the option of LFA upon six months advance written notice to LNY; or c. at the option of LNY upon institution of formal proceedings against LFA by regulatory body; d. at the option of LFA upon the institution of formal proceedings against LNY by the Department of Insurance of a state or any other federal or state regulatory body; e. as otherwise required by the 1940 Act. 6 21. Each notice required by this Agreement shall be given in writing and delivered by certified mail-return receipt requested. 22. This agreement shall be subject to the laws of the State of New York and construed so as to interpret the Contracts as insurance products written within the business operation of LNY. 23. This Agreement covers and includes all agreements, oral and written (expressed or implied) between LNY and LFA with regard to the marketing and distribution of the Contracts, and supersedes any and all Agreements between the parties with respect to the subject matter of this Agreement. 24. This Agreement may be amended from time to time by mutual agreement and consent of the undersigned parties, provided such amendment is in writing and duly executed. 25. Schedule A hereto may be amended unilaterally by LNY from time to time by written notice to LFA. 26. Notwithstanding LFA's role as principal underwriter, nothing in this Agreement shall prevent LFA from selling any Contract described herein to its own customers, subject to the terms and conditions contained in the selling group agreement entered into between LFA and other broker-dealers, as the terms of such selling group agreement are amended from time to time. This Agreement shall become effective on June , 1999 27. All notices given or submitted pursuant to this Agreement shall be made in writing and shall be deemed given when (a) deposited with the United States Postal Service, postage prepaid, registered or certified mail, return receipt requested; (b) deposited with a nationally recognized overnight mail delivery services; (c) sent by facsimile with electronic confirmation of delivery or with a copy sent by mail as described in (a) or (b) above; or (d) delivered in person; all to the last address of record of each party being notified. Any notice under this Agreement to LNY shall be given to: ATTN: Troy D. Panning 2nd Vice President and Chief Financial Officer Lincoln Life & Annuity Company of New York 120 Madison Street, Suite 1700 Syracuse, NY 13202 Phone: (315) 428-8411 Facsimile: (315) 428-8419 With a copy to: Robert O. Sheppard, Esq. Corporate Counsel Lincoln Life & Annuity Company of New York 120 Madison Street, Suite 1700 Syracuse, NY 13202 Phone: (315) 428-8420 Facsimile: (315) 428-8419 Any notice under this Agreement to LFA shall be given to: ATTN: Richard C. Boyles 2nd Vice President and Controller 200 East Berry Street Fort Wayne, IN 46802 Phone: (219) 455-3158 Facsimile: (219) 455-6535 This Agreement shall become effective on August 1, 1999. 7 IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be duly executed and attested on the date first stated above. LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK Attest: /s/ KATHLEEN GORMAN By: /s/ JOANNE B. COLLINS - --------------------------- ----------------------------- LINCOLN FINANCIAL ADVISORS CORPORATION Attest: /s/ TRINA MILLS By: /s/ ROBERT C. BOYLES - --------------------------- ----------------------------- 8 SCHEDULE A LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK SEPARATE ACCOUNTS Lincoln Life & Annuity Variable Annuity Account L (Group Variable Annuity 1) Established 7/24/96 Lincoln Life & Annuity Variable Annuity Account L (Group Variable Annuity II) Established 7/24/96 Lincoln Life & Annuity Variable Annuity Account L (Group Variable Annuity III) Established 7/24/96 Lincoln Life & Annuity Flexible Premium Variable Life Account M Established 11/24/97 LLANY Separate Account N for Variable Annuities Established 3/11/99 LLANY Account Q for Variable Annuities Established 1/29/98 LLANY Separate Account R for Flexible Premium Variable Life Insurance Established 1/29/98 LLANY Separate Account S for Flexible Premium Variable Life Insurance Established 3/11/99 9 EX-99.(8)(B) 7 EXHIBIT 99.(8)(B) WHOLESALING AGREEMENT AGREEMENT dated as of October , 1999 by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK ("LNY"), a New York insurance corporation, LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), an Indiana corporation, in its capacity as principal underwriter for one or more of LNY's life insurance and/or annuity separate accounts, and DELAWARE DISTRIBUTORS, L.P., a Delaware limited partnership (hereinafter referred to as "DELAWARE"). WITNESSETH: WHEREAS, LNY issues and sells certain variable annuity and variable life insurance contracts and uses LFA as its principal underwriter for such contracts; and WHEREAS, LNY, LFA and DELAWARE desire to establish an arrangement whereby DELAWARE will act as a wholesaler for such variable annuity and variable life insurance contracts and, as such, will recruit business firms to distribute such contracts; NOW, THEREFORE, in consideration of their mutual promises, LNY, LFA and DELAWARE hereby agree as follows: 1. DEFINITIONS a. 1933 ACT - The Securities Act of 1933, as amended. b. 1934 ACT - The Securities Exchange Act of 1934, as amended. c. 1940 ACT - The Investment Company Act of 1940, as amended. d. ACCOUNT - Each and any separate account established by LNY and listed on Schedule 1.d to this Agreement, as amended from time to time in accordance with Section 2.e of this Agreement. The phrase "Account supporting the Contracts" or "Account supporting a class of Contracts" shall mean the separate account identified in such Contracts as the separate account to which the Purchase Payments made, net of any front-end charges, under such Contracts are allocated and as to which income, gains ad losses, whether or not realized, from assets allocated to such separate account, are, in accordance with such Contracts, credited to or charged against such separate account without regard to other income, gains, or losses of LNY or any other separate account established by LNY. e. ASSOCIATED PERSON - This term as used in this Agreement shall have the meaning assigned to it in the 1934 Act. f. BROKER - An entity registered as a broker-dealer and licensed as a life insurance agency or associated with an entity so licensed in accordance with any applicable SEC no-action letter, and recruited by DELAWARE and subsequently authorized by LNY to distribute the Contracts pursuant to the sales agreement with LFA entered into in accordance with Section 3 of this Agreement. g. CONTRACTS - The variable annuity contracts or variable life insurance contracts described more specifically on Schedule 1.g to this Agreement, as amended from time to time pursuant to Section 2.e. The term "Contracts" shall include any riders to such contracts and any other contracts offered in connection therewith or any contracts for which such Contracts may be exchanged or converted. The 1 phrase "a class of Contracts" shall mean those variable annuity contracts or variable life insurance contracts, as the case may be, issued on the same policy form or forms and covered by the same Registration Statement, as shown on Schedule 1.g to this Agreement. h. DISTRIBUTOR - LINCOLN FINANCIAL ADVISORS CORPORATION, principal underwriter for the Contracts. i. FUND - any fund or series thereof in which an Account supporting the Contracts invests. (Plural, "Funds") j. FUND PROSPECTUS - At any time while this Agreement is in effect, the prospectus for a Fund most recently filed with the SEC pursuant to Rule 485 and Rule 497 under the 1933 Act. (For purposes of Section 11 of this Agreement, however, the term "Fund Prospectus" means any document that is or at any time was a Fund Prospectus within the meaning of this Section 1.j.) k. FUND REGISTRATION STATEMENT - At any time while this Agreement is in effect, the currently effective registration statement of a fund filed with the SEC under the 1933 Act, or currently effective post-effective amendment thereto, for shares of a fund. (For purposes of Section 11 of this Agreement, however, the term "Fund Registration Statement" means any document that is or at any time was a Fund Registration Statement within the meaning of this Section 1.k.) l. NASD - Collectively, The National Association of Securities Dealers, Inc. ("Association") and NASD Regulation, Inc. ("NASDR"). m. PARTICIPATION AGREEMENT - an agreement between LNY and a Fund relating to the investment of assets of LNY separate accounts in such Fund. n. PROCEDURES - The administrative procedures prepared and distributed by LNY or LFA, as such may be amended or supplemented from time to time, relating to the solicitation, sale, issue and delivery of the Contracts. o. PROSPECTUS - At any time while this Agreement is in effect, the current prospectus relating to the Contracts most recently filed with the SEC pursuant to Rule 485 or Rule 497 of the 1933 Act. (For purposes of Section 5.a and 11 of this Agreement, however, the term "any Prospectus" means any document that is or at any time was a Prospectus within the meaning of this Section 1.o.) p. PREMIUM PAYMENT - a payment made under a Contract by an applicant or purchaser to purchase benefits under the Contract. q. REGISTRATION STATEMENT - At any time while this Agreement is in effect the pending or currently effective registration statement (including post-effective amendments) filed with the SEC under the 1933 Act, as applicable, relating to a class of Contracts, including financial statements included in, and all exhibits to, such registration statement or post-effective amendment. (For purposes of Sections 5.a and 11 of this Agreement, however, the term "Registration Statement" means any document that is or at any time was a Registration Statement within the meaning of this Section 1.q.) r. REGULATIONS - The rules and regulations promulgated by the SEC under the 1933 Act, the 1934 Act and the 1940 Act, and the rules and regulations of the NASD, as in effect at the time this Agreement is executed or thereafter promulgated, and as they may be amended from time to time. 2 s. REPRESENTATIVE - An Associated Person of DELAWARE or a Broker registered with the NASD as a registered representative or principal of DELAWARE or Broker, as the case may be. t. SEC - The Securities and Exchange Commission. u. STATE - Any state or commonwealth of the United States, the District of Columbia or any other territory of the United States. v. TERRITORY - Any State or territory of the United States (including the District of Columbia) where the contracts have been filed and approved for sale by the appropriate regulatory authorities. w. WHOLESALER - DELAWARE when it performs the functions assigned to it in this agreement (including, but not by way of limitation, those functions set forth in Sections 2, 3 and 4 hereof). 2. APPOINTMENT AND WHOLESALING DUTIES a. LNY and LFA hereby authorize DELAWARE under applicable securities laws to engage in the activities contemplated in this Agreement relating to the wholesaling of the Contracts for which LFA acts as principal underwriter. b. DELAWARE undertakes to use its best efforts to contact, recruit, screen, and recommend Brokers in accordance with Section 3 of this Agreement, consistent with market conditions and compliance with its responsibilities under the federal securities laws and regulations. c. (1) The appointment and authorization of DELAWARE to engage in wholesaling activities pursuant to this Agreement is exclusive as to the Contracts listed on Schedule 1.g, as amended from time to time in accordance with Section 2.e of this Agreement. LNY and LFA shall not authorize any other person to engage in wholesaling activities with respect to the Contracts or to recruit business firms to engage in wholesaling activities with respect to the Contracts (other than business firms recommended by DELAWARE pursuant to Section 3 of this Agreement) without DELAWARE's prior written consent, nor shall LNY and LFA separately engage in wholesaling or distribution activities relating to the Contracts. Nothing in this Agreement, however, shall preclude or limit LFA's ability to distribute the Contracts through its own registered representative. (2) To the extent that any Contract offers a general account option, LNY shall, if required by the SEC, register that option under the 1933 Act. (3) LNY shall register each Account with the SEC. The subaccounts of each Account available under the Contracts or a class of Contracts are listed on Schedule 1.a to this Agreement, as amended form time to time in accordance with Section 2.e of this Agreement. d. LNY shall obtain appropriate authorizations, to the extent necessary, whether by Registration, qualification, approval or otherwise, for the issuance and sale of the Contracts in any State. From time to time LNY shall notify DELAWARE in writing of all States other than New York in which each class of Contract may then lawfully be offered. e. The parties to this Agreement may amend Schedules 1.d and 1.g to this Agreement from time to time by mutual agreement to reflect changes in or relating to the Contracts and the Accounts and to add new classes of variable 3 annuity contracts and variable life insurance contracts to be issued by LNY for which DELAWARE will act as wholesaler. The provisions of this Agreement shall be equally applicable to each such class of Contracts, unless the context otherwise requires. Schedule 9.a to this Agreement may be amended only by mutual agreement of the parties to this Agreement pursuant to Section 9 of this Agreement. f. Either party may recommend the addition of funding options for one or more Accounts. DELAWARE will have final approval of fund additions (including additions pursuant to substitutions) as long as each such addition satisfies LNY's then current selection criteria. 3. RECRUITMENT OF BROKERS AND RELATED RESPONSIBILITIES a. LNY hereby authorized DELWARE to contact, recruit, screen, and recommend to LNY and LFA business firms appropriate to act as Brokers for the sale of the Contracts, and DELAWARE agrees to do so. DELAWARE will use its best efforts, upon diligent inquiry, to recruit only Brokers. LNY shall have the right to reject any such recommendation, but shall not do so arbitrarily or unreasonably. b. LNY shall have the responsibility for and bear the cost of: (i)executing appropriate sales agreements with the business firms recommended by DELAWARE; and (ii) appointing and renewing appointments for, such business firms, and/or Associate Persons of such firms, as insurance agents of LNY in those states where such business firms and/or Associated Persons possess insurance agent licenses (except as provided in Section 9.c hereof). DELAWARE shall provide LNY with such information as LNY requests for this process. Neither DELAWARE nor LFA nor LNY shall have responsibility for, or bear the cost of, any registration or licensing of Brokers or any of their Associated Persons with the SEC, NASD or any state insurance governmental or regulatory agency. LNY shall maintain the appointment records of all agents appointed by LNY to distribute the Contracts contemplated by this Agreement. c. Any sales agreement entered into by LFA with a Broker shall provide that: (1) The Broker (or an affiliated person duly registered as a broker-dealer with the SEC) shall train, supervise, and be solely responsible for the conduct of, all of its Associated Persons in the proper method of solicitation, sale and delivery of the Contracts for the purpose of complying on a continuous basis with the NASD Conduct Rules and with federal and state securities and insurance law requirements applicable in connection with the offering and sale of the Contracts; (2) Premium Payments shall be made payable to LNY and shall be delivered together with all applications and related information in accordance with the Procedures; (3) The Broker shall be solely responsible for all compensation paid to its Representatives and all related tax reporting that may be required under applicable law; (4) The Broker and its Representatives shall not use, develop or distribute any promotional, sales or advertising material that has not been approved in writing by LNY and filed with the appropriate governmental or regulatory agencies; and (5) The Broker shall not have authority, on behalf of LNY, LFA or DELAWARE, to make, alter or discharge any Contract or other contract entered 4 into pursuant to a Contract; to waive any Contract forfeiture provision; to extend the time of paying any Premium Payment; to receive any monies or Premium Payments (except for the sole purpose of forwarding monies or Premium Payments to LNY); or to expend, or contract for the expenditure of, funds of LNY, LFA or DELAWARE. d. DELAWARE shall provide assistance to LNY at a level acceptable to LNY, to facilitate the appointment of Brokers and their Representatives. e. DELAWARE shall train, supervise, and be solely responsible for the conduct of, all of its Associated Persons (but not Brokers or their Representatives unaffiliated with DELAWARE), for the purpose of complying on a continuous basis with the NASD Conduct Rules and with federal securities laws and state securities and insurance laws applicable to the wholesaling activities contemplated in this Agreement. DELAWARE shall be responsible for the maintenance and updating of broker-dealer or agent registrations that they determine to be necessary for themselves and/or their Associated Persons pursuant to any federal or state securities law or state insurance law. f. DELAWARE, LFA and LNY will have no supervisory responsibility (as such supervision is contemplated by the 1934 Act or the NASD's Conduct Rules) with respect to Brokers or their Representatives. Under no circumstances will DELAWARE be responsible for Brokers' or Broker's Representatives' failure to comply with the Procedures. g. DELAWARE shall not have authority on behalf of LNY or LFA to make, alter or discharge any Contract or other contract entered into to extend the time of paying any Premium Payment; or to receive any monies or Purchase Payments. DELAWARE shall not expend, nor contract for the expenditure of, funds of LNY or LFA; nor shall DELAWARE possess or exercise any authority on behalf of LNY or LFA other than that expressly conferred on DELAWARE by this Agreement. h. DELAWARE shall act as an independent contractor in the performance of its duties and obligations under this Agreement, and nothing contained in this Agreement shall constitute DELAWARE or its respective Associated Persons employees of LNY or LFA in connection with the wholesaling activities contemplated by this Agreement or otherwise. i. DELAWARE shall not purchase Contracts from, nor sell Contracts for, LNY, nor shall it have any direct or indirect participation in such undertakings, and nothing contained in this Agreement shall constitute DELAWARE an "underwriter" or a "principal underwriter" of any of the Contracts, as those terms are defined in the 1933, 1934 or 1940 Acts. j. The Distributor of the Contracts, as the term "Distributor" is customarily used in the variable insurance products industry, shall be LFA. LNY shall be identified as such in all sales, promotional, and advertising materials for the Contracts. 4. MARKETING AND SALES MATERIAL a. (1) DELAWARE shall be responsible for drafting and designing all promotional, sales and advertising materials to be developed for filing pursuant to section 4(a)(3). LNY and LFA will cooperate with DELAWARE in the 5 development of these materials. No such materials shall be used without the prior approval of LNY and LFA, which approval shall not be unreasonably withheld. (2) LNY/LFA shall be responsible for maintaining that portion of any World Wide Web site(s) relating to the Contracts and their distribution. DELAWARE will not, without prior authorization in writing from LNY or LFA, establish direct or indirect hyperlinks or other electronic connections between the Web site(s) described in the preceding sentence and any current or future Web site(s) in use or to be used for or in connection with any other products or services. (3) (a) DELAWARE shall be responsible for filing with the NASD, as required, all promotional, sales and advertising material developed for use with the Contracts, and shall be responsible for doing any necessary followup with the NASD. LFA shall provide DELAWARE with final copies of all such material developed it or by LNY, and shall not use such material until DELAWARE has informed LFA that such material has been filed with and where appropriate, reviewed by, the NASD. LFA and DELAWARE agree to cooperate in implementing requests for changes received from the NASD. (b) LNY shall be responsible for filing, as required, all promotional, sales and advertising material, developed for use with the Contracts, with any other federal or state governmental or regulatory agencies, including any state insurance governmental or regulatory agencies. (4) With respect to all promotional, sales and advertising material developed by DELAWARE, LFA and LNY shall have a reasonable period of time, not to exceed five full business days, for review of each of such material. In response to this material, LFA may provide to DELAWARE: (1) changes, if any, which LFA deems mandatory; and (2) changes which LFA deems optional. DELAWARE will make the mandatory changes. In addition, DELAWARE may make the optional changes, at its discretion. Once DELAWARE has completed the processing of all changes, DELAWARE will provide proof copy to LFA for LFA's final approval before the materials are filed with the NASD and disseminated to Brokers and/or to the public. b. DELAWARE acknowledges that LNY shall have the unconditional right to reject, in whole or in part, any application for a Contract. In the event an application is rejected, any Premium Payment submitted will be returned by or on behalf of LNY. In that event, LNY or LFA on its behalf will use its best efforts to so notify DELAWARE when it notifies the Broker/Dealer which submitted the Premium Payment. In the event that a purchaser exercises the free look right under the Contract, any amount to be refunded as provided in such Contract will be so refunded to the purchaser by or on behalf of LNY. LNY will follow the same notification procedure that it uses for rejected applications. c. (1) DELAWARE will bear the cost of printing and mailing: (a) all preliminary and definitive Contract Prospectuses used for sales purposes; and (b) all preliminary and definitive Fund Prospectuses used for sales purposes, except to the extent that these expenses are borne by a Fund pursuant to the relevant Fund Participation Agreement. 