SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made as of
August 15, 1996, by and among Delaware Management Holdings, Inc., a
Delaware corporation ("Holdings"), Delaware Service Company,
Inc., a Delaware corporation and a wholly owned subsidiary of
Holdings ("Delaware"), Lincoln National Life Insurance Company,
an Indiana insurance corporation ("Lincoln Life"), and each of
the investment companies listed in EXHIBIT A hereto, each a
Maryland corporation (together with any other investment company
designated in accordance with Section 5.1, the "Funds," or
individually, a "Fund").
The parties hereto, in consideration of the mutual
covenants hereinafter expressed, agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. The following terms shall have
the respective meanings set forth in this Section 1.1 for all
purposes of this Agreement except where the application of such
definitions is limited by reference in this Section 1.1 to a
specific Article of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the
terms herein defined):
"Acceptance Test" means a test, reasonably acceptable to
Lincoln Life, Delaware and the Funds, of the performance of the
Value Calculation Services for the Accounts included in the
respective Phases, to be conducted in accordance with Article 4.
"Accounting Services" means the services listed in the
Cutover Schedule with respect to the Accounts.
"Accounts" means the Funds and the Separate Accounts,
collectively.
"Affiliate" means, with respect to any entity, any other
entity controlling, controlled by or under common control with
such entity.
"Business Day" means a day on which the New York Stock
Exchange is open for trading.
"Calculation Losses" means any losses suffered by a
Contractowner, Third Party Administrator, Fund or Separate
Account directly caused by an error in a Net Asset Value or Unit
Value, or by the delivery to Lincoln Life or any Fund of a Net
Asset Value or Unit Value after the applicable deadline provided
for in Section 2.1; provided, however, that such losses shall not
include any consequential damages.
"Contractowner" means the present or former owner of an
insurance or annuity contract supported by a Separate Account, or
any beneficiary or annuitant thereof.
"Cutover Date," with respect to any Phase, means the
date, which shall be a Business Day, on which Delaware actually
commences providing the Accounting Services with respect to such
Phase in accordance with Section 4.2 The planned Cutover Date for
each Phase is set forth in the Cutover Schedule.
"Cutover Schedule" means SCHEDULE 1.1(a) hereto, which
sets forth the accounting services to be rendered pursuant to
this Agreement and the planned Cutover Dates, as such Schedule
may be amended form time to time pursuant to Section 16.1.
"Delaware" has the meaning set forth in the preamble to
this Agreement.
"Delaware Affiliate" means Holdings and any entity that is
directly or indirectly controlled by Holdings.
"Fee Schedule" means Schedule 6.1 hereto, as such Schedule
may be amended form time to time pursuant to Section 16.1.
"Fund" has the meaning set forth in the preamble to
this Agreement.
"Holdings" has the meaning set forth in the preamble to
this Agreement.
"Lincoln Affiliate" means any Affiliate of Lincoln Life
other than a Delaware Affiliate.
"Lincoln Life" has the meaning set forth in the preamble
to this Agreement.
"Net Asset Value" means the daily net asset value per
share of the respective Funds for each Business Day, all
determined in accordance with the terms of the Cutover Schedule
and with any applicable prospectus or regulatory requirement.
"Phase" means a set of Accounts comprising the Phase I
Accounts, the Phase II Accounts or the Phase III Accounts.
"Phase I Account" means an Account designated as such on
the Cutover Schedule.
"Phase II Account" means an Account designated as such
on the Cutover Schedule.
"Phase III Account" means an Account designated as such
on the Cutover Schedule.
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"Renewal Term" means each successive one-year term
occurring after the expiration of the initial term of this
Agreement as described in Section 11.1.
"Separate Account" means a separate account of Lincoln
Life identified as such on the Cutover Schedule, and any
additional separate account or sub-account of Lincoln Life or any
Lincoln Affiliate (or of any other person if Lincoln Life or any
Lincoln Affiliate has administrative responsibilities with
respect to such separate account or sub-account pursuant to any
reinsurance agreement or otherwise) designated in accordance
with Section 5.1.
"Test Period" means, with respect to each Phase, a
period of time prior to the Cutover Date for such Phase,
commencing on the date specified by Delaware pursuant to Section
4.1 and having a duration of three weeks or such longer period as
may be determined pursuant to Section 4.1.
"Third Party Administrator" means an administrator of
insurance or annuity contracts acting on behalf of Contractowners.
"Unit Value" means the daily unit value per unit of the
respective Separate Accounts or sub-accounts thereof for each
Business Day, all determined in accordance with the terms of the
Cutover Schedule and with any applicable prospectus or regulatory
requirement.
"Value Calculation Services" means those Accounting
Services consisting of or incidental to the calculation and
communication of Unit Values and Net Asset Values in accordance
with the terms of this Agreement.
ARTICLE 2
SCOPE OF SERVICES: CUTOVER
Section 2.1 SCOPE OF SERVICES. Delaware shall provide
the Accounting Services to each of the Funds and to Lincoln Life
with respect to each of the Separate Accounts, all in accordance
with the terms of this Agreement. Without limiting the generality
of the foregoing, from and after the Cutover Date of each
respective Phase, Delaware, no later than 6:00 p.m. (New York City
time) on each Business Day, shall in accordance with the terms of
this Agreement provide to Lincoln Life and to the Funds the Value
Calculation Services for each of the Accounts included in such
Phase. In the event of any error in the Value Calculation
Services, the parties hereto will follow the procedures set forth
in SCHEDULE 2.1, without prejudice to any other rights described in
this Agreement.
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Section 2.2 CUTOVER SCHEDULE. Delaware, Lincoln Life and
the Funds shall use their respective best efforts to cause the
Cutover Date to occur no later than (a) August 15, 1996, with
respect to the Phase I Accounts, (b) October 31, 1996, with respect
to the Phase II Accounts and (c) January 1, 1997 with respect to
the Phase III Accounts.
ARTICLE 3
LINCOLN LIFE'S SUPPORT OBLIGATIONS
Section 3.1 PROVISION OF DATA. Lincoln Life shall use
its best efforts to provide or cause to be provided to Delaware the
data identified in SCHEDULE 3.1 during the periods and in accordance
with the procedures identified in such Schedule, it being understood
that Delaware shall not be responsible for any Calculation Losses or
other claims, suits, hearings, actions, damages, liabilities, fines,
penalties, costs, losses or expenses, including reasonable
attorney's fees, which any party may sustain or incur, directly or
indirectly, in each case to the extent caused by or arising from
Lincoln Life's failure to provide such data in accordance with such
SCHEDULE 3.1.
Section 3.2 DATA TO BE PROVIDED BY THIRD PARTIES. With
respect to each of the mutual funds identified in SCHEDULE 3.2 as an
available investment of one or more of the Separate Accounts (other
than mutual funds managed by Lincoln Life or Delaware or their
respective Affiliates) and each third party service provider
identified in such Schedule, Lincoln Life shall direct each of the
managers of such funds or such service provider, as the case may be,
to provide or cause to be provided to Delaware the data identified
in SCHEDULE 3.2 in accordance with the procedures and time deadlines
identified in such Schedule.
Section 3.3 INFORMATION FOR PERIODS PRIOR TO CUTOVER DATE.
Lincoln Life will provide appropriate financial and other
information with respect to the Accounts to Delaware, and will
cooperate with Delaware, in connection with the preparation of data
for 1996 annual reports to Contractowner and other elements of the
Accounting Services that relate to periods prior to the Cutover
Dates for the respective Accounts. In addition, Lincoln Life will
provide to Delaware appropriate financial and other information
regarding the Accounts for periods prior to 1996 to the extent
relevant to the performance of the Accounting Services for 1996 and
subsequent periods.
ARTICLE 4
ACCEPTANCE TEST: CUTOVER DATE
Section 4.1 ACCEPTANCE TESTING. Delaware shall notify
Lincoln Life of the date, which shall be a Business Day, on which
the Value Calculation Services for each respective Phase will be
ready for the commencement of the Acceptance Test for such Phase.
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During the Test Period for each Phase, Delaware, Lincoln Life and the Funds
shall cooperate in performing the Acceptance Test for such Phase, and Delaware
and Lincoln Life, respectively, shall use its best efforts to remedy any
failure in the performance of the Value Calculation Services caused by such
party. In the event that, during the Test Period with respect to any Phase,
performance of the Value Calculation Services is suspended for such Phase in
order to effect such remedy or for any other reason, the Test Period for such
Phase shall be extended by the number of days of such suspension. Further, if
at the date that would otherwise be the end of the Test Period for any Phase
Delaware is not performing the Value Calculation Services with respect to such
Phase to the reasonable satisfaction of Lincoln Life, and Lincoln Life shall
so notify Delaware, the Test Period shall be extended until the date on which
Lincoln Life notifies Delaware that the Value Calculation Services are being
performed to the reasonable satisfaction of Lincoln Life. All references in
this Section 4.1 to the performance of the Value Calculation Services shall
refer to the performance thereof in a test mode.
Section 4.2 CUTOVER DATE. With respect to each Phase, upon the
termination of the Test Period, Lincoln Life, the Funds and Delaware shall
execute a written acknowledgment in the form of EXHIBIT B hereto confirming
such termination and specifying the Cutover Date, which shall be the Business
Day immediately following the date of such termination unless Lincoln Life,
the Funds and Delaware shall agree upon a different date.
ARTICLE 5
NEW ACCOUNTS; NEW INVESTMENT MANAGERS
Section 5.1 ADDITIONAL ACCOUNTS. Lincoln Life may from time to time
designate (i) one or more additional investment companies or separate accounts
to constitute Funds or Separate Accounts, as the case may be, for all purposes
of this Agreement, or (ii) one or more newly established sub-accounts of any
Separate Account. Such designation shall be:
(a) subject to Delaware's consent, which shall not be
unreasonably withheld; provided, that such consent
shall be considered to be unreasonably withheld if
Delaware does not make reasonable efforts to accept
such new investment companies, separate accounts and
sub-accounts, which efforts shall include, but not
be limited to, reasonable consideration of the
expansion of Delaware's infrastructure to handle
such new investment companies, separate accounts and
sub-accounts; and
(b) evidenced by a writing executed by Lincoln Life,
Delaware and, if applicable, each such investment
company, setting forth the name of such investment
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company, separate account or new sub-account, the applicable
rate under the Fee Schedule that shall apply to the
Accounting Services for such investment company, separate
account or new sub-account, the effective date of the
designation thereof as a Fund, Separate Account or new
sub-account, and any other matters the parties wish to
include.
Notwithstanding clause (b) of the preceding sentence, if Delaware's
performance of the Accounting Services for such additional Funds,
Separate Accounts, or sub-accounts of such Separate Accounts would, in
Delaware's reasonable opinion, result in higher costs than the costs
Delaware incurs for providing the Accounting Services to the current
Accounts, then the affected parties hereto shall negotiate in good
faith an addendum to the Fee Schedule for such additional Funds,
Separate Accounts and sub-accounts and Delaware shall not be deemed to
have unreasonably withheld its consent under clause (b) of this
Section 5.1 until such addendum has been agreed to. Except as
otherwise specified in such writing, from and after such effective
date, Delaware shall provide to such Fund, or to Lincoln Life with
respect to a Separate Account or new sub-account, the same Accounting
Services as are specified in the Cutover Schedule with respect to the
other Funds, Separate Accounts or sub-account of a Separate Account,
as the case may be.
Section 5.2 NEW INVESTMENT MANAGERS. If new investment
managers are added to provide investment advisory services to any of
the Accounts, and Delaware's performance of the Accounting Services
is, as a result thereof, significantly more costly to Delaware, the
affected parties shall negotiate in good faith an addendum to the Fee
Schedule for such Accounts.
ARTICLE 6
FEES
Section 6.1 ACCRUAL OF FEES. From and after the Cutover Date
with respect to each Phase, Lincoln Life shall pay fees for the
Accounting Services for each of the Separate Accounts included in such
Phase, and each Fund included in such Phase shall pay fees for the
Accounting Services for such Fund, in each case at the respective
rates per annum determined in accordance with the Fee Schedule. Fees
accrued pursuant to this Section 6.1 shall be payable in arrears on a
monthly basis.
Section 6.2 PAYMENT OF FEES BY LINCOLN LIFE. Delaware shall
submit to Lincoln Life an invoice for each month for all of the fees
payable pursuant to Section 6.1 with respect to each of the Separate
Accounts, which invoice shall be itemized to show the portion of such
fees allocable to each of the Separate Accounts in accordance with the
Fee Schedule. Subject to the
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terms of this Agreement, invoices for such fees shall be payable
within 30 days of receipt.
Section 6.3 PAYMENT OF FEES BY THE FUNDS. Delaware shall
submit to each Fund, with a copy to Lincoln Life, an invoice for
each month for all of the fees payable pursuant to Section 6.1
with respect to such Fund. Subject to the terms of this
Agreement, invoices for such fees shall be payable within 30 days
of receipt.
ARTICLE 7
STANDARD OF CARE; INDEMNIFICATION
Section 7.1 STANDARD OF CARE. Delaware shall provide the
Accounting Services with a level of care equal to or greater than
the level of care at which it performs similar functions for
mutual funds that are sponsored or managed by any Delaware
Affiliate, and in any event, Delaware shall always exercise
reasonable care in performing the Accounting Services.
Section 7.2 INDEMNIFICATION
(a) INDEMNIFICATION BY LINCOLN LIFE. Lincoln Life shall
indemnify, defend and hold harmless Delaware and any Delaware
Affiliate, and the directors, officers and employees of the fore-
going (each individually, a "Delaware Indemnified Party"), against
any and all claims, suits, hearings, actions, damages,
liabilities, fines, penalties, costs, losses or expenses,
including reasonable attorney's fees, which any Delaware
Indemnified Party may sustain or incur, directly or indirectly, in
each case to the extent caused by or arising from (i) the
negligence, recklessness or intentional misconduct of Lincoln Life
or any Lincoln Affiliate, or any director, officer or employee
thereof, in the performance of this Agreement; or (ii) the failure
of Lincoln Life to comply with the terms of this Agreement.
(b) INDEMNIFICATION BY DELAWARE. Subject to Section 3.1,
Delaware shall indemnify, defend and hold harmless Lincoln Life,
the Lincoln Affiliates and the Funds, and the directors, officers
and employees of the foregoing (each individually, a "Lincoln
Indemnified Party") against any and all claims, suits, hearings,
actions, damages, liabilities, fines, penalties, costs, losses
(including but not limited to (a) Calculation Losses reimbursed by
Lincoln Life and (b) any market fluctuation losses incurred by
Lincoln Life in effecting such reimbursement) or expenses,
including reasonable attorney's fees, which any Lincoln
Indemnified Party may sustain or incur, directly or indirectly,
in each case to the extent caused by or arising from (i) the
negligence, recklessness or intentional misconduct of Delaware
or any Delaware Affiliate, or any director, officer or employee
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thereof, in the performance of this Agreement; or (ii) the failure of
Delaware to comply with the terms of this Agreement.
(c) PROCEDURES. Subject to the provisions of Section 7.2(d),
promptly after receipt by a Delaware Indemnified Party or a Lincoln
Indemnified Party (each, an "Indemnified Party") of notice of the
commencement of any action, proceeding, investigation or claim by any
Contractowner or other third party (a "Proceeding"), the Indemnified
Party shall, if a claim in respect thereof is to be made pursuant to
this Section 7.2 against another party to this Agreement (the
"Indemnifying Party"), notify the Indemnifying Party in writing of the
commencement thereof; but the failure so to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability under
this Section 7.2, except to the extent that such failure to notify
actually prejudices the Indemnifying Party. In case any such Proceeding
shall be brought against an Indemnified Party, the Indemnifying Party
shall be entitled to participate in and to assume the defense thereof,
with counsel satisfactory to the Indemnified Party, and after notice
from the Indemnifying Party to the Indemnified Party of the Indemnifying
Party's election to assume the defense thereof, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other
expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that (i) if, in the reasonable judgment of the
Indemnified Party, it is advisable for the Indemnified Party to be
represented by separate counsel other than counsel for the Indemnifying
Party, the Indemnified Party shall have the right to employ a single
counsel to represent the Indemnified Party, in which event the
reasonable fees and expenses of such separate single counsel shall be
borne by the Indemnifying Party, and (ii) in the case of any Proceeding
brought by any governmental authority, the Indemnifying Party shall have
the right to participate in, but not to assume the defense of, such
Proceeding. The Indemnifying Party shall not be obligated under any
settlement agreement relating to any Proceeding under this Section 7.2
to which it has not consented in writing, which consent shall not be
unreasonably withheld.