6 (2) LNY will bear the cost of: (a) preparing, printing and mailing all preliminary and definitive Contract Prospectuses used for other than sales purposes; and (b) printing and mailing all preliminary and definitive Fund Prospectuses used for other than sales purposes, except to the extent that these expenses are borne by a Fund pursuant to the relevant Fund Participation Agreement. d. DELAWARE will pay the following expenses contemplated by this Agreement for: (i) the compensation, if any, of its Associated Persons; (ii) expenses associated with the initial and ongoing NASD licensing and training of its Associated Persons involved in the wholesaling activities; (iii) the drafting, design, printing and mailing of all promotional, sales or advertising material developed by DELAWARE for use in connection with the distribution of the Contracts; (iv) expenses associated with telecommunications with LNY and LFA at the sites of DE LAWARE or its Associated Persons, including site installations and purchases, leases or rentals of modems, terminals and other hardware, and lease line telephone charges for their Associated Persons; (v) continuing education courses sponsored by DELAWARE for all Brokers and relating to the contracts; (vi) fees associated with NASD filings of promotional, sales or advertising material developed by DELAWARE; (vii) development and maintenance of DELAWARE's Internet Web sites and related functions; (viii) media advertising and promotion (e.g., broker trade journals) for use in connection with the distribution of the Contracts; and (ix) any other expenses incurred by DELAWARE or its Associated Persons for the purpose of carrying out the obligations of DELAWARE hereunder. e. LNY will pay all expenses in connection with: (i) the preparation and filing with appropriate governmental or regulatory agencies of the Registration Statement and each preliminary Prospectus and definitive Prospectus; (ii) the preparation and issuance of the Contracts; (iii) any authorization, registration, qualification or approval of the Contracts required under the securities, blue-sky laws or insurance laws of the States; (iv) registration fees for the Contracts payable to the SEC or to any other governmental or regulatory agency; (v) the mailing of Prospectuses for the Contracts and Fund Prospectuses and any supplements thereto, as required by federal securities laws, and proxy soliciting materials and periodic reports relating to a Fund or the Accounts to Contractowners; (vi) the printing of applications, the Procedures and any other administrative forms utilized in connection with the servicing of the Contracts; (vii) compensation as provided in Section 9 hereof; (viii) the design and maintenance of any product-specific Web site for the contracts, if LNY determines that such a Web site is necessary or advisable; and (ix) any other expenses related to the distribution of the Contracts except as provided in Sections 4.c and 4.d of this Agreement. f. Except to the extent for which DELAWARE is responsible under section 6.5 hereof, LNY alone shall be responsible for and bear the cost of administration of the Contracts following their issues, including all Contractowner service and communication activities. 7 g. LFA will confirm to each owner of a Contract, in accordance with Rule 10b-10 under the 1934 Act, LNY's acceptance of Premium Payments and such other transactions as are required by Rule 10b-10 or administrative interpretations thereunder and in accordance with Release 8389 under the 1934 Act. Except for material which is required by law to accompany these confirmations, nothing shall be included with them that has not been approved in advance by LNY or LFA and DELAWARE. 5. REPRESENTATIONS AND WARRANTIES a. LNY represents and warrants to DELAWARE, as of the effective date of each Registration Statement for the Contracts (or class of Contracts) and at each time that a Contract is sold, as follows: (1) The Registration Statement has been declared effective by the SEC or has become effective in accordance with the Regulations. (2) The Registration Statement and the Prospectus each comply in all material respects with the provisions of the 1933 Act and the 1940 Act and the Regulations, and neither the Registration Statement nor the Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made; provided, however, that none of the representations and warranties in this Section 5.a(2) shall apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to LNY in writing by DELAWARE expressly for use in the Registration Statement. (3) LNY has not received notice from the SEC with respect to the Registration Statement or the Account supporting the Contracts described in the Registration Statement pursuant to Section 8(e) of the 1940 Act and no stop order under the 1933 Act has been issued and no proceeding therefor has been instituted or threatened by the SEC. (4) The accountants who certified the financial statements included the Registration Statement and Prospectus are independent public accountants as required by the 1933 Act, the 1940 Act and the Regulations. (5) The financial statements included in the Registration Statement for the Account and for LNY present fairly the respective financial positions of LNY and the Account supporting the Contracts described in the Registration Statement as of the dates indicated; and, for the Account, such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis, and for LNY, such financial statements have been prepared in conformity with statutory accounting principles in the United States applied on a consistent basis. (6) Subsequent to the respective dates as of which information is given in the Registration Statement or the Prospects, there has not been any material adverse change in the condition, financial or otherwise, of LNY or the Account supporting the Contracts described in the Registration Statement that would cause such information to be materially misleading. (7) LNY has been duly organized and is validly existing as a corporation in good standing under the laws of New York, with full power and authority to own, 8 lease and operate its properties and conduct its business in the manner described in the Prospectus, is duly qualified to transact the business of a life insurance company and is validly existing or in good standing in each State in which the Contracts are or will be offered. (8) Each Account supporting the Contracts described in the Registration Statement has been duly authorized and established and is validly existing as an insurance company separate account under the laws of New York and is duly registered with the SEC as a unit investment trust under the 1940 Act. (9) The form of the Contracts has been (or, before it is offered for sale, will be) approved to the extent required by the New York Superintendent of Insurance and by the governmental agency responsible for regulating insurance companies in each other state in which the Contracts are offered. (10) The execution and delivery of this Agreement and the consummation of the transactions contemplated in this Agreement have been duly authorized by all necessary corporate action by LNY and when so executed and delivered this Agreement will be the valid and binding obligation of LNY enforceable in accordance with its terms. (11) LNY has filed with the SEC all statements and other documents required for registration under the provisions of the 1940 Act and the Regulations thereunder for the Account supporting the Contracts described in the Registration Statement, and such registration is (or, prior to being offered to the public, will be) effective; there are no agreements or documents required by the 1933 Act, the 1940 Act or the Regulations to be filed with the SEC as exhibits to the Registration Statement that have not been so filed; and LNY has obtained all exemptive or other orders of the SEC necessary to make the public offering and consummate the sale of the Contracts pursuant to this Agreement and to permit the operation of the Account supporting the Contracts described in the Registration statement, as contemplated in the Prospectus. (12) The Contracts have been duly authorized by LNY and conform to the descriptions thereof in the Registration Statement and the Prospectus and, when issued as contemplated by the Registration Statement, will constitute legal, validly issued and binding obligations of LNY in accordance with their terms. b. DELAWARE represents and warrants to LNY and LFA on the date hereof as follows: (1) DELAWARE has been duly organized and is validly existing as a limited partnership in good standing under the laws of Delaware with full power and authority to own, lease and operate its properties and conduct its business as a broker-dealer registered with the SEC and with the securities commission of every State where such registration is required, and is a member in good standing of the NASD. (2) DELAWARE has taken all action including, without limitation, those necessary under its limited partnership agreement, by-laws and applicable state law, necessary to authorize the execution, delivery and performance of this Agreement and all transactions contemplated hereunder. (3) DELAWARE is and during the term of this Agreement shall remain duly registered as a broker-dealer under the 1934 Act, a member in good standing with 9 the NASD, and duly registered as a broker-dealer under applicable state securities laws. c. LFA represents and warrants to DELAWARE in the date hereof as follows: (1) Delaware has been duly organized and is validly existing as a limited partnership in good standing under the laws of Indiana with full power and authority to own, lease and operate its properties and conduct its business as a broker-dealer registered with the SEC and with the securities commission of every State where such registration is required, and is a member in good standing of the NASD. (2) DELAWARE has taken all action including, without limitation, those necessary under its charter, by-laws and applicable state law, necessary to authorize the execution, delivery and performance of this Agreement and all transactions contemplated hereunder. (3) DELAWARE is and during the term of this Agreement shall remain duly registered as a broker-dealer under the 1934 Act, a member in good standing with the NASD, and duly registered as a broker-dealer under applicable state securities laws. 6. ADDITIONAL RESPONSIBILITIES OF LNY a. LNY shall: (1) maintain the registration of the Contracts with the SEC and any state securities commissions of any State where the securities or blue-sky laws of such State require registration of the Contracts, including without limitation using its best efforts to prevent a stop order from being issued or if a stop order has been issued using its best efforts to cause such stop order to be withdrawn; (2) maintain the approval or other authorization of the Contract forms where required under the insurance laws and regulations of any State; (3) keep such registration, approval and authorization in effect thereafter so long as the Contracts are outstanding, to the extent required by law; and b. During the term of this Agreement, LNY shall take all action required to cause each class of Contracts to comply, and to continue to comply, as annuity contracts or life insurance contracts, as the case may be, and to cause the Registration Statement and the Prospectus for each class of Contracts to comply, and to continue to comply, with all applicable federal laws and regulations and all applicable laws and regulations of each State. c. LNY, during the term of this Agreement, shall notify DELAWARE immediately: (1) When each Registration Statement (or amendment or supplement to it) has become effective; (2) Of the initiation of any legal proceeding commenced by any regulatory body or by any third party alleging that any material statement made in a Registration Statement or a Prospectus is untrue in any material respect or results in a material omission in a Registration Statement or Prospectus; (3) Of the issuance by the SEC of any stop order with respect to a Registration Statement or any amendment thereto; or the initiation by the SEC of any proceedings for that purpose or for any other purpose relating to the registration and/or offering of the Contracts (or class of Contracts); 10 (4) Of all those States in which registration of the Contracts (or class of Contracts) is required under the securities or blue-sky laws, and the date on which such registrations have become effective. d. LNY shall furnish to DELAWARE without charge, promptly after filing, on copy of each Registration Statement as originally filed, including financial statements and all exhibits (including exhibits incorporated therein by reference). e. LNY shall file in a timely manner all reports, statements and amendments required to be filed by or for each Account or class of Contracts under the 1933 Act and/or the 1940 Act or the Regulations. f. LNY shall provide DELAWARE access to such records, officers and employees of LNY and of each Account at reasonable times as is necessary to enable DELAWARE to fulfill its obligations under the federal securities laws, Regulations and NASD rules. 6.5 ADDITIONAL RESPONSIBILITIES OF DELAWARE DELAWARE shall: a. assist LNY with certain administrative activities relating to the Contracts, to the extent agreed upon from time to time by LNY and DELAWARE. b. provide LNY and LFA access to such of its records, officers and employees at reasonable times as is necessary to enable each of LNY and LFA to fulfill its obligations under the federal securities laws and the Regulations. c. be responsible for duplication and distribution of illustration and asset allocation software programs originated by LNY. 7. CONFIDENTIALITY AND INTELLECTUAL PROPERTY RIGHTS OF DELAWARE, LNY AND LFA a. LNY acknowledges that the names and addresses of all customers and prospective customers (for purposes of this Section 7.a, the terms "customers" and "prospective customers" shall not mean Brokers) of any Broker that may come to the attention of LNY or LFA as a result of its relationship with any Broker and not from any independent source, are confidential and shall not be used by LNY or LFA for any purpose whatsoever, except (1) as agreed upon between LNY or LFA and any Broker; and (2) as may be necessary in connection with the administration of the Contracts sold by the Brokers, including responses to specific requests made to LNY for service by Contractowners or efforts to prevent the replacement of such Contracts or to encourage the exercise of options under the terms of the Contracts. The restrictions set forth in the previous sentence do not apply if and to the extent a Broker knowingly discloses the names and addresses of its customers or prospective customers to LNY or LFA outside the operation of this Agreement. In no event shall the names and addresses of such customers and prospective customers be furnished by LNY to any other person not affiliated with LNY or LFA. The intent of this paragraph is that LNY and LFA shall not utilize or permit to be utilized (other than as provided above) its knowledge of any Broker, derived as a result of the relationship created through the funding and sale of the Contracts, for the solicitation of sales of any product or 11 service other than the Contracts. This paragraph shall remain operative and in full force and effect regardless of the termination of this Agreement, and shall survive any such termination. b. The intellectual property rights of the parties are set forth in Exhibit A to this Agreement, which is hereby incorporated herein by this reference. 8. RECORDS LNY, LFA and DELAWARE each shall maintain such accounts, books and other documents as are required to be maintained by each of them by applicable laws and regulations and shall preserve such accounts, books and other documents for the periods prescribed by such laws and regulations. The accounts, books and records of LNY, the Account, LFA and DELAWARE as to all transactions hereunder shall be maintained so as to clearly and accurately disclose the nature and details of the transactions, including such accounting information as necessary to support the reasonableness of the amounts paid by LNY hereunder. Each party shall have the right to inspect and audit such accounts, books and records of the other party during normal business hours upon reasonable written notice to each other party. Each party shall keep confidential all information obtained pursuant to such an inspection or audit, and shall disclose such information to third parties only upon receipt of written authorization from the other party, except as required under compulsion of law. 9. COMPENSATION a. BASIS. (1) LNY shall compensate DELAWARE for sales of the Contracts by the Brokers pursuant to Schedule 9.a to this Agreement, as such Schedule may be amended from time to time upon mutual agreement of the parties to this Agreement. Such compensation shall be based on Premium Payments received and accepted by LNY for all Contracts issued on applications obtained by the Brokers or any of their respective Representatives. LNY will pay compensation due DELAWARE in accordance with the procedures set forth on Schedule 9.a. The compensation provided for in this Section 9 shall cease after the termination date of the Agreement. (2) If LNY informs DELAWARE that any State, by insurance rule, regulation or statue, prohibits any payment of compensation by LNY to a class of business entities including DELAWARE, DELAWARE shall designate in writing a business entity or natural person, including an insurance agency affiliate of DELAWARE meeting the requirements of such State, to receive any amounts that may otherwise be payable to DELAWARE hereunder, and LNY shall have the right to rely upon the legality of all such designations. DELAWARE may change such designation from time to time, upon prior written notice to LNY. Any payments made by LNY to any person or entity so designated by DELAWARE shall discharge LNY's liability to DELAWARE hereunder. (3) If a purchaser rescinds a Contract or exercises a right to surrender a contract for return of all Premium Payments, DELAWARE will repay to LNY, on demand, the amount of any compensation it received on the Premium Payments returned. 12 b. INDEBTEDNESS. Nothing in this Agreement shall be construed as giving DELAWARE the right to incur any indebtedness on behalf of LNY. c. RENEWAL APPOINTMENT FEES FOR LOW-PRODUCING FIRMS AND ASSOCIATED PERSONS. LNY shall consult with DELAWARE prior to any refusal by LNY, on grounds of insufficient production of premium income for LNY products, to renew the appointment of any firm or Associated Person appointed to LNY under Section 3.b above. DELAWARE shall not unreasonably object to any such non-renewal. d. REPORTING. DELAWARE shall be responsible for all tax reporting information DELAWARE is required to provide under applicable tax law to its Associated Persons with respect to the Contracts. Nothing contained in this Agreement or any sales agreement with a Broker is to be construed to require DELAWARE to provide any tax reporting information directly or indirectly to any unaffiliated Broker or its Representatives. 10. INVESTIGATION AND PROCEEDINGS a. LNY, LFA and DELAWARE will cooperate fully in any securities or insurance regulatory investigation or proceeding, or judicial proceeding brought by any regulatory authority, arising in connection with the offering, sale or distribution of the Contracts for which DELAWARE acts as wholesaler pursuant to this Agreement. Without limiting the foregoing, each party agrees to furnish to the other party any official notices received about these proceedings. (1) In the case of a complaint involving the terms of the Contract, DELAWARE will provide LNY and LFA with all available information and will cooperate fully in LNY's and LFA's investigation of the complaint. (2) In the case of a complaint involving DELAWARE, LNY or LFA will provide DELAWARE with all available information and will cooperate fully in DELAWARE's investigation of the complaint. 11. INDEMNIFICATION a. LNY shall indemnify and hold harmless DELAWARE and any officer, director, employee or agent of DELAWARE, against any and all losses, claims, damages or liabilities (including reasonable investigative and legal expenses incurred in connection with any action, suit or proceeding, or any amount paid in settlement thereof with the prior approval of LNY), to which DELAWARE and/or any such person may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities: (1) arise out of or are based upon: (a) any untrue statement or allege untrue statement of a material fact contained in (i) any Registration Statement, Prospectus, Blue-Sky application or other document executed by LNY specifically for the purpose of qualifying any or all of the Contracts for sale under the securities laws of the United States or any State; (ii) any promotional, sales or advertising material for the Contracts; (iii) the Contracts themselves; or (iv) any amendment or supplement to any of the foregoing; or (b) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in case of (a) or (b) above this obligation to indemnify shall not apply if such untrue statement or 13 omission or such alleged untrue statement or alleged omission was made in reliance upon ad in conformity with information furnished in writing to LNY by DELAWARE specifically for use in the preparation of any such Registration Statement, Prospectus or Blue-Sky application or other document, material, or Contract (or any such amendment or supplement thereto), (2) arise out of or are based upon any untrue statement or alleged untrue statement or omission or alleged omission of a material fact by or on behalf of LNY (other than statements or representations contained in any Fund Registration Statement, Fund Prospectus or promotional, sales or advertising material of a Fund that were not supplied by LNY or by persons under its control) or the gross negligence or intentional misconduct of LNY or persons under its control with respect to the sale or distribution of the Contracts; or (3) result because of the terms of any Contract or because of any material breach by LNY of any terms of this Agreement or of any Contracts or that proximately result from any activities of LNY's officers, directors, employees or agents or their failure to take action in connection with the sale of a Contract, to the extent of LNY's obligations under the Agreement or otherwise, or the processing or administration of the Contracts. This indemnification obligation will be in addition to any liability that LNY may otherwise have; provided, however, that DELAWARE shall not be entitled to indemnification pursuant to this Section 11.a if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by DELAWARE. b. DELAWARE shall indemnify and hold harmless LNY and LFA and any officer, director, employee or agent of LNY or LFA, against any and all losses, claims, damages or liabilities (including reasonable investigative and legal expenses incurred in connection with, any action, suit or proceeding or any amount paid in settlement thereof wit the prior approval of DELAWARE), to which LNY and/or any such person may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon: (1) (a) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or Blue-Sky application or other document executed by LNY specifically for the purposes of qualifying any or all of the Contracts for sale under the securities law of any state (or any amendment or supplement to the foregoing), or (b) omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, in light of the circumstances in which they were made; in the case of (a) and (b) to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished in writing to LNY by DELAWARE specifically for use in the preparation of any such Registration Statement, Prospectus, such Blue-Sky application or other document (or any such amendment or supplement thereto); or (2) any use of promotional, sales or advertising material for the Contracts not authorized by LNY or LFA pursuant to Section 4.a of this Agreement or any 14 verbal or written misrepresentations or any unlawful sales practices concerning the Contracts by DELAWARE under federal securities laws or NASD regulations (but not including state insurance laws, compliance with which is a responsibility of LNY under this Agreement or otherwise); or (3) claims by agents, representatives or employees of DELAWARE for commissions or other compensation or remuneration of any type; or (4) any material breach by DELAWARE of any provision of this Agreement. This indemnification obligation will be in addition to any liability that DELAWARE may otherwise have; provided, however, that LNY shall not be entitled to indemnification pursuant to this Section 11.b if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by LNY c. After receipt by a party entitled to indemnification ("indemnified party") under this Section 11 of notice of the commencement of any action, if a claim in respect thereof is to be made by the indemnified party against any person obligated to provide indemnification under this Section 11 ("indemnifying party"), such indemnified party will notify the indemnifying party will not relieve it from any liability under this Section 11, except to the extent that the omission results in a failure of actual notice to the indemnifying party and such indemnifying party is damaged solely as a result of the failure to give such notice. The indemnifying party, upon the request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the counsel would be inappropriate due to the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party shall indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. d. The indemnification provisions contained in this Section 11 shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of LNY or by or on behalf of any controlling or affiliated person thereof, (ii) delivery of any Contracts and Purchase Payments therefore, or (iii) any termination of this Agreement. A successor by law of DELAWARE, LFA or LNY, as the case may be, shall be entitled to the benefits of the indemnification provisions contained in this Section 11. 15 12. TERMINATION a. This Agreement may be terminated at the option of any party upon 90 calendar days advance written notice to the other party; b. This Agreement shall terminate automatically if it is assigned; provided, however, that a transaction will not be deemed an assignment if it does no result in a change of actual control or management of a party. This Agreement may be terminated at the option of one party upon the other party's material breach of any provision of this Agreement. c. Upon termination of this Agreement all authorizations, rights and obligations shall cease except: (i) the obligation to settle accounts hereunder, including incurred compensation; and (ii) the provisions contained in Sections 7 and 11 of this Agreement. 13. RIGHTS, REMEDIES, ETC. ARE CUMULATIVE. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties to this Agreement are entitled to under state and federal laws. Failure of one party to insist upon strict compliance by an other party with any of the conditions of this Agreement in any one instance shall not be construed as a waiver of any of the conditions for any subsequent instance, but the same shall remain in full force and effect. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. 14. NOTICES. All notices hereunder are to be in writing and shall be given, if to LNY, to: Michael Antrobus Annuities Product Management Lincoln Life & Annuity Company of New York c/o Lincoln National Life Insurance Company 1300 South Clinton Street Fort Wayne, Indiana 46802 And Robert O. Sheppard, Esq. Lincoln Life & Annuity Company of New York 120 Madison Street Suite 1700 Syracuse, New York 13202 If to DELAWARE: Daniel J. O'Brien Delaware Distributors, L.P. 1818 Market Street Philadelphia, PA 19103 16 Any party may specify another name and/or address in writing. Each such notice to a party shall be hand-delivered; or transmitted by postage prepaid registered or certified United States mail, with return receipt requested; or sent by an overnight courier service. 15. INTERPRETATION, JURISDICTION, ETC. a. This Agreement constitutes the whole agreement among the parties to this Agreement relating to the wholesaling activities contemplated in this Agreement, and supersedes all prior oral or written negotiations among the parties to this Agreement with respect to the subject matter of this Agreement. The parties acknowledge that LNY and the Funds have entered into Participation Agreements and that it may be necessary to construe the terms of such Participation Agreements and this Agreement together. This Agreement shall be construed and the provisions of this Agreement interpreted under and in accordance with the internal laws of the State of New York without giving effect to its principles of conflict of laws. b. Anything in this Agreement to the contrary notwithstanding, (i) in no event will DELAWARE, in performing its services for LNY under this Agreement, interpose itself into the contractual relationship between LNY and any of its contractowners; and (ii) in no event will DELAWARE, in performing its services for LNY or LFA under this Agreement, intervene in the relationship between LNY or LFA and any of its Brokers and/or Brokers' Associated Persons in such a manner as to directly or indirectly cause any Broker(s) to breach its/their Selling Group Agreement(s) with LNY or LFA. 16. HEADINGS. The headings in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions of this Agreement or otherwise affect their construction or effect. 17. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which taken together shall constitute one and the same instrument. 18. SEVERABILITY. This is a severable agreement and in the event that any part or parts of this Agreement shall be held to be unenforceable to its or their full extent, then it is the intention of the parties to this Agreement that such part or parts shall be enforced to the extent permitted under the law, and, in any event, that all other parts of this Agreement shall remain valid and duly enforceable as if the unenforceable part or parts had never been a part of this Agreement. 19. REGULATION. This Agreement shall be subject to all applicable provisions of state law and to the 1933 Act; 1934 Act; 1940 Act; and the Regulations and the rules and regulations of the NASD, from time to time in effect; including such exemptions from the 1940 Act as the SEC may grant. The terms of this Agreement shall be interpreted and construed in accordance therewith. Without limiting the generality of the foregoing, the term "assigned" shall not include any transaction exempted from Section 15(b)(2) of the 1940 Act. IN WITNESS WHEREOF, each party hereto represents that the officer signing this Agreement on the party's behalf is duly authorized to execute this Agreement; and each party has caused this Agreement to be duly executed by such authorized officer as of the date first set forth above. 17 LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- LINCOLN FINANCIAL ADVISORS By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- DELAWARE DISTRIBUTORS, L.P. By: DELAWARE DISTRIBUTORS, INC. (General Partner) By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- 18 EXHIBIT A Intellectual Property Rights of the Parties I. DELAWARE. Delaware Management Holdings, Inc. owns all right, title and interest, including the good will associated therewith, in and to the marks DELAWARE, DELAWARE GROUP, DELAWARE INVESTMENTS and DELAWARE GROUP PREMIUM FUND, which may be used in connection with one or more of the underlying investment media for the Contracts, and in and to the name DELAWARE in whatever manner used in connection with the performance of this Agreement (such marks are hereinafter referred to as "Delaware Licensed Marks"). Delaware Management Holdings, Inc. has granted to DELAWARE the right and license to use the Delaware Licensed Marks and the right to sublicense to others. DELAWARE hereby grants to LNY a revokable, nonexclusive license to use the Delaware Licensed Marks in connection with the Contracts and LNY's performance of the services as set forth under this Agreement. A. TERM. The grant of limited license as specified in this Exhibit A shall terminate with respect to Delaware Licensed Marks on the earlier of the following events: 1. A change of name of such Delaware Licensed Mark to a name that does not include the term "Delaware"; or 2. Solely at the option of DELAWARE, with respect to any or all Delaware Licensed Marks and respecting only new business, upon a termination of this Agreement. In the case of existing business, the grant of limited license as specified in this Exhibit A shall survive the termination of the Agreement, but only to the extent necessary to allow the continuance of any business written prior to such termination wherein the Delaware Licensed Marks were previously used, and so long as such use was made in conformity and continue to conform with the terms of this Agreement. Upon termination of the grant of limited license, LNY shall, within ten (10) business days of the effective termination date, cease to issue new Contracts or to use or disseminate any promotional, sales or advertising material relating to the Contracts or service existing Contracts except as provide in A.2 above under such Delaware Licensed Mark, and shall likewise cease any new business activity that suggests that it has any right under such Delaware Licensed Mark or that it has any association with DELAWARE in connection with any such Contracts with respect to such Delaware Licensed Mark. In addition, LNY shall cease to use the Mark DELAWARE-LNY CHOICPLUS, except to the extent permitted for DELAWARE Licensed Markers under A.2 above. B. PRE-RELEASE APPROVAL OF TRADEMARK-BEARING MATERIALS. 1. LNY agrees that it will display the Delaware Licensed Marks only in such form and manner as are specifically approved by DELAWARE and that it will cause them to appear on all promotional, sales or advertising material used in connection with the Contracts or related services with such legends, markings and notices as DELAWARE may request in order to give appropriate notice of service mark registration when effected. All such materials will be submitted by LNY to DELWARE for the purpose of service mark reviews and approval at least ten (10) business days before their intended use by LNY. 19 2. During the term of this limited license, DELAWARE may request that LNY submit samples of any material bearing any of the Delaware Licensed Marks that were previously approved by DELAWARE or that were not previously approved in the manner set forth above. If, on reconsideration or on initial review, respectively, any such sample fails to meet with the written approval of DELAWARE, then LNY shall immediately cease using or disseminating such disapproved material. LNY shall obtain the prior written approval of DELAWARE for the use of any new material developed to replace the disapproved material, in the manner set forth above. All costs associated with any such reconsideration will be borne by LNY. C. ASSIGNMENT. This limited license is personal to LNY and may not be assigned without the prior written consent of DELAWARE. D. BREACH. If LNY shall violate or fail to perform any of its obligations under this limited license, DELAWARE shall have the right to terminate this limited license upon thirty (30) days written notice, and such notice of termination shall become effective unless LNY shall completely remedy the default within such 30-day period. Termination of the license under the provisions of this paragraph shall be without prejudice to any other rights that DELAWARE may have against LNY. E. DELAWARE'S RIGHTS. All rights in the Delaware Licensed Marks other than those specifically granted herein are reserved by DELAWARE for its own use and benefit. LNY shall at any time, whether during or after the term of this limited license, execute any documents reasonably required by DELAWARE to confirm DELAWARE's ownership of all such rights. II. LINCOLN. National Corporation owns all right, title and interest, including the good will associated therewith, in and to the marks LINCOLN NATIONAL, LINCOLN SILHOUETTE DESIGN, and LINCOLN FINANCIAL GROUP which may be used in connection with one or more of the underlying investment media for the contracts, and in and to the name LINCOLN in whatever manner used in connection with the performance of this Agreement (such marks are hereinafter referred to as "LNC Marks"). Lincoln National Corporation has granted to LINCOLN the right and license to use the LNC Marks and the right to sublicense to others. In addition, LINCOLN owns all right, title and interest, including the good will associated therewith, in and to the marks, LINCOLN LIFE, A. LINCOLN Signature Design, and DELAWARE-LINCOLN CHOICEPLUS (such marks are hereinafter referred to as "Lincoln Marks"). For the purpose of this Agreement, the LNC Marks and the Lincoln Marks shall be collectively referred to as the "Lincoln Licensed Marks". LINCOLN hereby grants to DELAWARE a revokable, nonexclusive limited license to use the Lincoln Licensed Marks in connection with the Contracts and DELAWARE's performance of the services as set forth under this Agreement. A. TERM. The grant of limited license as specified in this Exhibit A shall terminate with respect to Lincoln Licensed Marks on the earlier of the following events: 1. A change of name of such Lincoln Licensed Marks to a name that does not include the term "LINCOLN"; or 20 2. Solely at the option of LINCOLN, with respect to any or all Lincoln Licensed Marks and respecting only new business, upon a termination of this Agreement. In the case of existing business, the grant of limited license as specified in this Exhibit A shall survive the termination of the Agreement, but only to the extent necessary to allow the continuance of any business written prior to such termination wherein the Lincoln Licensed Marks were previously used, and so long as such use was made in conformity and continues to conform with the terms of this Agreement. Upon termination of the grant of limited license, DELAWARE shall, within ten (10) business days of the effective termination date, cease its wholesaling activities hereunder and suspend all dissemination of promotional, sales and advertising material relating to the Contracts or service existing Contracts except as provided in A.2 above under such Lincoln Licensed Marks, and shall likewise cease any new business activity that suggests that it has any right under such Lincoln Licensed Marks or that it has any association with LINCOLN in connection with any such Contracts with respect to such Lincoln Licensed Marks. B. PRE-RELEASE APPROVAL OF TRADEMARK-BEARING MATERIALS. 1. DELAWARE agrees that it will display the Lincoln Licensed Marks only in such form and manner as are specifically approved by LINCOLN and that it will cause them to appear on all promotional, sales or advertising material used in connection with the Contracts or related services with such legends, markings and notices as LINCOLN may request in order to give appropriate notice of service mark registration when effected. All such materials will be submitted by DELAWARE to LINCOLN for the purpose of service mark reviews and approval at least ten business days before their intended use by DELAWARE. 2. During the term of this limited license, LINCOLN may request that DELAWARE submit samples of any material bearing any of the Lincoln Licensed Marks that were previously approved by LINCOLN or that were not previously approved in the manner set forth above. If, on reconsideration or on initial review, respectively, any such sample fails to meet with the written approval of LINCOLN, then DELAWARE shall immediately cease using or disseminating such disapproved material. DELAWARE shall obtain the prior written approval of LINCOLN for the use of any new material developed to replace the disapproved material, in the manner set forth above. All costs associated with any such reconsideration will be borne by DELAWARE. C. ASSIGNMENT. This limited license is personal to DELAWARE and may not be assigned without the prior written consent of LINCOLN. D. BREACH. If DELAWARE shall violate or fail to perform any of its obligations under this limited license. LINCOLN shall have the right to terminate this limited license upon thirty (30) days written notice, and such notice of termination shall become effective unless DELAWARE shall completely remedy the default within such 30-day period. Termination of the license under the provisions of this paragraph shall be without prejudice to any other rights that LINCOLN may have against DELAWARE. 21 E. LINCOLN'S RIGHTS. All rights in the Lincoln Licensed Marks other than those specifically granted herein are reserved by LINCOLN for its own use and benefit. DELAWARE shall at any time, whether during or after the term of this limited license, execute any documents reasonably required by LINCOLN to confirm LINCOLN's ownership of all such rights. 22 Schedule 1.d Separate Account Subaccounts To be available under the Contracts Subject to the Wholesaling Agreement Effective October___,1999
NAME OF SEPARATE ACCOUNT SUBACCOUNTS Lincoln New York Separate Account N AIM V.I. Growth Subaccount AIM V.I. Value Subaccount AIM V.I. International Equity Subaccount BT Insurance Trust Equity 500 index Subaccount Delaware Group Decatur Total Return Subaccount Delaware Group Devon Subaccount Delaware Group Social Awareness Subaccount Delaware Group REIT Subaccount Delaware Group Small Cap Value Subaccount Delaware Group Trend Subaccount Delaware Group International Equity Subaccount Delaware Group Emerging Markets Subaccounts Delaware Group Delchester Subaccount Dreyfus Variable Fund Small Cap Subaccount Fidelity VIP Equity-Income Subaccount Fidelity VIP Growth Subaccount Fidelity VIP Overseas Subaccount Fidelity VIP III Growth Opportunities Subaccount Investors Fund Kemper Govt. Securities Subaccount Investors Fund Kemper Small Cap Growth Subaccount Liberty Variable Trust Colonial U.S. Stock Subaccount Liberty Variable Trust Newport Tiger Subaccount Lincoln National Bond Subaccount Lincoln National Money Market Subaccount MFS Variable Trust Total Return Subaccount MFS Variable Trust Utilities Subaccount MFS Variable Trust Emerging Growth Subaccount MFS Variable Trust Research Subaccount OCC Trust Global Equity Subaccount OCC Trust Managed Subaccount
23 Schedule 1.g Contracts Subject to Wholesaling Agreement Effective October ___, 1999
SEC ('33 Act) Marketing Policy Registration Name of Name of Contract Form No. No. Separate Account - ---------------- -------- --- ---------------- Delaware-Lincoln Choice Plus AN425-LL* 333-40937 Lincoln New York Separate Account N For Variable Annuities
24 SCHEDULE 9.a COMPENSATION SCHEDULE EFFECTIVE November 20, 1998 COMPENSATION PAYABLE BY LINCOLN TO DELAWARE FOR WHOLSALING ACTIVITY Both ChoicePlus and ChoicePlus XL pay the same wholesaling allowances, which vary by year of deposit. All wholesaling allowances are paid as a percent of new deposits; no trail of any kind is paid.