(d) PRESERVING RIGHTS WITH RESPECT TO CALCULATION LOSSES.
Notwithstanding section 7.2(c), Lincoln Life may in its sole discretion
elect to reimburse a Contractowner, Third Party Administrator, Separate
Account or Fund for Calculation Losses out of Lincoln Life's own funds
and such reimbursement shall have no effect on the respective
indemnification obligations of the parties pursuant to Section 7.2(a)
and (b).
(e) OVERPAYMENTS. The parties agree that there may be
circumstances in which it would not be commercially reasonable for
Lincoln Life and the Funds to seek reimbursement from one or more
Contractowners of overpayments made them, taking
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into account relevant factors such as industry practice; the amount of such
overpayments; the number of Contractowners overpaid; the cost of seeking
reimbursement; and the implications for customer relations of seeking
reimbursement. In the event of any overpayment to a Contractowner for which
Lincoln Life or any Fund intends to seek indemnification from Delaware
pursuant to Section 7.2(b) without seeking reimbursement from the
Contractowner, the parties shall negotiate in good faith as to what effect, if
any, the determination not to seek such reimbursement should have under the
circumstances on the rights of Lincoln Life or the Funds to indemnification
for the amounts overpaid.
ARTICLE 8
INSURANCE COVERAGE
Section 8.1 INSURANCE. Delaware and Holdings shall maintain insurance
coverage at a level at least equal to the insurance coverage held by each of
them at the time this Agreement becomes effective.
ARTICLE 9
FORCE MAJEURE AND DISASTER RECOVERY PLAN
Section 9.1 FORCE MAJEURE; DISASTER RECOVERY PLAN. No party shall be
liable to any other party for any damages caused by delays beyond its
reasonable control, including, without limitation, those delays occasioned by
fire, strike, labor dispute, acts of the other party, acts of any common
carrier, pricing service, corporate action service, or telephone network, acts
of the power supply company or its networks, restrictions by civil or military
authorities, acts of nature, or unforeseen transportation failures. In the
event of any such delay, the hindered party shall promptly notify the other
parties and, upon the giving of such notice, the period of time for
performance of obligations hereunder affected by such delays will be extended
by the same number of days as the delay. Notwithstanding the foregoing,
Delaware shall maintain and implement a customary disaster recovery plan and
such plan shall be reasonably acceptable to Lincoln Life and the Funds. This
Article 9 shall not excuse any failure to perform, or extend the time for
performance of, any obligation of Delaware under this Agreement to the extent
that such failure or delay would have been avoided by compliance with such
disaster recovery plan, or by the use of reasonable, readily available
alternatives.
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ARTICLE 10
EFFECTIVENESS
Section 10.1 EFFECTIVENESS.
(a) This Agreement shall become effective upon the later of:
(i) the date first set forth above; or
(ii) the date as of which Lincoln Life has complied with the
requirements of the Indiana insurance holding company
laws at Section 27-1-23-4 of the Indiana Code.
(b) Lincoln Life shall diligently and reasonably pursue the
satisfaction of the requirements of the Indiana insurance holding
company laws at Section 27-1-23-4 of the Indiana Code.
ARTICLE 11
TERM AND TERMINATION
Section 11.1 TERM. The initial term of this Agreement shall end on the
fourth anniversary of the Cutover Date of Phase III, and this Agreement shall be
automatically renewed for subsequent Renewal Terms thereafter unless sooner
terminated under Section 11.2.
Section 11.2 TERMINATION. Subject to the procedures set forth in Article
12 and to Section 11.3, this Agreement may be terminated as follows:
(a) by Lincoln Life, Delaware, or any Fund, in each case upon notice
to each of the other parties at least 180 days prior to the
expiration of the initial term or any Renewal Term, with such
termination to become effective upon such expiration; and
(b) by Lincoln Life, Delaware or any Fund upon 30 days notice to each
of the other parties, for any material breach of this Agreement
unless such breach is cured within such notice period.
For the purpose of this Section 11.2 (b) only, a "material breach" shall
include, but not be limited to, the failure by Delaware to provide Accounting
Services hereunder of a quality reasonably determined by Lincoln Life or any
Fund to be consistent with a superior level of service in the industry.
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Section 11.3 EFFECT OF TERMINATION BY A FUND. In the event one or
more Funds shall terminate this Agreement, this Agreement shall nonetheless
continue in full force and effect between and among those parties who have
not terminated this Agreement.
ARTICLE 12
PROCEDURES UPON TERMINATION
Section 12.1 OBLIGATIONS UPON TERMINATION. Upon termination of this
Agreement by any party under Article 11, each party shall be obligated to
cooperate with each other party to provide for the transfer of all
responsibilities, duties and obligations of this Agreement as may be
necessary to ensure the orderly, undisrupted business of each party. Such
cooperation shall include, but not be limited to, returning all papers,
documents, materials or equipment to the party owning such materials. In the
event that this Agreement is terminated by Lincoln Life or any Fund under
Section 11.2(b), Lincoln Life and the Funds shall have the right to require
Delaware to continue performing all or any part of its responsibilities,
duties and obligations under this Agreement until the earlier of (a) 210 days
following the date notice of such termination was given, or (b) the date that
is 30 days after notice from Lincoln Life or the Funds that Delaware shall
cease such performance. For this purpose, (a) the terms of this Agreement
(including without limitation the obligation of Lincoln Life and the Funds to
pay Delaware's fees under Article 6, and the obligation of Delaware to
continue to exercise the standard of care required under Section 7.1 shall
remain in effect with respect to the period in which Delaware is obligated to
continue such performance, and (b) if any portion of Delaware's
responsibilities, duties and obligations during such period are not so
extended as required by Lincoln Life, the parties shall mutually agree in
good faith on a reduction of fees which reflects the termination of such
responsibilities, duties and obligations.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES
Each party represents and warrants to the other parties as follows:
Section 13.1 ORGANIZATION AND AUTHORITY. Such party is duly
organized, validly existing and in good standing as a corporation under the
laws of the state indicated on the first page of this Agreement, with the
requisite authority and power, in conformity with applicable laws, rules and
regulations, to execute and deliver this Agreement and to perform its
obligations hereunder. Such party has taken all necessary action to authorize
such execution, delivery and performance.
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Section 13.2 NO CONFLICT WITH LAWS. The execution, delivery and
performance of this Agreement by such party do not conflict with or violate
any laws applicable to such party, any provision of its constituent
documents, any order or judgment of any court or governmental agency
applicable to it or any of its assets or any contractual restriction binding
on it or its assets.
Section 13.3 OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of such party, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to the enforcement of creditors' rights
generally and subject to principles of equity.
ARTICLE 14
PARENT GUARANTY
Section 14.1 PARENT GUARANTY. Holdings hereby unconditionally
guarantees the full and punctual performance of the covenants, agreements and
obligations of Delaware under this Agreement, including but not limited to
the payment when due of all amounts that may from time to time be payable by
Delaware pursuant to Section 7.2 (b) (the "Guaranteed Obligations").
Section 14.2 GUARANTY UNCONDITIONAL. The obligations of Holdings
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released or discharged by:
(a) any extension, settlement, compromise, waiver or
release in respect of any obligation of Delaware under this Agreement;
(b) any modification or amendment of or supplement to
this Agreement;
(c) any change in the corporate existence, structure or
ownership of Delaware, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting Delaware or its assets; or
(d) any other act or omission to act or delay of any kind by
Delaware, Lincoln Life, any Fund or any other person which would, but
for the provisions of this paragraph (d), constitute a legal or
equitable discharge of Holding's obligations hereunder;
provided, however, that in the event of any extension, settlement, compromise,
waiver or release of any obligation of Delaware under this Agreement, or any
modification or amendment of or supplement to this Agreement, the guaranty
provided for in this
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Article 14 shall apply to the obligations of Delaware as so extended,
settled, compromised, waived, released, modified, amended or supplemented.