Year of Deposit Allowance* - --------------- ---------- (Calendar Year) (Percent of New Deposit) 1998 0.75% 1999 2.08% 2000 1.50% 2001 1.00% 2002 0.75%
Compensation will be paid to DELAWARE according to then current Lincoln practice, but no less frequently than weekly. On all business produced through the LFA distribution system, the allowance shown in the table above will be reduced by the estimated cost of the bonus program for LFA producers. The amount will be determined annually prior to the beginning of the calendar year. * To the extent that the full gross dealer compensation available under compensation options 1, 2, or 3 as shown below is not paid to a broker/dealer, the difference between what is paid and the amount available under options 1, 2, or 3 will be paid to DELAWARE. This is in addition to the percentage shown in the table above. To the extent more than the full gross dealer compensation available under compensation options 1, 2, or 3 as shown below is paid to a broker/dealer, the excess over the amount available under options 1, 2, or 3 will be paid to LINCOLN. This will be a deduction from the percentage shown in the table above.
Option Age 80 or Less Ages 81-85 ------ -------------- ---------- 1 6.50% 4.50% 2 4.00% 2.50% 3 4.75% 3.25%
EX-99.(8)(F)(I) 8 EXHIBIT 99.(8)(F)(I) Schedule A Amended as of October 15, 1999 Separate Accounts and Associated Contracts Name of Separate Account and Policy Form Numbers of Contracts Date Established by Board of Directors Funded By Separate Account - -------------------------------------- -------------------------- Lincoln Life & Annuity Variable GAC96-111 Annuity Account L GAC91-101 Lincoln Life & Annuity Flexible Premium LN650NY Variable Account R IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to Schedule A 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. Date 10/13/99 LINCOLN LIFE & ANNUITY -------- COMPANY OF NEW YORK By: /s/ Troy D. Panning ----------------------------------- Name: Troy D. Panning --------------------------------- Title: CFO / 2nd Vice President -------------------------------- Date 10/14/99 VARIABLE INSURANCE PRODUCTS FUNDS II -------- By: /s/ Robert C. Pozen ----------------------------------- Name: Robert C. Pozen --------------------------------- Title: Senior Vice President -------------------------------- Date 10/14/99 FIDELITY DISTRIBUTORS CORPORATION -------- By: /s/ Kevin J. Kelly ----------------------------------- Name: Kevin J. Kelly --------------------------------- Title: Vice President -------------------------------- EX-99.(8)(H) 9 EXHIBIT 99.(8)(H) PARTICIPATION AGREEMENT Among VARIABLE INSURANCE PRODUCTS FUND III, FIDELITY DISTRIBUTORS CORPORATION and LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK THIS AGREEMENT, made and entered into as of the 15th day of October, 1999 by and among LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK, (hereinafter the "Company"), a New York corporation, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND III, an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts corporation. WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements with the Fund and the Underwriter (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets, any one or more of which may be made available under this Agreement, as may be amended from time to time by mutual agreement of the parties hereto (each such series hereinafter referred to as a "Portfolio"); and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (is) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies hereinafter the "Shared Funding 1 Exemptive Order"); and WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly registered as an investment adviser under the federal Investment Advisers Act of 1940; and WHEREAS, the Company has registered or will register certain variable life insurance and variable annuity contracts under the 1933 Act, unless exempt; and WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid variable annuity and variable life contracts; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, unless exempt; and WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and reculations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid variable life insurance and variable annuity contracts and the Underwriter is authorized to sell such shares to unit investment trusts such as each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Underwriter agrees to sell to the Company those shares of the Fund which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:00 a.m. Boston 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 Fund 2 calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. 1.2. The Fund 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 Fund calculates its net asset value pursuant to rules of the Securities and Exchange Commission and the Fund shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, 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, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Portfolio will be sold to the general public. 1.4. The Fund and the Underwriter will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement is in effect to govern such sales. 1.5. The Fund agrees to redeem for cash, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such request for redemption on the next following Business Day. 1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Fund shall be made in accordance with the provisions of such prospectus. The Company agrees that all net amounts available under the variable life insurance or variable annuity contracts with the form number(s) which are listed on Schedule A attached hereto and incorporated herein by this reference, as such Schedule A may be amended from time to time hereafter by mutual written agreement of all the parties hereto, (the "Contracts") shall be invested in the Fund, in such other Funds advised by the Adviser as may be mutually agreed to in writing by the parties hereto, or in the Company's general account, provided that such amounts may also be invested in one or more investment companies other than the Fund. 1.7. The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 3 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9. The Fund shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the Fund's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Portfolio available to the Company or its designee on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally by 6:30 p.m. Boston time) and shall use its best efforts to make such net asset value per share available by 7 p.m. Boston time. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act unless an exemption from registration is available and an opinion of counsel to that effect shall have been furnished to the Fund; that the Contracts will be issued and sold in compliance in all material respects with all applicable Federal and State laws. The Company further represents and warrants that it is an insurance company duly organized and validly existing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section 4240 of the New York Insurance Code and has registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act, unless exempt, to serve as a segregated investment account for the Contracts. 2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of New York and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its 4 shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended. (the "Code") and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as life insurance policies or annuity insurance contracts under applicable provisions of the Code; that it will make every effort to maintain such treatment; and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. (a) With respect to Initial Class shares, the Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for distribution expenses. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (b) With respect to Service Class shares, the Fund has adopted a Rule 12b-1 Plan under which it makes payments to finance distribution expenses. The Fund represents and warrants that it has a board of trustees, a majority of whom are not interested persons of the Fund, which has formulated and approved the Fund's Rule 12b-1 Plan to finance distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plan will be approved by a similarly constituted board of trustees. 2.6. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the State of New York and the Fund and the Underwriter represent that their respective operations are and shall at all times remain in material compliance with the laws of the State of New York to the extent required to perform this Agreement. 2.7. The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of 5 the State of New York and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 6 2.8. The Fund represents that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act. 2.9. The Underwriter represents and warrants that the Adviser is and shall remain duly registered in all material respects under the Investment Advisers Act of 1940 and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of New York and any applicable state and federal securities laws. 2.10. The Fund and Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(l) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. The Fund and the Underwriter agree to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agree to notify the Company immediately in the event that such coverage no longer applies. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage for the benefit of the Fund, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less than $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1. The Underwriter shall provide the Company with as many printed copies of the Fund's current prospectus and Statement of Additional Information as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund shall provide camera-ready film containing the Fund's prospectus (which shall mean, for purposes of this Article III if the Company so requests, a separate prospectus for each Fund portfolio used in a particular Account), and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Fund is amended during the year) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document, and to have the Statement of Additional Information for the Fund and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the 7 Fund's prospectus and/or its Statement of Additional Information in combination with other fund companies' prospectuses and statements of additional information. Except as provided in the following three sentences, all expenses of printing and distributing Fund prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Fund's prospectus, the Fund will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the Contracts, and B is the Fund's per unit cost of typesetting and printing the Fund's prospectus. The same procedures shall be followed with respect to the Fund's Statement of Additional Information. The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund's expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts. 3.2. The Fund's prospectus shall state that the Statement of Additional Information for the Fund is available from the Underwriter or the Company (or in the Fund's discretion, the Prospectus shall state that such Statement is available from the Fund). 3.3. The Fund, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners. 3.4. If and to the extent required by law the Company shall (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in a particular separate account in the same proportion as Fund shares of such portfolio for which instructions have been received in that separate account, so long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for 8 assuring that each of their separate accounts participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B attached hereto and incorporated herein by this reference, which standards will also be provided to the other Participating Insurance Companies. 3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the Securities and Exchange Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto. ARTICLE IV. Sales Material and Information 4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or its investment adviser or the Underwriter is named, at least ten Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within ten 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 Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either. 4.3. The Fund, 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 in which the Company and/or its separate account(s), is named at least ten Business Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within ten Business Days after receipt of such material. 4.4. The Fund and the Underwriter shall not 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 an offering statement for unregistered contracts, or in published reports for each Account which are in the public 9 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 permission of the Company. 4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, within 30 days of the filing of such document with the Securities and Exchange Commission or other regulators, authorities. 4.6. The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, and to their investments in the Fund within 30 days of the filing of such document with the SEC or other regulatory authorities. 4.7. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: 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 agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials, and any other material constituting sales literature or advertising under NASD rules, the 1940 Act or the 1933 Act. ARTICLE V. Fees and Expenses 5.1. The Fund and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Fund. 10 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund's shares. 5.3.The Company shall bear the expenses of distributing the Fund's prospectus, proxy materials and reports to owners of Contracts issued by the Company. ARTICLE VI. Diversification 6.1.The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund 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, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 1.817-5. ARTICLE VII. Potential Conflicts 7.1.The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2.The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information 11 reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3.If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their 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 irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account. 7.4.If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.5.If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict: provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 12 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By The Company 8.1.(a) The Company agrees to indemnify and hold harmless tile Fund and each trustee of the Board and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including reasonable legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or 13 supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the Registration Statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of untrue statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature of the Fund not supplied by the Company, or persons under its control) or willful misfeasance, bad faith or gross negligence of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1.(b) The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified 14 Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.1.(c) The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1.(d) The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2. Indemnification by the Underwriter 8.2.(a) The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party 15 if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of untrue statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or willful misfeasance, bad faith, or gross negligence of the Fund, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2.(b) The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to each Company or the Account, 16 whichever is applicable. 8.2.(c) The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2.(d) The Company agrees promptly to notify the Underwriter of tile commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 8.3. Indemnification By the Fund 8.3.(a) The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this 17 Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3.(b) The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or each Account, whichever is applicable. 8.3.(c) The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3.(d) The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted 18 and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall continue in full force and effect until the first to occur of: (a) termination by any party for any reason by ninety (90) days advance written notice delivered to the other parties; or (b) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio based upon the Company's determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event any of the Portfolio'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 the underlying investment media of the Contracts issued or to be issued by the Company; or (d) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Fund may fail to so qualify; or (e) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or (f) termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company and/or its affiliated companies has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (g) termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that either the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial 19 condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (h) termination by the Company by written notice to the Fund and the Underwriter upon the requisite vote of the Contract owners having an interest in a Portfolio (unless otherwise required by applicable law) and written approval of the Company, to substitute shares of another investment company for the corresponding shares of a Portfolio in accordance with the terms of the Contracts; or (i) termination by written notice to the Company at the option of the Fund, upon institution of formal proceedings against the Company and by the NASD, the SEC, the insurance commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the operation of the Account, the administration of the Contracts or the purchase of Fund shares, or an expected or anticipated ruling, judgment or outcome which would, in the Fund's reasonable judgment, materially impair the Company's ability to perform the Company's obligations and duties hereunder; or (j) termination by written notice to the Fund and the Underwriter, at the option of the Company, upon institution of formal proceedings against the Fund, the Underwriter, the Fund's investment adviser or any sub-adviser, by the NASD, the SEC, or any state securities or insurance commission or any other regulatory body regarding the duties of the Fund or the Underwriter under this Agreement, or an expected or anticipated ruling, judgment or outcome which would, in the Company's reasonable judgment, materially impair the Fund's or the Underwriter's ability to perform the Fund's or Underwriter's obligations and duties hereunder; or (k) termination by written notice to the Fund and the Underwriter, at the option of the Company, upon institution of formal proceedings against the Fund's investment adviser of any sub-adviser by the NASD, the SEC, or any state securities or insurance commission or any regulatory body which would, in the good faith opinion of the Company, result in material harm to the Accounts, the Company or Contract Owners. 10.2. Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of the Fund 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, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties 20 agree that this Section 10.2 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.3. The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company's assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved 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") or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract Owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so. 10.4. Notwithstanding any other provision of this Agreement, one party's obligation under Article VIII to indemnify the other party shall survive termination of this Agreement, to the extent that the events giving rise to the obligation to indemnify the other party occurred prior to the date of termination. ARTICLE XI. 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 Fund: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer If to the Company: Lincoln Life & Annuity Company of New York 120 Madison Street, Suite 1700 21 Syracuse, NY 13202 Attention: Troy Panning If to the Underwriter: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer ARTICLE XII. Miscellaneous 12.1. All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the Board, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund. 12.2. Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish any insurance commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the insurance operations of the Company are being conducted in a manner consistent with the insurance regulations and any other applicable law or regulations of that state. 22 12.7. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto; provided, however, that the Underwriter may assign this Agreement or any rights or obligations hereunder to any affiliate of or company under common control with the Underwriter, if such assignee is duly licensed and registered to perform the obligations of the Underwriter under this Agreement. The Company shall promptly notify the Fund and the Underwriter of any change in control of the Company. 12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee copies of the following reports: (a) the Company's annual statement (prepared under statutory ) and annual report (prepared under generally accepted accounting principles ("GAAP"), if any), as soon as practical and in any event within 90 days alter the end of each fiscal year; (b) the Company's quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period; (c) any financial statement, proxy statement, notice or report of the Company sent to stockholders and/or policyholders, as soon as practical after the delivery thereof to stockholders; (d) any registration statement (without exhibits) and financial reports of the Company filed with the SEC or any state insurance regulator, as soon as practical after the filing thereof; (e) any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof. 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: ----------------------------- Name: --------------------------- Title: -------------------------- 23 VARIABLE INSURANCE PRODUCTS FUND III By: ----------------------------- Robert C. Pozen Senior Vice President FIDELITY DISTRIBUTION By: ----------------------------- Kevin J. Kelly Vice President 24 Schedule A Separate Accounts and Associated Contracts As of October 15, 1999