Section 14.3 DISCHARGE ONLY UPON PAYMENT OR PERFORMANCE IN FULL;
REINSTATEMENT IN CERTAIN CIRCUMSTANCES. Holding's obligations hereunder shall
remain in full force and effect until the Guaranteed Obligations shall have
been paid or performed in full. If at any time any payment of Guaranteed
Obligations by Delaware under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of Delaware or otherwise, Holding's obligations hereunder
with respect to such payment shall be reinstated as though such payment had
been due but not made at such time.
Section 14.4 WAIVER BY HOLDINGS. Holdings irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided
for herein, as well as any requirement that at any time any action be taken
by any person against Delaware or any other person.
Section 14.5 SUBROGATION. Upon making any payment with respect to
Delaware hereunder, Holdings shall be subrogated to the rights of the payee
against Delaware with respect to such payment; provided that Holdings shall
not enforce payment by way of subrogation until all Guaranteed Obligations
have been paid or performed in full.
ARTICLE 15
DISPUTE RESOLUTION
Before commencing litigation of any dispute arising out of or
relating to this Agreement, the parties shall attempt in good faith to
resolve the dispute by the following means:
Section 15.1 NEGOTIATION. The parties shall in good faith attempt to
resolve any dispute arising out of or relating to this Agreement promptly by
negotiations between executives who have authority to settle the controversy.
A party may give the other parties written notice of any dispute not resolved
in the normal course of business. Within 20 days after delivery of that
notice, executives of the affected parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within 60 days of the disputing
party's notice, or if the parties fail to meet within 20 days, either party
may initiate mediation of the controversy or claim as provided in Section
15.2. If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator shall be given at least 3 Business Days' notice of that
intention and may also be accompanied by an attorney.
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Section 15.2 MEDIATION. If the dispute has not been resolved by
negotiation as provided in Section 15.1, the parties shall endeavor for an
additional period of 60 days to settle the dispute by mediation under the
then-current Center for Public Resources (CPR) Model Procedure for Mediation
of Business Disputes. The neutral third party will be selected from the CPR
Panel of Neutrals. If the parties encounter difficulty in agreeing on a
neutral, they will seek the assistance of CPR in the selection process.
Section 15.3 CONFIDENTIALITY. All activities under this Article 15
are confidential and shall be treated as compromise and settlement
negotiations for purposes of the Federal Rules of Evidence and state rules of
evidence.
ARTICLE 16
MISCELLANEOUS
Section 16.1 AMENDMENT. This Agreement, including any Exhibits or
Schedules, may be amended, modified or supplemented only in writing signed by
Delaware, Lincoln Life and any Fund affected thereby. This Agreement shall be
binding upon all successors, assigns or transferees of the parties to this
Agreement.
Section 16.2 ASSIGNMENT. This Agreement and the rights, duties and
obligations of the parties hereto shall not be assignable by any party,
except assignment to successors in the case of mergers, sales of all or
substantially all of the assets of such party or transfer of ownership by
reorganization or similar restructuring to a successor in interest to the
business of such party, without the prior written consent of the other
parties, and any purported assignment in the absence of such consent shall be
void.
Section 16.3 NOTICES. 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 service; (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.
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Any notice under this Agreement to Lincoln Life shall be given to:
ATTN: O. Xxxxxxx Xxxxxxxxxxx
Vice President and Controller
Lincoln National Life Insurance
Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Any notice under this Agreement to Delaware or Holdings shall be given
to:
ATTN: Xxxxxxx X. Xxxxxx
Vice President and Treasurer
Delaware Management Company
0000 Xxxxxx Xxxxxx; 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxx
Managing Director, Corporate
& Tax Affairs
Delaware Management Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Any notice under this Agreement to any Fund shall be given to:
ATTN: Xxxxx X. Xxxxxxxxx
Lincoln National Life Insurance
Company
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, by means of written notice in compliance with this
Section 16.3, change the address or the identity of the person to whom any
notice, or copy thereof, is to be sent.
15
Section 16.4 SEVERABILITY. If any provision of this Agreement, as
applied to any party or to any circumstances, shall be found by a court of
competent jurisdiction to be void, invalid or unenforceable, the same shall
in no way affect any other provision of this Agreement, the application of
any such provision in any other circumstances, or the validity or
enforceability of this Agreement; provided, however, that nothing in this
Section 16.4 shall adversely affect the fundamental benefits received by the
parties under this Agreement.
Section 16.5 WAIVER. A waiver by any party of any of the terms and
conditions of this Agreement in any one instance shall not be deemed or
construed to be waiver of any such term or condition for the future, or of
any subsequent breach thereof, nor shall it be deemed a waiver of performance
of any other obligation hereunder. No waiver of any provision of this
Agreement shall be valid unless agreed to in writing by the party or parties
against whom such waiver is sought to be enforced.
Section 16.6 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter of this
Agreement and supersedes all prior and collateral agreements, understandings,
statements and negotiations of the parties.
Section 16.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana, without giving
effect to the conflict of law provisions thereof.
Section 16.8 SECTION AND PARAGRAPH HEADINGS. The titles of the
sections and paragraphs of this Agreement are for convenience only and shall
not in any way affect the interpretation of any provision or condition of
this Agreement.
Section 16.9 COUNTERPARTS. This Agreement may be executed in
counterparts which, taken together, shall constitute the whole of the
Agreement as between the parties.
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
LINCOLN LIFE:
LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
-----------------------------------------------------
O. Xxxxxxx Xxxxxxxxxxx
Title: Vice President and Controller
Date:
---------------------------------------------------
HOLDINGS:
DELAWARE MANAGEMENT HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------------
Xxxxx X. Xxxxxx
Title: Executive Vice President & Chief Operating Officer
--------------------------------------------------
Date: August 15, 1996
---------------------------------------------------
DELAWARE:
DELAWARE SERVICE COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------------
Xxxxxxx X. Xxxxxx
Title: Vice President & Treasurer
--------------------------------------------------
Date: August 15, 1996
---------------------------------------------------
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
LINCOLN LIFE:
LINCOLN NATIONAL LIFE INSURANCE COMPANY
By: /s/ O. Xxxxxxx Xxxxxxxxxxx
-----------------------------------------------------
O. Xxxxxxx Xxxxxxxxxxx
Title: Vice President and Controller
Date:
---------------------------------------------------
HOLDINGS:
DELAWARE MANAGEMENT HOLDINGS, INC.
By:
-----------------------------------------------------
Title:
--------------------------------------------------
Date:
---------------------------------------------------
DELAWARE:
DELAWARE SERVICE COMPANY, INC.
By:
-----------------------------------------------------
Title:
--------------------------------------------------
Date:
---------------------------------------------------
17
FUNDS:
LINCOLN NATIONAL AGGRESSIVE GROWTH FUND, INC.
LINCOLN NATIONAL BOND FUND, INC.
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.
LINCOLN NATIONAL EQUITY-INCOME FUND, INC.
LINCOLN NATIONAL GLOBAL ASSET ALLOCATION FUND, INC.
LINCOLN NATIONAL GROWTH AND INCOME FUND, INC.
LINCOLN NATIONAL INTERNATIONAL FUND, INC.
LINCOLN NATIONAL MANAGED FUND, INC.
LINCOLN NATIONAL MONEY MARKET FUND, INC.
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.
LINCOLN NATIONAL SPECIAL OPPORTUNITIES FUND, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------------------
Xxxxx X. Xxxxxxxxx
In his capacity as President of each of the
above-named Funds.
Date:
---------------------------------------------------
18
EXHIBIT A
INVESTMENT COMPANIES
EXHIBIT A
INVESTMENT COMPANIES
Lincoln National Aggressive Growth Fund, Inc.
Lincoln National Bond Fund, Inc.
Lincoln National Capital Appreciation Fund, Inc.
Lincoln National Equity-Income Fund, Inc.
Lincoln National Global Asset Allocation Fund, Inc.
Lincoln National Growth and Income Fund, Inc.
Lincoln National International Fund, Inc.
Lincoln National Managed Fund, Inc.
Lincoln National Money Market Fund, Inc.
Lincoln National Social Awareness Fund, Inc.
Lincoln National Special Opportunities Fund, Inc.
EXHIBIT B
FORM OF WRITTEN ACKNOWLEDGEMENT OF CUTOVER DATE
EXHIBIT B
FORM OF ACKNOWLEDGEMENT OF CUTOVER DATE
This acknowledgement is executed pursuant Section 4.2 of that certain
Services Agreement (the "Agreement") dated as of July __, 1996 by and among
Delaware Management Holdings, Inc., Delaware Service Company, Inc., Lincoln
National Life Insurance Company, Lincoln National Aggressive Growth Fund,
Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation
Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National
Global Asset Allocation Fund, Inc., Lincoln National Growth and Income Fund,
Inc., Lincoln National International Fund, Inc., Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National Social
Awareness Fund, Inc. and Lincoln National Special Opportunities Fund, Inc.
Capitalized terms used herein have the same meaning as in the Agreement.
Each of the parties signing this acknowledgement below hereby agrees that
the Test Period for Phase __ terminated on ________________, 1996. The Cutover
Date for providing the Accounting Service for Phase __ is ________________,
1996.
LINCOLN NATIONAL LIFE INSURANCE COMPANY
By:
-----------------------------------------------------
Title:
--------------------------------------------------
Date:
---------------------------------------------------
DELAWARE SERVICE COMPANY, INC.
By:
-----------------------------------------------------
Title:
--------------------------------------------------
Date:
---------------------------------------------------
[Each Fund]
By:
-----------------------------------------------------
Title:
--------------------------------------------------
Date:
---------------------------------------------------
2
SCHEDULE 1.1(a)
---------------
CUTOVER SCHEDULE
CUTOVER SCHEDULE
PHASE I (8/15/96 SCHEDULED CUTOVER DATE):
The following services will begin at the Cutover Date for Phase I and will
subsequently be provided by Delaware for the duration of the Service
Agreement. The Funds for which these services will be provided are as follows:
- Lincoln National Growth & Income Inc.,
- Lincoln National Bond Fund Inc.,
- Lincoln National Money Market Fund Inc.,
- Lincoln National Managed Fund Inc.,
- Lincoln National Social Awareness Fund Inc.,
- Lincoln National Special Opportunities Fund Inc.
Daily Net Asset Value Calculation Services
- Maintain Portfolio History
- Record portfolio purchases and sales
- Record corporation actions and capital changes
- Accrue interest, dividends and expenses
- Maintain income history for securities
- Determine distributions to shareholders
- Record and reconcile shareholder activity
- Seek subscription, liquidation and dividend reinvestments
- Record settlements of shareholder activity
- Reconcile fund shares outstanding to transfer agent
- Value portfolios (Calculate the NAV for each fund portfolio)
- Verify Delaware's internal controls - pricing securities and
portfolios
- Disseminate NAVs and dividends to interested parties (Lincoln Life,
ICI, Morningstar, Lipper, etc.) as mutually agreed upon by Lincoln Life &
Delaware
- Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
- Commencing 12/31/96 prepare the following information for use in the
semi-annual and annual reports for shareholders:
- Prepare Statement of Net Assets, Statement of Operations and Changes
in Net Assets
- Work with external auditors on footnotes to the financial statements,
- Workpapers for annual audit,
- Cooperate with external auditors, Lincoln Life Marketing & printer
- Required ICI reporting as mutually agreed upon by Lincoln Life and
Delaware
- Prepare Statistical reports as necessary (daily, monthly, quarterly and
annual reports for Lipper, Morningstar, and other third party reporting
agencies and survey companies) as mutually agreed upon by Lincoln Life and
Delaware
1
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
- Commencing 1/1/97, provide financial information for use in SEC reporting
(ie. NSAR, Prospectus, SAI, 24F2e, etc...)
- Provide financial information to support schedule "D"
Other Services:
- Calculate monthly SEC yields & fund level performance
- Prepare information for tax returns and ancillary schedules and submit to
Lincoln Corporate Tax Department:
- 1120 RIC and any other required forms
- Year-end excise tax distributions
- Calculate and provide information for Subchapter M & Section 4982 of
Internal Revenue Code compliance
- Provide tax return workpapers to Lincoln Life for review purposes
- Perform the following special tax reporting functions
- Prepare income by state, exempt income and qualified distributions
- Prepare financial information for expense and budget functions
- Maintain detailed records pertaining to expense accruals and payments
- Adjust fund records to reflect accrual adjustments
- Prepare reports which are mutually agreed upon by Lincoln Life and
Delaware for Board of Director meetings & Senior Management (as they
pertain to these 6 Funds)
- Cooperate with custodians in all custody relationships
- Facilitate security settlements
- Perform required foreign security accounting functions
- Perform daily cash reconciliations for each Fund provided that the
bank(s) &/or third party mutual fund complex(s) send the necessary
information to perform such reconciliations
- Perform weekly asset reconciliations for each fund providing the
bank(s) &/or third party mutual fund complex(s) send the necessary
information to perform such reconciliations
- Support business relationships with Lincoln business partners
(ie. advisors, custodians, banks, third party administrators, etc.)
- Provide portfolio holdings and security valuation reports
- Prepare cash forecasts and reconciliations as mutually agreed upon
by Lincoln Life and Delaware
- Assist in security settlements
- Resolve cash discrepancies
- Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
- Disseminate reconciliation data to interested parties for daily balancing
needs as mutually agreed upon by Lincoln Life and Delaware
- Provide process control data as mutually agreed upon by Lincoln Life and
Delaware.
2
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
Compliance Testing Services:
- Perform the following Registered Investment Company tests as required to
maintain the tax qualified status of the Funds and provide schedules of
the results. These tests are to be performed regularly as mutually greed
upon by Lincoln Life and Delaware.