Separate Account and Date Form Numbers of Contracts Established by Board of Directors Funded By Separate Account Fidelity Fund (Class) - --------------------------------- -------------------------- --------------------- Lincoln Life & Annuity Separate LN650NY Growth Opportunities Account R (January 29, 1998) -- Service Class
25 Schedule B Proxy Voting Procedure The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund by the Underwriter, the Fund and the Company. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "Company" shall also include the department or third party assigned by the Insurance Company to perform the steps delineated below. 1. The number of proxy proposals is given to the Company by the Underwriter as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Underwriter will inform the Company of the Record, Mailing and Meeting dates. This will be done in writing approximately two months before meeting. 2. Promptly after the Record Date, the Company will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contractowner/policyholder (the "Customer") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Customers' accounts as of the Record Date. Note: The number of proxy statements is determined by the activities described in Step #2. The Company will use its best efforts to call in the number of Customers to Fidelity, as soon as possible, but no later than two weeks after the Record Date. 3. The Fund's Annual Report no longer needs to be sent to each Customer by the Company either before or together with the Customers' receipt of a proxy statement. Underwriter will provide the last Annual Report to the Company pursuant to the terms of Section 3.3 of the Agreement to which this Schedule relates. 4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is provided to the Company by the Fund. The Company, at its expense, shall produce and personalize the Voting Instruction Cards. The Legal Department of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: a. name (legal name as found on account registration) b. address c. Fund or account number d. coding to state number of units e. individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) 26 (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 1. During this time, Fidelity Legal will develop, produce, and the Fund will pay for the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to Company for insertion into envelopes (envelopes and return envelopes are provided and paid for by the Insurance Company). Contents of envelope sent to Customers by Company will include: a) Voting Instruction Card(s) b) One proxy notice and statement (one document) c) Return envelope (postage pre-paid by Company) addressed to the company or its tabulation agent d) "Urge buckslip" -- optional, but recommended. )This is a small, single sheet of paper that requests Customers to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund. e) Cover letter -- optional, supplied by Company and reviewed and approved in advance by Fidelity legal. 1. The above contents should be received by the Company at least 7 business days before mail date. Individual in charge at Company reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to Fidelity Legal. 2. Package mailed by the Company. The Fund must allow at least a 15-day solicitation time to the Company as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, counting backwards. 3. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on process used. An often used procedure is to sort Cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure and has not been required by Fidelity in the past. 4. Signatures on Card checked against legal name on account registration which was printed on the Card. Note: For Example, If the account registration is under "Bertram C. Jones, Trustee," then that is the exact legal name to be printed on the Card and is the signature needed on the Card. 27 5. If Cards are mutilated, or for any reason are illegible or are not signed properly, they are considered to be not received for purposes of vote tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure are "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 6. There are various control procedures used to ensure proper tabulation of votes and accuracy of that tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do not coincide, then an internal audit of that vote should occur. This may entail a recount. 7. The actual tabulation of votes is done in units which is then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) Fidelity Legal must review and approve tabulation format. 8. Final tabulation in shares is verbally given by the Company to Fidelity Legal on the morning of the meeting not later than 10:00 a.m. Boston time. Fidelity Legal may reasonably request an earlier deadline if required to calculate the vote in time for the meeting. 9. A Certification of Mailing and Authorization to Vote Shares will be required from the Company as well as an original copy of the final vote. Fidelity Legal will provide a standard form for each Certification. 10. The Company will be required to box and archive the Cards received from the Customers. In the event that any vote is challenged or if otherwise necessary for legal, regulatory, or accounting purposes, Fidelity Legal will be permitted reasonable access to such Cards. 11. All approvals and "signing-off" may be done orally, but must always be followed up in writing. 28 Schedule C Other investment companies currently available under variable annuities or variable life insurance issued by the Company: Investment Companies Available: AIM, Bankers Trust, Baron Capital, Colonial, Delaware, Dreyfus, Janus, Kemper, Lincoln National Investments, MFS, Neuberger Berman, Templeton 29 EX-99.(8)(N) 10 EXHIBIT 99.(8)(N) FUND PARTICIPATION AGREEMENT Between THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK And LINCOLN NATIONAL BOND FUND, INC. THIS AGREEMENT, made and entered into this 25th day of September 1998, by and between Lincoln National Bond Fund, Inc. a corporation organized under the laws of Maryland (the "Fund"), and LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK, a New York insurance corporation (the "Company"), on its own behalf and on behalf of each separate account of the Company named in Schedule 1 to this Agreement as in effect at the time this Agreement is executed and such other separate accounts that may be added to Schedule 1 from time to time in accordance with the provisions of Article XI of this Agreement (each such account referred to as the "Account"; collectively, the "Accounts"). WHEREAS, the Fund is engaged in business as an open-end management investment company and was established for the purpose of serving as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively referred to as "Variable Insurance Products," the owners of such products being referred to as "Product owners") to be offered by insurance companies which have entered into participation agreements with the Fund ("Participating Insurance Companies"); and WHEREAS, the Fund filed with the Securities and Exchange Commission (the "SEC") and the SEC has declared effective a registration statement (referred to herein as the "Fund Registration Statement" and the prospectus contained therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein as the "Fund Prospectus") on Form N-1A to register itself as an open-end management investment company (File No. 811-3212) under the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund shares (File No. 2-80743) under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, the Company has filed a registration statement with the SEC to register under the 1933 Act (unless exempt therefrom) certain variable annuity contracts and/or variable life insurance policies described in Schedule 2 to this Agreement as in effect at the time this Agreement is executed and such other variable annuity contracts and variable life insurance policies which may be added to Schedule 2 from time to time in accordance with Article XI of this Agreement (such policies and contracts shall be referred to herein collectively as the "Contracts," each such registration statement for a class or classes of contracts listed on Schedule 2 being referred to as the "Contracts Registration Statement" and the prospectus for each such class or classes being referred to herein as the "Contracts Prospectus," and the owners of the such contracts, as distinguished from all Product Owners, being referred to as "Contract Owners"); and WHEREAS, each Account, a validly existing separate account, duly authorized by the Company on the date set forth on Schedule 1, sets aside and invests assets attributable to the Contracts; and WHEREAS, the Company has registered or will have registered each Account with the SEC as a unit investment trust under the 1940 Act before any Contacts are issued by that Account; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares on behalf of each Account to fund its Contracts and the Fund is authorized to sell such shares to unit investment trusts such as the Accounts at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company and the Fund agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to the Company those shares which the Company orders on behalf of the Account, executing such orders on a daily basis in accordance with Section 1.4 of this Agreement. 1.2. The Fund agrees to make shares available for purchase by the Company on behalf of the Account at the then applicable net asset value per share on Business Days as defined in Section 1.4 of this Agreement, and the Fund shall use its best efforts to calculate and deliver such net asset value by 7:00 p.m., E.S.T., on each such Business Day. Notwithstanding any other provision in this Agreement to the contrary, the Board of Directors of the Fund (the "Fund Board") may suspend or terminate the offering of shares, if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Fund Board acting in good faith and in light of its fiduciary duties under Federal and any applicable state laws, suspension or termination is necessary and in the best interests of the shareholders (it being understood that "shareholders" for this purpose shall mean Product owners). 1.3. The Fund agrees to redeem, at the Company's request, any full or fractional shares of the Fund held by the Account or the Company, executing such requests at the net asset value on a daily basis (LL will expect same day redemption wires unless unusual circumstances evolve which cause the Fund to have to redeem securities) in accordance with Section 1.4 of this Agreement, the applicable provisions of the 1940 Act and the then currently effective Fund Prospectus. Notwithstanding the foregoing, the Fund may delay redemption of Fund shares to the extent permitted by the 1940 Act, any rules, regulations or orders thereunder, or the then currently effective Fund Prospectus. 2 1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be the agent of the Fund for the limited purpose of receiving redemption and purchase requests from the Account (but not from the general account of the Company), and receipt on any Business Day by the Company as such limited agent of the Fund prior to the time prescribed in the current Fund Prospectus (which as of the date of execution of this Agreement is 4 p.m., E.S.T.) shall constitute receipt by the Fund on that same Business Day, provided that the Fund receives notice of such redemption or purchase request by 9:00 a.m., E.S.T. on the next following Business Day. For purposes of this Agreement, "Business Day" shall mean any day on which the New York Stock exchange is open for trading. (b) The Company shall pay for the shares on the same day that it places an order with the Fund to purchase those Fund shares for an Account. Payment for Fund shares will be made by the Account or the Company in Federal Funds transmitted to the Fund by wire to be received by 11:00 a.m., E.S.T. on the day the Fund is properly notified of the purchase order for shares. The Fund will confirm receipt of each trade and these confirmations will be received by the Company via Fax or E-mail by 3:00 p.m. E.S.T. If Federal Funds are not received on time, such funds will be invested, and shares purchased thereby will be issued, as soon as practicable. (c) Payment for shares redeemed by the Account or the Company will be made in Federal Funds transmitted to the Company by wire on the same day the Fund is notified of the redemption order of shares, except that the Fund reserves the right to delay payment of redemption proceeds, but in no event may such payment be delayed longer than the period permitted under Section 22(e) of the 1940 Act. The Fund shall not bear any responsibility whatsoever for the proper disbursement or crediting of redemption proceeds if securities must be redeemed; the Company alone shall be responsible for such action. 1.5. Issuance and transfer of Fund shares will be by book entry only. Stock certificates will not be issued to the Company or the Account. Purchase and redemption orders for Fund shares will be recorded in an appropriate ledger for the Account or the appropriate subaccount of the Account. 1.6. The Fund shall furnish notice as soon as reasonably practicable to the Company of any income dividends or capital gain distributions payable on any shares. The Company, on its behalf and on behalf of the Account, hereby elects to receive all such dividends and distributions as are payable on any shares in the form of additional shares of that Fund. The Company reserves the right, on its behalf and on behalf of the Account, to revoke this election and to receive all such dividends in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 3 1.7. The Fund shall use its best efforts to make the net asset value per share available to the Company by 7:00 p.m., E.S.T. each Business Day, and in any event, as soon as reasonably practicable after the net asset value per share is calculated, and shall calculate such net asset value in accordance with the then currently effective Fund Prospectus. The Fund shall not be liable for any information provided to the Company pursuant to this Agreement which information is based on incorrect information supplied by the Company to the Fund. 1.8. (a) The Company may withdraw the Account's investment in the Fund only: (i) as necessary to facilitate Contract owner requests; (ii) upon a determination by a majority of the Fund Board, or a majority of disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of (x) any Product Owners or (y) the interests of the Participating Insurance Companies investing in the Fund; (iii) upon requisite vote of the Contract owners having an interest in the Fund to substitute the shares of another investment company for shares in accordance with the terms of the Contracts; (iv) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application; or (v) at the Company's sole discretion, pursuant to an order of the SEC under Section 26(b) of the 1940 Act. (b) The parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive and that the Fund shares may be sold to other insurance companies (subject to Section 1.9 hereof) and the cash value of the Contracts may be invested in other investment companies. (c) The Company shall not, without prior notice to the Fund (unless otherwise required by applicable law), take any action to operate the Accounts as management investment companies under the 1940 Act. 1.9. The Fund agrees that Fund shares will be sold only to Participating Insurance Companies and their separate accounts. The Fund will not sell Fund shares to any insurance company or separate account unless an agreement complying with Article VII of this Agreement is in effect to govern such sales. No Fund shares will be sold to the general public. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants (a) that the Contracts are registered under the 1933 Act or will be so registered before the issuance thereof, (b) that the Contracts will be issued in compliance in all material respects with all applicable Federal and state laws and (c) that the Company will require of every person distributing the Contracts that the Contracts be offered and sold in compliance in all material respects with all applicable Federal and state laws. The Company further represents and warrants that it is an insurance company duly organized and validly existing under applicable law and that it has legally and validly authorized each Account as 4 a separate account under Section 4240 of the New York Insurance Law and has registered or, prior to the issuance of any Contracts, will register each Account (unless exempt therefrom) as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a separate account for its Contracts, and that it will maintain such registrations for so long as any Contracts issued under them are outstanding. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act and duly authorized for issuance in accordance with applicable law and that the Fund is and shall remain registered under the 1940 Act for so long as the Fund shares are sold. The Fund further represents and warrants that it is a corporation duly organized and in good standing under the laws of Maryland. 2.3. The Fund represents and warrants that it currently qualifies as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Fund further represents and warrants that it will make every effort to continue to qualify and to maintain such qualification (under Subchapter M or any successor or similar provision), and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Fund represents and warrants that it will comply with Section 817(h) of the Code, and all regulations issued thereunder. 2.5. The 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. The Company shall make every effort to maintain such treatment and shall notify the Fund immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.6. The Fund represents that the Fund's investment policies, fees and expenses, and operations are and shall at all times remain in material compliance with the laws of the state of Maryland, to the extent required to perform this Agreement. The Fund, however, makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) otherwise complies with the insurance laws or regulations of any state. The Company alone shall be responsible for informing the Fund of any investment restrictions imposed by state insurance law and applicable to the Fund. 2.7. The Fund represents and warrants that it has and maintains a fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will immediately notify the Company in the event the fidelity bond coverage should lapse at any time. 5 ARTICLE III. Prospectuses and Proxy Statements; Sales Material and Other Information 3.1. The Fund shall provide the Company with as many copies of the current Fund Prospectus as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund at its expense shall provide to the Company a camera-ready copy, and electronic version, of the current Fund Prospectus suitable for printing and other assistance as is reasonably necessary in order for the Company to have a new Contracts Prospectus printed together with the Fund Prospectus in one document. See Article V for a detailed explanation of the responsibility for the cost of printing and distributing Fund prospectuses. 3.2. The Fund Prospectus shall state that the Statement of Additional Information for the Fund is available from the Fund and the Fund shall provide such Statement free of charge to the Company and to any outstanding or prospective Contract owner who requests such Statement. 3.3. (a) The Fund at its expense shall provide to the Company a camera-ready copy of the Fund's shareholder reports and other communications to shareholders (except proxy material), in each case in a form suitable for printing, as determined by the Company. The Fund shall be responsible for the costs of printing and distributing these materials to Contract owners. (b) The Fund at its expense shall be responsible for preparing, printing and distributing its proxy material. The Company will provide the appropriate Contract owner names and addresses to the Fund for this purpose. 3.4. The Company shall furnish to the Fund, prior to its use, each piece of sales literature or other promotional material in which the Fund is named. No such material shall be used, except with the prior written permission of the Fund. The Fund agrees to respond to any request for approval on a prompt and timely basis. Failure of the Fund to respond within 10 days of the request by the Company shall relieve the Company of the obligation to obtain the prior written permission of the Fund. 3.5. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund other than the information or representations contained in the Fund Registration Statement or Fund Prospectus, as such Registration Statement and Prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund, except with the prior written permission of the Fund. The Fund agrees to respond to any request for permission on a prompt and timely basis. If the Fund does not respond within 10 days of a request by the Company, then the Company shall be relieved of the obligation to obtain the prior written permission of the Fund. 6 3.6. The Fund shall not give any information or make any representations on behalf of the Company or concerning the Company, the Account or the Contracts other than the information or representations contained in the Contracts Registration Statement or Contracts Prospectus, as such Registration Statement and Prospectus may be amended or supplemented from time to time, or in published reports of the Account which are in the public domain or approved in writing by the Company for distribution to Contract owners, or in sales literature or other promotional material approved in writing by the Company, except with the prior written permission of the Company. The Company agrees to respond to any request for permission on a prompt and timely basis. If the Company fails to respond within 10 days of a request by the Fund, then the Fund is relieved of the obligation to obtain the prior written permission of the Company. 3.7. The Fund will provide to the Company at least one complete copy of all Fund Registration Statements, Fund Prospectuses, Statements of Additional Information, annual and semi-annual reports and other reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments or supplements to any of the above, that relate to the Fund or Fund shares, within 20 days after the filing of such document with the SEC or other regulatory authorities. 3.8. The Company will provide to the Fund at least one complete copy of all Contracts Registration Statements, Contracts Prospectuses. Statements of Additional Information. Annual and Semi-annual Reports, sales literature and other promotional materials, and all amendments or supplements to any of the above, that relate to the Contracts, within 20 days after the filing of such document with the SEC or other regulatory authorities. 3.9. Each party will provide to the other party copies of draft versions of any registration statements, prospectuses, statements of additional information, reports, proxy statements, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments or supplements to any of the above, to the extent that the other party reasonably needs such information for purposes of preparing a report or other filing to be filed with or submitted to a regulatory agency. If a party requests any such information before it has been filed, the other party will provide the requested information if then available and in the version then available at the time of such request. 