- Monthly 30% Gross Income Test (according to IRS regulations)
- Annual 90% Gross Income Test (according to IRS regulations)
- Monthly, prepare the IRS Industry Diversification Test (50% & 25%)
- Annual 50% Distribution Test
- Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is mutually agreed
upon by Lincoln Life and Delaware
The following services will begin at the Cutover Date for Phase I and will
subsequently by provided by Delaware for the duration of the Services
Agreement. The Separate Account Sub-Accounts for which these services will be
provided are as follows:
- Separate Account C LN Growth & Income Fund
- Separate Account C XX Xxxx Fund
- Separate Account C LN Social Awareness Fund
- Separate Account C LN Special Opportunities Fund
- Separate Account C LN Managed Fund
- Separate Account C LN Money Market Fund
- Separate Account C LN Global Asset Allocation Fund
- Separate Account C LN International Fund
- Separate Account C LN Aggressive Growth Fund
- Separate Account C LN Capital Appreciation Fund
- Separate Account C LN Equity Income Fund
- Separate Account C Delaware Equity Income Fund
- Separate Account C Delaware Emerging Growth Fund
- Separate Account C Delaware Global Bond Fund
- Separate Account K LN Growth & Income Fund
- Separate Account K XX Xxxx Fund
- Separate Account K LN Social Awareness Fund
- Separate Account K LN Special Opportunities Fund
- Separate Account K LN Managed Fund
- Separate Account K LN Money Market Fund
- Separate Account K LN Global Asset Allocation Fund
- Separate Account K LN International Fund
- Separate Account K LN Aggressive Growth Fund
- Separate Account K LN Capital Appreciation Fund
- Separate Account K LN Equity Income Fund
- Separate Account K Delaware Equity Income Fund
- Separate Account K Delaware Emerging Growth Fund
- Separate Account K Delaware Global Bond Fund
3
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
- Separate Account D LN Growth & Income Fund
- Separate Account D XX Xxxx Fund
- Separate Account D LN Special Opportunities Fund
- Separate Account D LN Managed Fund
- Separate Account D LN Money Market Fund
- Separate Account G LN Growth & Income Fund
- Separate Account G LN Special Opportunities Fund
- Separate Account 60 Global Bond Fund Net 1 DV
- Separate Account 60 Global Bond Fund Net 2 DV
- Separate Account 60 Global Bond Fund Net 3 DV
- Separate Account 60 Global Bond Fund Gross 1 DV
- Separate Account 60 Global Bond Fund Gross 3 DV
- Separate Account 61 Decatur Total Return Fund Net 1 DV
- Separate Account 61 Decatur Total Return Fund Net 2 DV
- Separate Account 61 Decatur Total Return Fund Net 3 DV
- Separate Account 61 Decatur Total Return Fund Gross 1 DV
- Separate Account 61 Decatur Total Return Fund Gross 2 DV
Daily Unit Value calculations:
- Maintain Portfolio History
- Accrue dividends and expenses to each Sub-Account
- Maintain gain/loss history for each Sub-Account
- Maintain record of holdings for each Sub-Account
- Record and reconcile shareholder activity
- Book subscription, liquidation and dividend reinvestments to each
Sub-Account
- Record settlements of shareholder activity
- Reconcile Sub-Account units outstanding to Lincoln Life
administrative systems
- Establish controls for daily pricing of units outstanding of each
Sub-Account
- Calculate the Unit Value for each Lincoln Life Separate Account
Sub-Account
- Disseminate daily Unit Values to interested parties (ie. Lipper,
Morningstar, etc...) as mutually agreed upon by Lincoln Life and Delaware
- Resolve daily pricing and/or custody discrepancies
- Accept NAVs from State Street Bank for purposes of calculating unit
values of pertinent Separate Account Sub-Accounts
Financial Reporting:
- Provide Lincoln Life with an automated transmission of Separate Account
Sub-Account financial data into the Lincoln Life General Ledger.
- Provide other ancillary schedules as mutually agreed upon by Lincoln
Life and Delaware
4
PHASE I (8/15/96 SCHEDULED CUTOVER DATE CONTINUED):
- Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, Third Party Administrators, etc...)
- Provide portfolio holdings and security valuation reports
- Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
- Assist in security settlements
- Resolve cash discrepencies
- Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
- Provide financial information to support schedule "D"
- Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and Delaware
- Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
- Perform daily cash reconciliations for each Separate Account (provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations)
- Perform weekly asset reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations.
PHASE II (10/31/96 SCHEDULED CUTOVER DATE):
The following services will begin at this Cutover Date for Phase II and will
subsequently be provided by Delaware for the duration of the Services
Agreement. The Separate Accounts for which these services will be provided
are A, 3, 11, 12, 14, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 30, 32:
Daily Unit Value Calculation Services:
- Maintain Portfolio History
- Record portfolio purchases and sales
- Record corporate actions and capital changes
- Accrue interest, dividends and expenses
- Maintain income history for securities
- Record and reconcile shareholder activity
- Book subscription, liquidations and dividend reinvestments
- Record settlements of shareholder activity
- Reconcile fund shares outstanding to transfer agent
- Value portfolios (Calculate the Unit Value for each Separate Account
portfolio)
- Verify Delaware's internal controls - pricing securities and
portfolios
5
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
- Disseminate Unit Values to interested parties (Lincoln Life,
etc...) as mutually agreed upon by Lincoln Life & Delaware
- Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
- Coordinate audit activities with external auditors
- Prepare Statistical reports as mutually agreed upon by Lincoln Life and
Delaware
- Provide Lincoln with additional financial data as mutually agreed upon by
Lincoln Life and Delaware
- Provide Lincoln Life with an automated general ledger feed of pertinent
financial information (ie. revenue, cash flow, etc...)
Other Services:
- Cooperate with custodians in all custody relationships
- Facilitate security settlements
- Perform required foreign security accounting functions
- Perform daily cash reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
- Perform weekly asset reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
- Support business relationships with Lincoln business partners
(ie. advisors, custodians, banks, third party administrators, etc.)
- Provide portfolio holdings and security valuation reports
- Prepare cash forecasts and reconciliations as mutually agreed upon
by Lincoln Life and Delaware
- Assist in security settlements
- Resolve cash discrepancies
- Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
- Provide financial information to support schedule "D"
- Disseminate reconciliation data to interested parties for daily balancing
needs as mutually agreed upon by Lincoln Life and Delaware
- Provide process control data as mutually agreed upon by Lincoln Life and
Delaware.
Compliance Testing Services:
- Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is mutually agreed
upon by Lincoln Life and Delaware
6
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
The following services will begin at the Cutover Date for Phase II and will
subsequently by provided by Delaware for the duration of the Services
Agreement. The Separate Account Sub-Accounts for which these services will be
provided are as follows:
- Separate Account A Traditional Annuities Gross 1 UV
- Separate Account A Traditional Annuities Terminal Funding UV
- Separate Account 3 Core Equity Fund Gross 1 UV
- Separate Account 11 Core Equity Account Net 1 UV
- Separate Account 11 Core Equity Account Net 2 UV
- Separate Account 11 Core Equity Account Net 3 UV
- Separate Account 11 Core Equity Account Gross 1 UV
- Separate Account 11 Core Equity Account Gross 2 UV
- Separate Account 11 Core Equity Account Balanced UV
- Separate Account 12 Govt. Corp Bond Account Net 1 UV
- Separate Account 12 Govt. Corp Bond Account Net 2 UV
- Separate Account 12 Govt. Corp Bond Account Net 3 UV
- Separate Account 12 Govt. Corp Bond Account Gross 1 UV
- Separate Account 12 Govt. Corp Bond Account Gross 2 UV
- Separate Account 12 Govt. Corp Bond Account Balanced UV
- Separate Account 14 Short Term Account Net 1 UV
- Separate Account 14 Short Term Account Net 2 UV
- Separate Account 14 Short Term Account Net 3 UV
- Separate Account 14 Short Term Account Gross 1 UV
- Separate Account 14 Short Term Account Gross 2 UV
- Separate Account 14 Short Term Account Balanced UV
- Separate Account 17 Medium Cap. Equity Account Net 1 UV
- Separate Account 17 Medium Cap. Equity Account Net 2 UV
- Separate Account 17 Medium Cap. Equity Account Net 3 UV
- Separate Account 17 Medium Cap. Equity Account Gross 1 UV
- Separate Account 17 Medium Cap. Equity Account Gross 2 UV
- Separate Account 17 Medium Cap. Equity Account Balanced UV
- Separate Account 20 High Yield Bond Account Net 1 UV
- Separate Account 20 High Yield Bond Account Net 2 UV
- Separate Account 20 High Yield Bond Account Net 3 UV
- Separate Account 20 High Yield Bond Account Gross 1 UV
- Separate Account 20 High Yield Bond Account Gross 2 UV
- Separate Account 20 High Yield Bond Account Balanced UV
- Separate Account 21 Balanced Account Net 1 UV
- Separate Account 21 Balanced Account Net 2 UV
- Separate Account 21 Balanced Account Net 3 UV
- Separate Account 21 Balanced Account Gross 1 UV
- Separate Account 21 Balanced Account Gross 2 UV
7
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
- Separate Account 22 International Account Net 1 UV
- Separate Account 22 International Account Net 2 UV
- Separate Account 22 International Account Net 3 UV
- Separate Account 22 International Account Gross 1 UV
- Separate Account 22 International Account Gross 2 UV
- Separate Account 22 International Account Balanced UV
- Separate Account 23 Large Cap. Equity Account Net 1 UV
- Separate Account 23 Large Cap. Equity Account Net 2 UV
- Separate Account 23 Large Cap. Equity Account Net 3 UV
- Separate Account 23 Large Cap. Equity Account Gross 1 UV
- Separate Account 23 Large Cap. Equity Account Gross 2 UV
- Separate Account 23 Large Cap. Equity Account Balanced UV
- Separate Account 24 Small Cap. Equity Account Net 1 UV
- Separate Account 24 Small Cap. Equity Account Net 2 UV
- Separate Account 24 Small Cap. Equity Account Net 3 UV
- Separate Account 24 Small Cap. Equity Account Gross 1 UV
- Separate Account 24 Small Cap. Equity Account Gross 2 UV
- Separate Account 24 Small Cap. Equity Account Balanced UV
- Separate Account 25 Long Term Bond Gross 1G UV
- Separate Account 26 Govt. Bond Account Net 1 UV
- Separate Account 26 Govt. Bond Account Net 2 UV
- Separate Account 26 Govt. Bond Account Net 3 UV
- Separate Account 26 Govt. Bond Account Gross 1 UV
- Separate Account 26 Govt. Bond Account Gross 2 UV
- Separate Account 27 Stable Value Account Net 2 UV
- Separate Account 27 Stable Value Account Net 3 UV
- Separate Account 27 Stable Value Account Gross 2 UV
- Separate Account 28 Value Equity Account Net 1 UV
- Separate Account 28 Value Equity Account Net 2 UV
- Separate Account 28 Value Equity Account Net 3 UV
- Separate Account 28 Value Equity Account Gross 1 UV
- Separate Account 28 Value Equity Account Gross 2 UV
- Separate Account 28 Value Equity Account Balanced UV
- Separate Account 30 Conservative Balanced Account Net 1 UV
- Separate Account 30 Conservative Balanced Account Net 2 UV
- Separate Account 30 Conservative Balanced Account Net 3 UV
- Separate Account 30 Conservative Balanced Account Gross 1 UV
- Separate Account 30 Conservative Balanced Account Gross 2 UV
- Separate Account 32 Aggressive Balanced Account Net 1 UV
- Separate Account 32 Aggressive Balanced Account Net 2 UV
- Separate Account 32 Aggressive Balanced Account Net 3 UV
- Separate Account 32 Aggressive Balanced Account Gross 1 UV
- Separate Account 32 Aggressive Balanced Account Gross 2 UV
8
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
- Separate Account 41 Fidelity Asset Manager Net 2 UV
- Separate Account 41 Fidelity Asset Manager Net 3 UV
- Separate Account 41 Fidelity Asset Manager Gross 2 UV
- Separate Account 42 Janus Capital Appreciation Net 2 UV
- Separate Account 42 Janus Capital Appreciation Net 3 UV
- Separate Account 42 Janus Capital Appreciation Gross 2 UV
- Separate Account 43 Fidelity Contra Net 2 UV
- Separate Account 43 Fidelity Contra Net 3 UV
- Separate Account 43 Fidelity Contra Gross 2 UV
- Separate Account 44 Strong Discovery Net 2 UV
- Separate Account 44 Strong Discovery Net 3 UV
- Separate Account 44 Strong Discovery Gross 2 UV
- Separate Account 45 T-Xxxx Price International Net 2 UV
- Separate Account 45 T-Xxxx Price International Net 3 UV
- Separate Account 45 T-Xxxx Price International Gross 2 UV
- Separate Account F XXXX Xxxx Management Fund
- Separate Account F AVIS Growth Series Fund
- Separate Account F AVIS Growth Income Fund
- Separate Account F AVIS High Yield Bond Fund
- Separate Account F AVIS Govt. AAA Securities Fund
- Separate Account F AVIS International Fund
- Separate Account F AVIS Asset Allocation Fund
- Separate Account F XXXX Xxxx Fund
- Separate Account J XXXX Xxxx Management Fund
- Separate Account J AVIS Growth Series Fund
- Separate Account J AVIS Growth Income Fund
- Separate Account J AVIS High Yield Bond Fund
- Separate Account J AVIS Govt. AAA Securities Fund
- Separate Account J AVIS International Fund
- Separate Account J AVIS Asset Allocation Fund
- Separate Account J XXXX Xxxx Fund
- Separate Account G XXXX Xxxx Management Fund
- Separate Account G AVIS Growth Series Fund
- Separate Account G AVIS Growth Income Fund
- Separate Account G AVIS High Yield Bond Fund
- Separate Account G AVIS Govt. AAA Securities Fund
- Separate Account G AVIS International Fund
- Separate Account G AVIS Asset Allocation Fund
- Separate Account G XXXX Xxxx Fund
9
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
- Separate Account E XXXX Xxxx Management Fund
- Separate Account E AVIS Growth Series Fund
- Separate Account E AVIS Growth Income Fund
- Separate Account E AVIS High Yield Bond Fund
- Separate Account E AVIS Govt. AAA Securities Fund
- Separate Account E AVIS International Fund
- Separate Account E AVIS Asset Allocation Fund
- Separate Account E XXXX Xxxx Fund
- Separate Account H XXXX Xxxx Management Fund
- Separate Account H AVIS Growth Series Fund
- Separate Account H AVIS Growth Income Fund
- Separate Account H AVIS High Yield Bond Fund
- Separate Account H AVIS Govt. AAA Securities Fund
- Separate Account H AVIS International Fund
- Separate Account H AVIS Asset Allocation Fund
- Separate Account H XXXX Xxxx Fund
- Separate Account 50 XXXX Xxxx Management Fund
- Separate Account 50 AVIS Growth Series Fund
- Separate Account 50 AVIS Growth Income Fund
- Separate Account 50 AVIS High Yield Bond Fund
- Separate Account 50 AVIS Govt. AAA Securities Fund
- Separate Account 50 AVIS International Fund
- Separate Account 50 AVIS Asset Allocation Fund
- Separate Account 50 XXXX Xxxx Fund
- Separate Account 51 XXXX Xxxx Management Fund
- Separate Account 51 AVIS Growth Series Fund
- Separate Account 51 AVIS Growth Income Fund
- Separate Account 51 AVIS High Yield Bond Fund
- Separate Account 51 AVIS Govt. AAA Securities Fund
- Separate Account 51 AVIS International Fund
- Separate Account 51 AVIS Asset Allocation Fund
- Separate Account 51 XXXX Xxxx Fund
- Separate Account 52 XXXX Xxxx Management Fund
- Separate Account 52 AVIS Growth Series Fund
- Separate Account 52 AVIS Growth Income Fund
- Separate Account 52 AVIS High Yield Bond Fund
- Separate Account 52 AVIS Govt. AAA Securities Fund
- Separate Account 52 AVIS International Fund
- Separate Account 52 AVIS Asset Allocation Fund
- Separate Account 52 XXXX Xxxx Fund
Daily Unit Value calculations:
- Maintain Portfolio History
- Accrue dividends and expenses to each Sub-Account
- Maintain gain/loss history for each Sub-Account
- Maintain record of holdings for each Sub-Account
10
PHASE II (10/31/96 SCHEDULED CUTOVER DATE CONTINUED):
- Record and reconcile shareholder activity
- Book subscription, liquidations and dividend reinvestments to
each Sub-Account
- Record settlements of shareholder activity
- Reconcile Sub-Account units outstanding to Lincoln Life
administrative systems
- Establish controls for daily pricing of units outstanding of
each Sub-Account
- Calculate the Unit Value for each Lincoln National Separate Account
Sub-Account.
- Disseminate daily Unit Values to interested parties (ie. Lipper,
Morningstar, etc...) as mutually agreed upon by Lincoln Life and
Delaware
- Resolve daily pricing and/or custody discrepancies
- Accept NAVs from applicable managers, advisors and subadvisers for
purposes of calculating Unit Values of pertinent Separate Account
Sub-Accounts
FINANCIAL REPORTING:
- Provide Lincoln with an automated transmission of Separate Account
Sub-Account financial data into the Lincoln Life General Ledger.
- Provide other ancillary schedules as mutually agreed upon by Lincoln
Life and Delaware
OTHER SERVICES:
- Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third party administrators, etc...)