3.10. For purposes of this Article III, 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, computer net site, 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, in print or electronically, including brochures, circulars, research reports, market letters, form letters, seminar texts, or 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 agents or employees, registration statements, 7 prospectuses, Statements of Additional Information, shareholder reports and proxy materials, and any other material constituting sales literature or advertising under NASD rules, the 1940 Act or the 1933 Act. ARTICLE IV. Voting 4.1 Subject to applicable law and the requirements of Article VII, the Fund shall solicit voting instructions from Contract owners; 4.2 Subject to applicable law and the requirements of Article VII, the Company shall: (a) vote Fund shares attributable to Contract owners in accordance with instructions or proxies received in timely fashion from such Contract owners; (b) vote Fund shares attributable to Contract owners for which no instructions have been received in the same proportion as Fund shares of such Series for which instructions have been received in timely fashion; and (c) vote Fund shares held by the Company on its own behalf or on behalf of the Account that are not attributable to Contract owners in the same proportion as Fund shares of such Series for which instructions have been received in timely fashion. The Company shall be responsible for assuring that voting privileges for the Accounts are calculated in a manner consistent with the provisions set forth above. ARTICLE V. Fees and Expenses All expenses incident to performance by the Fund under this Agreement (including expenses expressly assumed by the Fund pursuant to this Agreement) shall be paid by the Fund to the extent permitted by law. Except as may otherwise be provided in Section 1.4 and Article VII of this Agreement, the Company shall not bear any of the expenses for the cost of registration and qualification of the Fund shares under Federal and any state securities law, preparation and filing of the Fund Prospectus and Fund Registration Statement, the preparation of all statements and notices required by any Federal or state securities law, all taxes on the issuance or transfer of Fund shares, and any expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. The Fund is responsible for the cost of printing and distributing Fund Prospectuses and SAIs to existing Contractowners. (If for this purpose the Company decided to print the Fund Prospectuses and SAIs in a booklet or separate booklets containing disclosure for the Contracts and for underlying funds other than those of the Fund, then the Fund shall pay only its proportionate share of the total cost to distribute the booklet to existing Contractowners.) 8 The Company is responsible for the cost of printing and distributing Fund prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for existing Contractowners. The Company shall have the final decision on choice of printer for all Prospectuses and SAIs. ARTICLE VI. Compliance Undertakings 6.1. The Fund undertakes to comply with Subchapter M and Section 817(h) of the Code, and all regulations issued thereunder. 6.2. The Company shall amend the Contracts Registration Statements under the 1933 Act and the Account's Registration Statement under the 1940 Act from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company shall register and qualify the Contracts for sale to the extent required by applicable securities laws of the various states. 6.3. The Fund shall amend the Fund Registration Statement under the 1933 Act and the 1940 Act from time to time as required in order to effect for so long as Fund shares are sold the continuous offering of Fund shares as described in the then currently effective Fund Prospectus. The Fund shall register and qualify Fund shares for sale to the extent required by applicable securities laws of the various states. 6.4. The Company shall be responsible for assuring that any prospectus offering a Contract that is a life insurance contract where it is reasonably possible that such Contract would be deemed a "modified endowment contract," as that term is defined in Section 7702A of the Code, will describe the circumstances under which a Contract could be treated as a modified endowment contract (or policy). 6.5. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a Fund Board of Directors, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. ARTICLE VII. Potential Conflicts 7.1. The Company agrees to report to the Board of Directors of the Fund (the "Board") any potential or existing conflicts between the interests of Product Owners of all separate accounts investing in the Fund, and to assist the Board in carrying out its responsibilities under Section 6e-3(T) of the 1940 Act, by providing all information reasonably necessary for the Board to consider any issues raised, including information as to a decision to disregard voting instructions of variable contract owners. 9 7.2. If a majority of the Board, or a majority of disinterested Board Members, determines that a material irreconcilable conflict exists, the Board shall give prompt notice to all Participating Insurance Companies. (a) If a majority of the whole Board, after notice to the Company and a reasonable opportunity for the Company to appear before it and present its case, determines that the Company is responsible for said conflict, and if the Company agrees with that determination, the Company shall, at its sole cost and expense, take whatever steps are necessary to remedy the material irreconcilable conflict. These steps could include: (i) withdrawing the assets allocable to some or all of the affected Accounts from the Fund and reinvesting such assets in a different investment vehicle, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any particular group (i.e., variable annuity Contract owners, variable life insurance policy owners, or variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Contract owners the option of making such a change; and (ii) establishing a new registered mutual fund or management separate account; or (iii) taking such other action as is necessary to remedy or eliminate the material irreconcilable conflict. (b) If the Company disagrees with the Board's determination, the Company shall file a written protest with the Board, reserving its right to dispute the determination as between just the Company and the Fund and to seek reimbursement from the Fund for the reasonable costs and expenses of resolving the conflict. After reserving that right the Company, although disagreeing with the Board that it (the Company) was responsible for the conflict, shall take the necessary steps, under protest, to remedy the conflict, substantially in accordance with paragraph (a) just above, for the protection of Contract owners. (c) As between the Company and the Fund, if within 45 days after the Board's determination the Company elects to press the dispute, it shall so notify the Board in writing. The parties shall then attempt to resolve the matter amicably through negotiation by individuals from each party who are authorized to settle the matter. If the matter has not been amicably resolved within 60 days from the date of the Company's notice of its intent to press the dispute, then before either party shall undertake to litigate the dispute it shall be submitted to non-binding arbitration conducted expeditiously in accordance with the CPR Rules for Non-Administered Arbitration of Business Disputes, by a sole arbitrator: provided, however, that if one party has requested the other party to seek an amicable resolution and the other party has failed to participate, the requesting party may initiate arbitration before expiration of the 60-day period set out just above. 10 If within 45 days of the commencement of the process to select an arbitrator the parties cannot agree upon the arbitrator, then he or she will be selected from the CPR Panels of Neutrals. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of arbitration shall be Fort Wayne, Indiana. The Arbitrator is not empowered to award damages in excess of compensatory damages. (d) If the Board shall determine that the Fund or another was responsible for the conflict, then the Board shall notify the Company immediately of that determination. The Fund shall assure the Company that it (the Fund) or that other Participating Insurance Company as applicable, shall, at its sole cost and expense, take whatever steps are necessary to eliminate the conflict. (e) Nothing in Sections 7.2(b) or 7.2(c) shall constitute a waiver of any right of action which the Company may have against other Participating Insurance Companies for reimbursement of all or part of the costs and expenses of resolving the conflict. 7.3. If a material irreconcilable conflict arises because of the Company's decision to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company shall withdraw (without charge or penalty) the Account's investment in the Fund, if the Fund so elects. 7.4. For purposes of this Article, a majority of the disinterested members of the Board shall determine whether or not any proposed action adequately remedies any irreconcilable conflict. However, in no event will the Fund be required to establish a new funding medium for any variable contract, nor will the Company be required to establish a new funding medium for any Contract, if in either case an offer to do so has been declined by a vote of a majority of affected Contract owners. ARTICLE VIII. Indemnification 8.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Fund and each person who controls or is associated with the Fund (other than another Participating Insurance Company) within the meaning of such terms under the federal securities laws and any officer, trustee, director, employee or agent of the foregoing, against any and all losses, claims, damages or liabilities, joint or several (including any investigative, legal and other expenses reasonably incurred in connection with, and any amounts paid with the prior written consent of the Company in settlement of, any action, suit or proceeding or any claim asserted), to which they or any of them may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities: 11 (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Contracts Registration Statement, Contracts Prospectus, sales literature or other promotional material for the Contracts or the Contracts themselves (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided that this obligation to indemnify shall not apply if such statement or omission or such alleged statement or alleged omission was made in reliance upon and in conformity with information furnished in writing to the Company by the Fund (or a person authorized in writing to do so on behalf of the Fund) for use in the Contracts Registration Statement, Contracts Prospectus or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (b) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact by or on behalf of the Company (other than statements or representations contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund not supplied by the Company or persons under its control) or wrongful conduct of the Company or persons under its control with respect to the sale or distribution of the Contracts or Fund shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company; or (d) arise as a result of any failure by the Company to provide the services and furnish the materials or to make any payments under the terms of this Agreement; or (e) arise out of any material breach by the Company of this Agreement, including but not limited to any failure to transmit a request for redemption or purchase of Fund shares on a timely basis in accordance with the procedures set forth in Article I; or (f) arise as a result of the Company's providing the Fund with inaccurate information, which causes the Fund to calculate its Net Asset Values incorrectly. 12 This indemnification will be in addition to any liability which the Company may otherwise have; provided, however, that no party shall be entitled to indemnification if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by the party seeking indemnification. 8.2. Indemnification by the Fund. The Fund agrees to indemnify and hold harmless the Company and each person who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any officer, director, employee or agent of the foregoing, against any and all losses, claims, damages or liabilities, joint or several (including any investigative, legal and other expenses reasonably incurred in connection with, and any amounts paid with the prior written consent of the Fund in settlement of, any action, suit or proceeding or any claim asserted), to which they or any of them may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities: (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Fund Registration Statement, Fund Prospectus (or any amendment or supplement thereto) or sales literature or other promotional material of the Fund, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided that this obligation to indemnify shall not apply if such statement or omission or alleged statement or alleged omission was made in reliance upon and in conformity with information furnished in writing by the Company to the Fund for use in the Fund Registration Statement, Fund Prospectus (or any amendment or supplement thereto) or sales literature for the Fund or otherwise for use in connection with the sale of the Contracts or Fund shares; or (b) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by the Fund (other than statements or representations contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund not supplied by the Distributor or the Fund or persons under their control) or wrongful conduct of the Fund or persons under its control with respect to the sale or distribution of the Contracts or Fund shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Contract's Registration Statement, Contracts Prospectus or sales literature or other promotional material for the Contracts (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon information furnished in writing by the Fund to the Company (or a person authorized in writing to do so on behalf of the Fund); or 13 (d) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including, but not by way of limitation, a failure, whether unintentional or in good faith or otherwise: (i) to comply with the diversification requirements specified in Sections 2.4 and 6.1 in Article VI of this Agreement; and (ii) to provide the Company with accurate information sufficient for it to calculate its accumulation and/or annuity unit values in timely fashion as required by law and by the Contracts Prospectuses); or (e) arise out of any material breach by the Fund of this Agreement. This indemnification will be in addition to any liability which the Fund may otherwise have; provided, however, that no party shall be entitled to indemnification if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by the party seeking indemnification. 8.3. Indemnification Procedures. After receipt by a party entitled to indemnification ("indemnified party") under this Article VIII of notice of the commencement of any action, if a claim in respect thereof is to be made by the indemnified party against any person obligated to provide indemnification under this Article VIII ("indemnifying party"), such indemnified party will notify the indemnifying party in writing of the commencement thereof as soon as practicable thereafter, provided that the omission to so notify the indemnifying party will not relieve it from any liability under this Article VIII, except to the extent that the omission results in a failure of actual notice to the indemnifying party and such indemnifying party is damaged solely as a result of the failure to give such notice. The indemnifying party, upon the request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. A successor by law of the parties to this Agreement shall be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII shall survive any termination of this Agreement. 14 ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the state of Maryland, without giving effect to the principles of conflicts of law. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant, and the terms hereof shall be limited, interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party upon 120 days advance written notice to the other parties; or (b) at the option of the Company if shares of the Fund are not available to meet the requirements of the Contracts as determined by the Company. Prompt notice of the election to terminate for such cause shall be furnished by the Company. Termination shall be effective ten days after the giving of notice by the Company; or (c) at the option of the Fund upon institution of formal proceedings against the Company by the NASD, the SEC, the insurance commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the operation of the Account, the administration of the Contracts or the purchase of Fund shares; (d) at the option of the Company upon institution of formal proceedings against the Fund, the investment advisor or any sub-investment advisor, by the NASD, the SEC, or any state securities or insurance commission or any other regulatory body; or (e) upon requisite vote of the Contract owners having an interest in the Fund (unless otherwise required by applicable law) and written approval of the Company, to substitute the shares of another investment company for the corresponding shares of the Fund in accordance with the terms of the Contracts; or 15 (f) at the option of the Fund in the event any of the Contracts are not registered, issued or sold in accordance with applicable Federal and/or state law; or (g) at the option of the Company or the Fund upon a determination by a majority of the Fund Board, or a majority of disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of (i) any Product owners or (ii) the interests of the Participating Insurance Companies investing in the Fund; or (h) at the option of the Company if the Fund ceases to qualify as a Regulated Investment Company under Subchapter M of the Code, or under any successor or similar provision, or if the Company reasonably believes, based on an opinion of its counsel, that the Fund may fail to so qualify; or (i) at the option of the Company if the Fund fails to meet the diversification requirements specified in Section 817(h) of the Code and any regulations thereunder; or (j) at the option of the Fund if the Contracts cease to qualify as annuity contracts or life insurance policies, as applicable, under the Code, or if the Fund reasonably believes that the Contracts may fail to so qualify; or (k) at the option of the Fund if the Fund shall determine, in its sole judgment exercised in good faith, that either (1) the Company shall have suffered a material adverse change in its business or financial condition: or (2) the Company shall have been the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Fund; or (l) at the option of the Company, if the Company shall determine, in its sole judgment exercised in good faith, that: (1) the Fund shall have suffered a material adverse change in its business or financial condition: or (2) the Fund shall have been the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Company; or (m) automatically upon the assignment of this Agreement (including, without limitation, any transfer of the Contracts or the Accounts to another insurance company pursuant to an assumption reinsurance agreement) unless the non-assigning party consents thereto or unless this Agreement is assigned to an affiliate of the Company or the Fund, as the case may be. 16 10.2. Notice Requirement. Except as otherwise provided in Section 10.1, no termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to the other party of its intent to terminate, which notice shall set forth the basis for such termination. Furthermore: (a) In the event that any termination is based upon the provisions of Article VII or the provisions of Section 10.1(a) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and (b) in the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination, or sooner if required by law or regulation. 10.3. Effect of Termination (a) Notwithstanding any termination of this Agreement pursuant to Section 10.1 of this Agreement, the Fund will, at the option of the Company, continue to make available additional Fund shares for so long after the termination of this Agreement as the Company desires, pursuant to the terms and conditions of this Agreement as provided in paragraph (b) below, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. (b) If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect except for Section 10.1(a) and thereafter either the Fund or the Company may terminate the Agreement, as so continued pursuant to this Section 10.3, upon prior written notice to the other party, such notice to be for a period that is reasonable under the circumstances but, if given by the Fund, need not be for more than six months. (c) The parties agree that this Section 10.3 shall not apply to any termination made pursuant to Article VII, and the effect of such Article VII termination shall be governed by the provisions set forth or incorporated by reference therein. 17 ARTICLE XI. Applicability to New Accounts and New Contacts The parties to this Agreement may amend the schedules to this Agreement from time to time to reflect changes in or relating to the Contracts and to add new classes of variable annuity contracts and variable life insurance policies to be issued by the Company through new or existing Separate Accounts investing in the Fund. The provisions of this Agreement shall be equally applicable to each such separate account and each such class of contracts or policies, unless the context otherwise requires. Any such amendment must be signed by the parties and must bear an effective date for that amendment. ARTICLE XII. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party(ies) at the address of such party(ies) set forth below or at such other address as such party(ies) may from time to time specify in writing to the other party. If to the Fund: Lincoln National Bond Fund, Inc. 1300 South Clinton Street Fort Wayne, Indiana 46802 Attn: Kelly D. Clevenger If to the Company: Lincoln Life and Annuity Company of New York 120 Madison Street, Suite 1700 Syracuse, NY 13202 Attn: Troy Panning ARTICLE XIII. Miscellaneous 13.1. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 13.2. This Agreement may be executed simultaneously in two or more counterparts, each of which together shall constitute one and the same instrument. 13.3. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 18 13.4. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 13.5. Each party represents that the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate or trust action, as applicable, by such party, and when so executed and delivered this Agreement will be the valid and binding obligation of such party enforceable in accordance with its terms. ARTICLE XIV. Prior Agreements This Fund Participation Agreement, as of its effective date, hereby supersedes any and all prior agreements to purchase shares between Lincoln Life and Annuity Company of New York and the Fund. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized officer on the date specified below. LINCOLN NATIONAL BOND FUND, INC. Signature: /s/ Kelly D. Clevenger ------------------------------------------- Name: Kelly D. Clevenger ------------------------------------------------ Title: President ----------------------------------------------- LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK Signature: /s/ Phillip Holstein ------------------------------------------- Name: Phillip Holstein ------------------------------------------------ Title: President, Treasurer & Director, Lincoln Life and Annuity Company of New York ----------------------------------------------- 19 Schedule 1 Lincoln National Bond Fund, Inc. Separate Accounts of Lincoln Life & Annuity Company of New York Investing in the Fund As of________________ LLANY Account Q Variable Annuity Schedule 2 Lincoln National Bond Fund, Inc. Variable Annuity Contracts and Variable Life Insurance Policies Supported by Separate Accounts Listed on Schedule 1 As of___________________ Group Multi Fund Amendment to Schedule 2 Lincoln National Money Market Fund, Inc. Variable Annuity Contracts and Variable Life Insurance Policies Supported by Separate Accounts Listed on Schedule 1 As of October 15, 1999 VUL I Group Multi Fund SVUL IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to Schedule 2 to be executed in its name and behalf by its duly authorized officer on the date specified below. LINCOLN NATIONAL MONEY MARKET FUND, INC. Signature: /s/ Kelly D. Clevenger ------------------------------------------- Name: Kelly D. Clevenger ------------------------------------------------ Title: President ----------------------------------------------- LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK Signature: /s/ Troy D. Panning ------------------------------------------- Name: Troy D. Panning ------------------------------------------------ Title: CFO/2nd Vice President ----------------------------------------------- Amendment to Schedule 1 Lincoln National Bond Fund, Inc. Separate Accounts of Lincoln Life & Annuity Company of New York Investing in the Fund As of October 15, 1999 LLANY Account Q Variable Annuity LLANY Separate Account R Amendment to Schedule 2 Lincoln National Bond Fund, Inc. Variable Annuity Contracts and Variable Life Insurance Policies Supported by Separate Accounts Listed on Schedule 1 As of October 15, 1999 Group Multi Fund LLANY Flexible Premium Variable Life Insurance -- SVUL IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to Schedules 1 and 2 to be executed in its name and behalf by its duly authorized officer on the date specified below. LINCOLN NATIONAL BOND FUND, INC. Signature: /s/ Kelly D. Clevenger ------------------------------------------- Name: Kelly D. Clevenger ------------------------------------------------ Title: President ----------------------------------------------- LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK Signature: /s/ Troy D. Panning ------------------------------------------- Name: Troy D. Panning ------------------------------------------------ Title: CFO/2nd Vice President ----------------------------------------------- EX-99.(8)(O) 11 EXHIBIT 99.(8)(O) FUND PARTICIPATION AGREEMENT Between THE LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK And LINCOLN NATIONAL MONEY MARKET FUND, INC. THIS AGREEMENT, made and entered into this 25th day of September, 1998, by and between Lincoln National Money Market Fund, Inc. a corporation organized under the laws of Maryland (the "Fund"), and LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK, a New York insurance corporation (the "Company"), on its own behalf and on behalf of each separate account of the Company named in Schedule 1 to this Agreement as in effect at the time this Agreement is executed and such other separate accounts that may be added to Schedule 1 from time to time in accordance with the provisions of Article XI of this Agreement (each such account referred to as the "Account"; collectively, the "Accounts"). WHEREAS, the Fund is engaged in business as an open-end management investment company and was established for the purpose of serving as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively referred to as "Variable Insurance Products," the owners of such products being referred to as "Product owners") to be offered by insurance companies which have entered into participation agreements with the Fund ("Participating Insurance Companies"); and WHEREAS, the Fund filed with the Securities and Exchange Commission (the "SEC") and the SEC has declared effective a registration statement (referred to herein as the "Fund Registration Statement" and the prospectus contained therein, or filed pursuant to Rule 497 under the 1933 Act, referred to herein as the "Fund Prospectus") on Form N-1A to register itself as an open-end management investment company (File No. 811-3212) under the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund shares (File No. 2-80743) under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, the Company has filed a registration statement with the SEC to register under the 1933 Act (unless exempt therefrom) certain variable annuity contracts and/or variable life insurance policies described in Schedule 2 to this Agreement as in effect at the time this Agreement is executed and such other variable annuity contracts and variable life insurance policies which may be added to Schedule 2 from time to time in accordance with Article XI of this Agreement (such policies and contracts shall be referred to herein collectively as the "Contracts," each such registration statement for a class or classes of contracts listed on Schedule 2 being referred to as the "Contracts Registration Statement" and the prospectus for each such class or classes being referred to herein as the "Contracts Prospectus," and the owners of the such contracts, as distinguished from all Product Owners, being referred to as "Contract Owners"); and WHEREAS, each Account, a validly existing separate account, duly authorized by the Company on the date set forth on Schedule 1, sets aside and invests assets attributable to the Contracts; and WHEREAS, the Company has registered or will have registered each Account with the SEC as a unit investment trust under the 1940 Act before any Contracts are issued by that Account; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares on behalf of each Account to fund its Contracts and the Fund is authorized to sell such shares to unit investment trusts such as the Accounts at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company and the Fund agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to the Company those shares which the Company orders on behalf of the Account, executing such orders on a daily basis in accordance with Section 1.4 of this Agreement. 1.2. The Fund agrees to make shares available for purchase by the Company on behalf of the Account at the then applicable net asset value per share on Business Days as defined in Section 1.4 of this Agreement, and the Fund shall use its best efforts to calculate and deliver such net asset value by 7:00 p.m., E.S.T., on each such Business Day. Notwithstanding any other provision in this Agreement to the contrary, the Board of Directors of the Fund (the "Fund Board") may suspend or terminate the offering of shares, if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Fund Board acting in good faith and in light of its fiduciary duties under Federal and any applicable state laws, suspension or termination is necessary and in the best interests of the shareholders (it being understood that "shareholders" for this purpose shall mean Product owners). 1.3. The Fund agrees to redeem, at the Company's request, any full or fractional shares of the Fund held by the Account or the Company, executing such requests at the net asset value on a daily basis (LL will expect same day redemption wires unless unusual circumstances evolve which cause the Fund to have to redeem securities) in accordance with Section 1.4 of this Agreement, the applicable provisions of the 1940 Act and the then currently effective Fund Prospectus. Notwithstanding the foregoing, the Fund may delay redemption of Fund shares to the extent permitted by the 1940 Act, any rules, regulations or orders thereunder, or the then currently effective Fund Prospectus. 2 1.4 (a) For purposes of Sections 1.1, 1.2 and 1.3, the Company shall be the agent of the Fund for the limited purpose of receiving redemption and purchase requests from the Account (but not from the general account of the Company), and receipt on any Business Day by the Company as such limited agent of the Fund prior to the time prescribed in the current Fund Prospectus (which as of the date of execution of this Agreement is 4 p.m., E.S.T.) shall constitute receipt by the Fund on that same Business Day, provided that the Fund receives notice of such redemption or purchase request by 9:00 a.m., E.S.T. on the next following Business Day. For purposes of this Agreement, "Business Day" shall mean any day on which the New York Stock exchange is open for trading. (b) The Company shall pay for the shares on the same day that it places an order with the Fund to purchase those Fund shares for an Account. Payment for Fund shares will be made by the Account or the Company in Federal Funds transmitted to the Fund by wire to be received by 11:00 a.m., E.S.T. on the day the Fund is properly notified of the purchase order for shares. The Fund will confirm receipt of each trade and these confirmations will be received by the Company via Fax or E-mail by 3:00 p.m. E.S.T. If Federal Funds are not received on time, such funds will be invested, and shares purchased thereby will be issued, as soon as practicable. (c) Payment for shares redeemed by the Account or the Company will be made in Federal Funds transmitted to the Company by wire on the same day the Fund is notified of the redemption order of shares, except that the Fund reserves the right to delay payment of redemption proceeds, but in no event may such payment be delayed longer than the period permitted under Section 22(e) of the 1940 Act. The Fund shall not bear any responsibility whatsoever for the proper disbursement or crediting of redemption proceeds if securities must be redeemed; the Company alone shall be responsible for such action. 1.5. Issuance and transfer of Fund shares will be by book entry only. Stock certificates will not be issued to the Company or the Account. Purchase and redemption orders for Fund shares will be recorded in an appropriate ledger for the Account or the appropriate subaccount of the Account. 1.6. The Fund shall furnish notice as soon as reasonably practicable to the Company of any income dividends or capital gain distributions payable on any shares. The Company, on its behalf and on behalf of the Account, hereby elects to receive all such dividends and distributions as are payable on any shares in the form of additional shares of that Fund. The Company reserves the right, on its behalf and on behalf of the Account, to revoke this election and to receive all such dividends in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 3 1.7. The Fund shall use its best efforts to make the net asset value per share available to the Company by 7:00 p.m., E.S.T. each Business Day, and in any event, as soon as reasonably practicable after the net asset value per share is calculated, and shall calculate such net asset value in accordance with the then currently effective Fund Prospectus. The Fund shall not be liable for any information provided to the Company pursuant to this Agreement which information is based on incorrect information supplied by the Company to the Fund. 1.8. (a) The Company may withdraw the Account's investment in the Fund only: (i) as necessary to facilitate Contract owner requests; (ii) upon a determination by a majority of the Fund Board, or a majority of disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of (x) any Product Owners or (y) the interests of the Participating Insurance Companies investing in the Fund; (iii) upon requisite vote of the Contract owners having an interest in the Fund to substitute the shares of another investment company for shares in accordance with the terms of the Contracts; (iv) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application; or (v) at the Company's sole discretion, pursuant to an order of the SEC under Section 26(b) of the 1940 Act. (b) The parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive and that the Fund shares may be sold to other insurance companies (subject to Section 1.9 hereof) and the cash value of the Contracts may be invested in other investment companies. (c) The Company shall not, without prior notice to the Fund (unless otherwise required by applicable law), take any action to operate the Accounts as management investment companies under the 1940 Act. 1.9. The Fund agrees that Fund shares will be sold only to Participating Insurance Companies and their separate accounts. The Fund will not sell Fund shares to any insurance company or separate account unless an agreement complying with Article VII of this Agreement is in effect to govern such sales. No Fund shares will be sold to the general public. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants (a) that the Contracts are registered under the 1933 Act or will be so registered before the issuance thereof, (b) that the Contracts will be issued in compliance in all material respects with all applicable Federal and state laws and (c) that the Company will require of every person distributing the Contracts that the Contracts be offered and sold in compliance in all material respects with all applicable Federal and state laws. The Company further represents and warrants that it is an insurance company duly organized and validly existing under applicable law and that it has legally and validly authorized each Account as 4 a separate account under Section 4240 of the New York Insurance Law and has registered or, prior to the issuance of any Contracts, will register each Account (unless exempt therefrom) as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a separate account for its Contracts, and that it will maintain such registrations for so long as any Contacts issued under them are outstanding. 2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act and duly authorized for issuance in accordance with applicable law and that the Fund is and shall remain registered under the 1940 Act for so long as the Fund shares are sold. The Fund further represents and warrants that it is a corporation duly organized and in good standing under the laws of Maryland. 2.3. The Fund represents and warrants that it currently qualifies as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Fund further represents and warrants that it will make every effort to continue to qualify and to maintain such qualification (under Subchapter M or any successor or similar provision), and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Fund represents and warrants that it will comply with Section 817(h) of the Code, and all regulations issued thereunder. 2.5. The 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. The Company shall make every effort to maintain such treatment and shall notify the Fund immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.6. The Fund represents that the Fund's investment policies, fees and expenses, and operations are and shall at all times remain in material compliance with the laws of the state of Maryland, to the extent required to perform this Agreement. The Fund, however, makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) otherwise complies with the insurance laws or regulations of any state. The Company alone shall be responsible for informing the Fund of any investment restrictions imposed by state insurance law and applicable to the Fund. 2.7. The Fund represents and warrants that it has and maintains a fidelity bond in accordance with Rule 17g-1 under the 1940 Act. The Fund will immediately notify the Company in the event the fidelity bond coverage should lapse at any time. 5 ARTICLE III. Prospectuses and Proxy Statements; Sales Material and Other Information 3.1. The Fund shall provide the Company with as many copies of the current Fund Prospectus as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund at its expense shall provide to the Company a camera-ready copy, and electronic version, of the current Fund Prospectus suitable for printing and other assistance as is reasonably necessary in order for the Company to have a new Contracts Prospectus printed together with the Fund Prospectus in one document. See Article V for a detailed explanation of the responsibility for the cost of printing and distributing Fund prospectuses. 3.2. The Fund Prospectus shall state that the Statement of Additional Information for the Fund is available from the Fund and the Fund shall provide such Statement free of charge to the Company and to any outstanding or prospective Contract owner who requests such Statement. 3.3. (a) The Fund at its expense shall provide to the Company a camera-ready copy of the Fund's shareholder reports and other communications to shareholders (except proxy material), in each case in a form suitable for printing, as determined by the Company. The Fund shall be responsible for the costs of printing and distributing these materials to Contract owners. (b) The Fund at its expense shall be responsible for preparing, printing and distributing its proxy material. The Company will provide the appropriate Contract owner names and addresses to the Fund for this purpose. 3.4. The Company shall furnish to the Fund, prior to its use, each piece of sales literature or other promotional material in which the Fund is named. No such material shall be used, except with the prior written permission of the Fund. The Fund agrees to respond to any request for approval on a prompt and timely basis. Failure of the Fund to respond within 10 days of the request by the Company shall relieve the Company of the obligation to obtain the prior written permission of the Fund. 3.5. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund other than the information or representations contained in the Fund Registration Statement or Fund Prospectus, as such Registration Statement and Prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund, except with the prior written permission of the Fund. The Fund agrees to respond to any request for permission on a prompt and timely basis. If the Fund does not respond within 10 days of a request by the Company, then the Company shall be relieved of the obligation to obtain the prior written permission of the Fund. 6 3.6. The Fund shall not give any information or make any representations on behalf of the Company or concerning the Company, the Account or the Contracts other than the information or representations contained in the Contracts Registration Statement or Contacts Prospectus, as such Registration Statement and Prospectus may be amended or supplemented from time to time, or in published reports of the Account which are in the public domain or approved in writing by the Company for distribution to Contract owners, or in sales literature or other promotional material approved in writing by the Company, except with the prior written permission of the Company. The Company agrees to respond to any request for permission on a prompt and timely basis. If the Company fails to respond within 10 days of a request by the Fund, then the Fund is relieved of the obligation to obtain the prior written permission of the Company. 3.7. The Fund will provide to the Company at least one complete copy of all Fund Registration Statements, Fund Prospectuses, Statements of Additional Information, annual and semi-annual reports and other reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments or supplements to any of the above, that relate to the Fund or Fund shares, within 20 days after the filing of such document with the SEC or other regulatory authorities. 3.8. The Company will provide to the Fund at least one complete copy of all Contracts Registration Statements, Contracts Prospectuses, Statements of Additional Information, Annual and Semi-annual Reports, sales literature and other promotional materials, and all amendments or supplements to any of the above, that relate to the Contracts, within 20 days after the filing of such document with the SEC or other regulatory authorities. 3.9. Each party will provide to the other party copies of draft versions of any registration statements, prospectuses, statements of additional information, reports, proxy statements, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments or supplements to any of the above, to the extent that the other party reasonably needs such information for purposes of preparing a report or other filings to be filed with or submitted to a regulatory agency. If a party requests any such information before it has been filed, the other party will provide the requested information if then available and in the version then available at the time of such request. 3.10. For purposes of this Article III, 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, computer net site, 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, in print or electronically, including brochures, circulars, research reports, market letters, form letters, seminar texts, or 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 agents or employees, registration statements, 7 prospectuses, Statements of Additional Information, shareholder reports and proxy materials, and any other material constituting sales literature or advertising under NASD rules, the 1940 Act or the 1933 Act. ARTICLE IV. Voting 4.1 Subject to applicable law and the requirements of Article VII, the Fund shall solicit voting instructions from Contract owners; 4.2 Subject to applicable law and the requirements of Article VII, the Company shall: (a) vote Fund shares attributable to Contract owners in accordance with instructions or proxies received in timely fashion from such Contact owners; (b) vote Fund shares attributable to Contract owners for which no instructions have been received in the same proportion as Fund shares of such Series for which instructions have been received in timely fashion; and (c) vote Fund shares held by the Company on its own behalf or on behalf of the Account that are not attributable to Contract owners in the same proportion as Fund shares of such Series for which instructions have been received in timely fashion. The Company shall be responsible for assuring that voting privileges for the Accounts are calculated in a manner consistent with the provisions set forth above. ARTICLE V. Fees and Expenses All expenses incident to performance by the Fund under this Agreement (including expenses expressly assumed by the Fund pursuant to this Agreement) shall be paid by the Fund to the extent permitted by law. Except as may otherwise be provided in Section 1.4 and Article VII of this Agreement, the Company shall not bear any of the expenses for the cost of registration and qualification of the Fund shares under Federal and any state securities law, preparation and filing of the Fund Prospectus and Fund Registration Statement, the preparation of all statements and notices required by any Federal or state securities law, all taxes on the issuance or transfer of Fund shares, and any expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-l under the 1940 Act. The Fund is responsible for the cost of printing and distributing Fund Prospectuses and SAIs to existing Contractowners. (If for this purpose the Company decided to print the Fund Prospectuses and SAIs in a booklet or separate booklets containing disclosure for the Contracts and for underlying funds other than those of the Fund, then the Fund shall pay only its proportionate share of the total cost to distribute the booklet to existing Contractowners.) 8 The Company is responsible for the cost of printing and distributing Fund prospectuses and SAIs for new sales; and Account Prospectuses and SAIs for existing Contractowners. The Company shall have the final decision on choice of printer for all Prospectuses and SAIs. ARTICLE VI. Compliance Undertakings 6.1. The Fund undertakes to comply with Subchapter M and Section 817(h) of the Code, and all regulations issued thereunder. 6.2. The Company shall amend the Contracts Registration Statements under the 1933 Act and the Account's Registration Statement under the 1940 Act from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company shall register and qualify the Contracts for sale to the extent required by applicable securities laws of the various states. 6.3. The Fund shall amend the Fund Registration Statement under the 1933 Act and the 1940 Act from time to time as required in order to effect for so long as Fund shares are sold the continuous offering of Fund shares as described in the then currently effective Fund Prospectus. The Fund shall register and qualify Fund shares for sale to the extent required by applicable securities laws of the various states. 6.4. The Company shall be responsible for assuring that any prospectus offering a Contract that is a life insurance contract where it is reasonably possible that such Contract would be deemed a "modified endowment contract," as that term is defined in Section 7702A of the Code, will describe the circumstances under which a Contract could be treated as a modified endowment contract (or policy). 6.5. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-l, the Fund undertakes to have a Fund Board of Directors, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-l to finance distribution expenses. ARTICLE VII. Potential Conflicts 7.1. The Company agrees to report to the Board of Directors of the Fund (the "Board") any potential or existing conflicts between the interests of Product Owners of all separate accounts investing in the Fund, and to assist the Board in carrying out its responsibilities under Section 6e-3(T) of the 1940 Act, by providing all information reasonably necessary for the Board to consider any issues raised, including information as to a decision to disregard voting instructions of variable contract owners. 9 7.2. If a majority of the Board, or a majority of disinterested Board Members, determines that a material irreconcilable conflict exists, the Board shall give prompt notice to all Participating Insurance Companies. (a) If a majority of the whole Board, after notice to the Company and a reasonable opportunity for the Company to appear before it and present its case, determines that the Company is responsible for said conflict, and if the Company agrees with that determination, the Company shall, at its sole cost and expense, take whatever steps are necessary to remedy the material irreconcilable conflict. These steps could include: (i) withdrawing the assets allocable to some or all of the affected Accounts from the Fund and reinvesting such assets in a different investment vehicle, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any particular group (i.e., variable annuity Contract owners, variable life insurance policy owners, or variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Contract owners the option of making such a change; and (ii) establishing a new registered mutual fund or management separate account; or (iii) taking such other action as is necessary to remedy or eliminate the material irreconcilable conflict. (b) If the Company disagrees with the Board's determination, the Company shall file a written protest with the Board, reserving its right to dispute the determination as between just the Company and the Fund and to seek reimbursement from the Fund for the reasonable costs and expenses of resolving the conflict. After reserving that right the Company, although disagreeing with the Board that it (the Company) was responsible for the conflict, shall take the necessary steps, under protest, to remedy the conflict, substantially in accordance with paragraph (a) just above, for the protection of Contract owners. (c) As between the Company and the Fund, if within 45 days after the Board's determination the Company elects to press the dispute, it shall so notify the Board in writing. The parties shall then attempt to resolve the matter amicably through negotiation by individuals from each party who are authorized to settle the matter. If the matter has not been amicably resolved within 60 days from the date of the Company's notice of its intent to press the dispute, then before either party shall undertake to litigate the dispute it shall be submitted to non-binding arbitration conducted expeditiously in accordance with the CPR Rules for Non-Administered Arbitration of Business Disputes, by a sole arbitrator; provided, however, that if one party has requested the other party to seek an amicable resolution and the other party has failed to participate, the requesting party may initiate arbitration before expiration of the 60-day period set out just above. 10 If within 45 days of the commencement of the process to select an arbitrator the parties cannot agree upon the arbitrator, then he or she will be selected from the CPR Panels of Neutrals. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16. The place of arbitration shall be Fort Wayne, Indiana. The Arbitrator is not empowered to award damages in excess of compensatory damages. (d) If the Board shall determine that the Fund or another was responsible for the conflict, then the Board shall notify the Company immediately of that determination. The Fund shall assure the Company that it (the Fund) or that other Participating Insurance Company as applicable, shall, at its sole cost and expense, take whatever steps are necessary to eliminate the conflict. (e) Nothing in Sections 7.2(b) or 7.2(c) shall constitute a waiver of any right of action which the Company may have against other Participating Insurance Companies for reimbursement of all or part of the costs and expenses of resolving the conflict. 7.3. If a material irreconcilable conflict arises because of the Company's decision to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company shall withdraw (without charge or penalty) the Account's investment in the Fund, if the Fund so elects. 7.4. For purposes of this Article, a majority of the disinterested members of the Board shall determine whether or not any proposed action adequately remedies any irreconcilable conflict. However, in no event will the Fund be required to establish a new funding medium for any variable contract, nor will the Company be required to establish a new funding medium for any Contract, if in either case an offer to do so has been declined by a vote of a majority of affected Contract owners. ARTICLE VIII. Indemnification 8.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Fund and each person who controls or is associated with the Fund (other than another Participating Insurance Company) within the meaning of such terms under the federal securities laws and any officer, trustee, director, employee or agent of the foregoing, against any and all losses, claims, damages or liabilities, joint or several (including any investigative, legal and other expenses reasonably incurred in connection with, and any amounts paid with the prior written consent of the Company in settlement of, any action, suit or proceeding or any claim asserted), to which they or any of them may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities: 11 (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Contracts Registration Statement, Contracts Prospectus, sales literature or other promotional material for the Contracts or the Contracts themselves (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided that this obligation to indemnify shall not apply if such statement or omission or such alleged statement or alleged omission was made in reliance upon and in conformity with information furnished in writing to the Company by the Fund (or a person authorized in writing to do so on behalf of the Fund) for use in the Contracts Registration Statement, Contracts Prospectus or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (b) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact by or on behalf of the Company (other than statements or representations contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund not supplied by the Company or persons under its control) or wrongful conduct of the Company or persons under its control with respect to the sale or distribution of the Contracts or Fund shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company; or (d) arise as a result of any failure by the Company to provide the services and furnish the materials or to make any payments under the terms of this Agreement; or (e) arise out of any material breach by the Company of this Agreement, including but not limited to any failure to transmit a request for redemption or purchase of Fund shares on a timely basis in accordance with the procedures set forth in Article I; or (f) arise as a result of the Company's providing the Fund with inaccurate information, which causes the Fund to calculate its Net Asset Values incorrectly. 12 This indemnification will be in addition to any liability which the Company may otherwise have; provided, however, that no party shall be entitled to indemnification if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by the party seeking indemnification. 8.2. Indemnification by the Fund. The Fund agrees to indemnify and hold harmless the Company and each person who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any officer, director, employee or agent of the foregoing, against any and all losses, claims, damages or liabilities, joint or several (including any investigative, legal and other expenses reasonably incurred in connection with, and any amounts paid with the prior written consent of the Fund in settlement of, any action, suit or proceeding or any claim asserted), to which they or any of them may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities: (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Fund Registration Statement, Fund Prospectus (or any amendment or supplement thereto) or sales literature or other promotional material of the Fund, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; provided that this obligation to indemnify shall not apply if such statement or omission or alleged statement or alleged omission was made in reliance upon and in conformity with information furnished in writing by the Company to the Fund for use in the Fund Registration Statement, Fund Prospectus (or any amendment or supplement thereto) or sales literature for the Fund or otherwise for use in connection with the sale of the Contracts or Fund shares; or (b) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by the Fund (other than statements or representations contained in the Fund Registration Statement, Fund Prospectus or sales literature or other promotional material of the Fund not supplied by the Distributor or the Fund or persons under their control) or wrongful conduct of the Fund or persons under its control with respect to the sale or distribution of the Contracts or Fund shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Contract's Registration Statement, Contracts Prospectus or sales literature or other promotional material for the Contracts (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon information furnished in writing by the Fund to the Company (or a person authorized in writing to do so on behalf of the Fund); or 13 (d) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including, but not by way of limitation, a failure, whether unintentional or in good faith or otherwise: (i) to comply with the diversification requirements specified in Sections 2.4 and 6.1 in Article VI of this Agreement; and (ii) to provide the Company with accurate information sufficient for it to calculate its accumulation and/or annuity unit values in timely fashion as required by law and by the Contracts Prospectuses); or (e) arise out of any material breach by the Fund of this Agreement. This indemnification will be in addition to any liability which the Fund may otherwise have; provided, however, that no party shall be entitled to indemnification if such loss, claim, damage or liability is due to the willful misfeasance, bad faith, gross negligence or reckless disregard of duty by the party seeking indemnification. 8.3. Indemnification Procedures. After receipt by a party entitled to indemnification ("indemnified party") under this Article VIII of notice of the commencement of any action, if a claim in respect thereof is to be made by the indemnified party against any person obligated to provide indemnification under this Article VIII ("indemnifying party"), such indemnified party will notify the indemnifying party in writing of the commencement thereof as soon as practicable thereafter, provided that the omission to so notify the indemnifying party will not relieve it from any liability under this Article VIII, except to the extent that the omission results in a failure of actual notice to the indemnifying party and such indemnifying party is damaged solely as a result of the failure to give such notice. The indemnifying party, upon the request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. A successor by law of the parties to this Agreement shall be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII shall survive any termination of this Agreement. 14 ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the state of Maryland, without giving effect to the principles of conflicts of law. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant, and the terms hereof shall be limited, interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party upon 120 days advance written notice to the other parties; or (b) at the option of the Company if shares of the Fund are not available to meet the requirements of the Contracts as determined by the Company. Prompt notice of the election to terminate for such cause shall be furnished by the Company. Termination shall be effective ten days after the giving of notice by the Company; or (c) at the option of the Fund upon institution of formal proceedings against the Company by the NASD, the SEC, the insurance commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the operation of the Account, the administration of the Contracts or the purchase of Fund shares; (d) at the option of the Company upon institution of formal proceedings against the Fund, the investment advisor or any sub-investment advisor, by the NASD, the SEC, or any state securities or insurance commission or any other regulatory body; or (e) upon requisite vote of the Contract owners having an interest in the Fund (unless otherwise required by applicable law) and written approval of the Company, to substitute the shares of another investment company for the corresponding shares of the Fund in accordance with the terms of the Contracts; or 15 (f) at the option of the Fund in the event any of the Contacts are not registered, issued or sold in accordance with applicable Federal and/or state law; or (g) at the option of the Company or the Fund upon a determination by a majority of the Fund Board, or a majority of disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of (i) any Product owners or (ii) the interests of the Participating Insurance Companies investing in the Fund; or (h) at the option of the Company if the Fund ceases to qualify as a Regulated Investment Company under Subchapter M of the Code, or under any successor or similar provision, or if the Company reasonably believes, based on an opinion of its counsel, that the Fund may fail to so qualify; or (i) at the option of the Company if the Fund fails to meet the diversification requirements specified in Section 817(h) of the Code and any regulations thereunder; or (j) at the option of the Fund if the Contracts cease to qualify as annuity contracts or life insurance policies, as applicable, under the Code, or if the Fund reasonably believes that the Contracts may fail to so qualify; or (k) at the option of the Fund if the Fund shall determine, in its sole judgment exercised in good faith, that either (1) the Company shall have suffered a material adverse change in its business or financial condition; or (2) the Company shall have been the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Fund; or (l) at the option of the Company, if the Company shall determine, in its sole judgment exercised in good faith, that; (1) the Fund shall have suffered a material adverse change in its business or financial condition; or (2) the Fund shall have been the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Company; or (m) automatically upon the assignment of this Agreement (including, without limitation, any transfer of the Contracts or the Accounts to another insurance company pursuant to an assumption reinsurance agreement) unless the non-assigning party consents thereto or unless this Agreement is assigned to an affiliate of the Company or the Fund, as the case may be. 16 10.2. Notice Requirement. Except as otherwise provided in Section 10.1, no termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to the other party of its intent to terminate, which notice shall set forth the basis for such termination. Furthermore: (a) In the event that any termination is based upon the provisions of Article VII or the provisions of Section 10.1(a) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and (b) in the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination, or sooner if required by law or regulation. 10.3. Effect of Termination (a) Notwithstanding any termination of this Agreement pursuant to Section 10.1 of this Agreement, the Fund will, at the option of the Company, continue to make available additional Fund shares for so long after the termination of this Agreement as the Company desires, pursuant to the terms and conditions of this Agreement as provided in paragraph (b) below, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. (b) If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect except for Section 10.1(a) and thereafter either the Fund or the Company may terminate the Agreement, as so continued pursuant to this Section 10.3, upon prior written notice to the other party, such notice to be for a period that is reasonable under the circumstances but, if given by the Fund, need not be for more than six months. (c) The parties agree that this Section 10.3 shall not apply to any termination made pursuant to Article VII, and the effect of such Article VII termination shall be governed by the provisions set forth or incorporated by reference therein. 17 ARTICLE XI. Applicability to New Accounts and New Contacts The parties to this Agreement may amend the schedules to this Agreement from time to time to reflect changes in or relating to the Contracts and to add new classes of variable annuity contracts and variable life insurance policies to be issued by the Company through new or existing Separate Accounts investing in the Fund. The provisions of this Agreement shall be equally applicable to each such separate account and each such class of contracts or policies, unless the context otherwise requires. Any such amendment must be signed by the parties and must bear an effective date for that amendment. ARTICLE XII. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party(ies) at the address of such party(ies) set forth below or at such other address as such party(ies) may from time to time specify in writing to the other party. If to the Fund: Lincoln National Money Market Fund, Inc. 1300 South Clinton Street Fort Wayne, Indiana 46802 Ann: Kelly D. Clevenger If to the Company: Lincoln Life and Annuity Company of New York 120 Madison Street, Suite 1700 Syracuse, NY 13202 Ann: Troy Panning ARTICLE XIII. Miscellaneous 13.1. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 13.2. This Agreement may be executed simultaneously in two or more counterparts, each of which together shall constitute one and the same instrument. 18 13.3. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 13.4. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 13.5. Each party represents that the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate or trust action, as applicable, by such party, and when so executed and delivered this Agreement will be the valid and binding obligation of such party enforceable in accordance with its terms. ARTICLE XIV. Prior Agreements This Fund Participation Agreement, as of its effective date, hereby supersedes any and all prior agreements to purchase shares between Lincoln Life and Annuity Company of New York and the Fund. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized officer on the date specified below. LINCOLN NATIONAL MONEY MARKET FUND, INC. Signature: /s/ Kelly D. Clevenger ----------------------------------------------------- Name: Kelly D. Clevenger ---------------------------------------------------------- Title: President --------------------------------------------------------- LINCOLN LIFE AND ANNUITY COMPANY OF NEW YORK Signature: /s/ Phillip Holstein ----------------------------------------------------- Name: Phillip Holstein ---------------------------------------------------------- Title: President, Treasurer & Director, Lincoln Life and Annuity --------------------------------------------------------- Company of New York --------------------------------------------------------- 19 Schedule 1 Lincoln National Money Market Fund, Inc. Separate Accounts of Lincoln Life & Annuity Company of New York Investing in the Fund As of___________________ LLANY Flexible Premium Variable Life Account M LLANY Account Q Variable Annuity LLANY Account R for Variable Life Schedule 2 Lincoln National Money Market Fund, Inc. Variable Annuity Contracts and Variable Life Insurance Policies Supported by Separate Accounts Listed on Schedule 1 As of___________________ VUL I Group Multi Fund SVUL I -----END PRIVACY-ENHANCED MESSAGE-----