- Provide portfolio holdings and security valuation reports
- Prepare cash forecasts and reconciliations as mutually agreed
upon by Lincoln Life and Delaware
- Assist in security settlements
- Resolve cash discrepancies
- Other reasonable requests as mutually agreed upon by Lincoln
Life and Delaware
- Provide financial information to support schedule "D"
- Disseminate reconciliation date to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and
Delaware
- Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
- Perform daily cash reconciliations for each Separate Account provided
that the bank(s) &/or third party mutual fund complex(s) send the
necessary information to perform such reconciliations
- Perform weekly asset reconciliations for each Separate Account
providing the bank(s) &/or mutual fund complex(s) send the
necessary information to perform such reconciliations
11
PHASE III (1/1/97 SCHEDULED CUTOVER DATE):
The following services will begin at this Cutover Date for Phase III and will
subsequently be provided by Delaware for the duration of the Services
Agreement. The Funds for which these services will be provided are as follows:
- Lincoln National Global Asset Allocation Fund Inc.,
- Lincoln National International Fund Inc.,
- Lincoln National Capital Appreciation Fund Inc.,
- Lincoln National Equity Income Fund Inc.,
- Lincoln National Aggressive Growth Fund Inc.
Daily Net Asset Value Calculation Services:
- Maintain Portfolio History
- Record portfolio purchases and sales
- Record corporate actions and capital changes
- Accrue interest, dividends and expenses
- Maintain income history for securities
- Determine distributions to shareholders
- Record and reconcile shareholder activity
- Book subscription, liquidations and dividend reinvestments
- Record settlements of shareholder activity
- Reconcile fund shares outstanding to transfer agent
- Value portfolios (Calculate the NAV for each Fund portfolio)
- Verify Delaware's internal controls - pricing securities and
portfolios
- Disseminate NAVs and dividends to interested parties (Lincoln Life,
ICI, Morningstar, Lipper, etc.) as mutually agreed upon by Lincoln
Life & Delaware
- Resolve daily pricing &/or custody discrepancies
Financial Reporting Services:
- Commencing 6/30/97, prepare the following information for use in the
semi-annual and annual reports for shareholders:
- Prepare Statement of Net Assets, Statement of Operations and
Changes in Net Assets
- Work with external auditors on footnotes to the financial
statements,
- Workpapers for annual audit,
- Cooperate with external auditors, Lincoln Life Marketing & printer
- Required ICI reporting as mutually agreed upon by Lincoln Life and
- Delaware
- Prepare Statistical reports as necessary (daily, monthly, quarterly and
annual reports for Lipper, Morningstar, and other third party
reporting agencies and survey companies) as mutually agreed upon by
Lincoln Life and Delaware
- Commencing 1/1/97, provide financial information for use in SEC
reporting (ie. NSAR, Prospectus, SAI, 24F2e, etc...)
- Provide financial information to support schedule "D"
12
PHASE III (1/1/97 SCHEDULED CUTOVER DATE CONTINUED):
Other Services:
- Calculate monthly SEC yields & fund level performance
- Prepare information for tax returns and auxiliary schedules and
submit to Corporate Tax Department:
- 1120 EIC and any other required forms
- Year-end excise tax distributions
- Calculate and provide information for Subchapter M & Section 4982
of Internal Revenue Code compliance
- Provide tax return workpapers to Lincoln Life for review purposes
- Perform the following special tax reporting functions
- Prepare income by state, exempt income and qualified distributions
- Prepare financial information for expense & budget functions
- Maintain detailed records pertaining to expense accruals and
payments
- Adjust fund records to reflect accrual adjustments
- Prepare reports which are mutually agreed upon by Lincoln Life and
Delaware for Board of Director meetings & Senior Management (as they
pertain to these 5 Funds)
- Cooperate with custodians in all custody relationships
- Facilitate security settlements
- Perform required foreign security accounting functions
- Perform daily cash reconciliations for each Fund provided that the
banks(s) &/or third party mutual fund complex(s) send the necessary
information to perform such reconciliations
- Perform weekly asset reconciliations for each fund providing the bank(s)
&/or third party mutual fund complex(s) send the necessary
information to perform such reconciliations
- Support business relationships with Lincoln business partners (ie.
advisors, custodians, banks, third part administrators, etc..)
- Provide portfolio holdings and security valuation reports
- Prepare cash forecasts and reconciliations as mutually agreed upon
by Lincoln Life and Delaware
- Assist in security settlements
- Resolve cash discrepancies
- Other reasonable requests as mutually agreed upon by Lincoln Life
and Delaware
- Disseminate reconciliation data to interested parties for daily
balancing needs as mutually agreed upon by Lincoln Life and Delaware
- Provide process control data as mutually agreed upon by Lincoln Life
and Delaware
13
PHASE III (1/1/97 SCHEDULED CUTOVER DATE CONTINUED):
Compliance Testing Services:
- Perform the following Registered Investment Company tests as required
to maintain the tax qualified status of the funds and provide
schedules of the results. These test will be performed regularly as
mutually agreed upon by Lincoln Life and Delaware,
- Monthly 30% Gross Income Test (according to IRS regulations)
- Annual 90% Gross Income Test (according to IRS regulations)
- Monthly, prepare the IRS Industry Diversification Test (50% & 25%)
- Annual 90% Distribution Test
- Provide monthly notification of derivative securities held in each
portfolio based upon a definition of "derivative" which is mutually
agreed upon by Lincoln Life and Delaware
Note: Delaware will not provide legal assistance, compliance monitoring or
tax work other than what is specified above. Delaware will not sign the
tax returns.
14
SCHEDULE 2.1
PROCEDURES FOR CORRECTING ERRORS
SCHEDULE 2.1
PROCEDURES FOR CORRECTING ERRORS
The following charts set forth certain procedures to be followed in
the event of errors in the calculation of the Net Asset Values and Unit
Values. There are two separate charts: Chart I outlines the procedures to be
followed in the event that the error is greater than, or equal to, .5% of
the Fund's Net Asset Value or Separate Account's Unit Value; Chart II
outlines the procedure in the event that the error is less than .5%. Each of
the Charts assumes that the error is in the Unit Value or Net Asset Value is
at least $.01. If the error is less than $.01, no action will be taken.
The procedures set forth in these Charts are designed to be
consistent with informal positions taken by the Securities and Exchange
Commission (the "SEC") with respect to errors in the calculation of net asset
values or unit values. The parties to the Services Agreement shall negotiate
in good faith to amend this Schedule 2.1 as appropriate in the event that (a)
the SEC modifies, amends or supplements such positions, or issues any other
regulatory guidance with respect to net asset values, unit values, or both,
or (b) a Unit Value changes to a degree that alternative error correction
procedures should be considered.
CHART I
ERROR GREATER THAN OR EQUAL TO .5%
Net Asset Value
or Net Asset Value
Unit Value or
Type of Transaction Understated Unit Value Overstated
---------------------------------------------------------------------------
Subscription Make Fund or Separate Reprocess(2)
Account Whole(1)
Redemption Reprocess(3) Make Fund or Separate
Account Whole(1)
-------------------
(1) Alternatively, at Lincoln Life's or the relevant Fund's discretion, all
shareholder transactions can be reprocessed. At the Fund level, the
shareholder would be the Lincoln Life Separate Account. At the Separate
Account level, the shareholder would be the Contractowner.
(2) Reprocessing would occur for all transactions where the shareholder
effect is greater than $10.00.
(3) Reprocessing would occur for all transactions where the shareholder
effect is greater than $10.00. Lincoln Life or the relevant Fund, at its
respective discretion, would reimburse the shareholder.
CHART II
ERROR LESS THAN .5%
Net Asset Value
or Net Asset Value
Unit Value or
Type of Transaction Understated Unit Value Overstated
---------------------------------------------------------------------------
Subscription Make Fund or Separate No Action(2)
Account Whole(1)
Redemption No Action(3) Make Fund or Separate
Account Whole(1)
-------------------
(1) Alternatively, at Lincoln Life's or the relevant Fund's discretion, the
shareholder transactions can be reprocessed. At the Fund level, the
shareholder would be the Lincoln Life Separate Account. At the Separate
Account level, the shareholder would be the Contractowner.
(2) Alternatively, Lincoln Life or the relevant Fund could determine to
reprocess the transactions.
(3) Alternatively, Lincoln Life or the relevant Fund could determine to
reprocess transactions and reimburse the shareholders.
SCHEDULE 3.1
DATA PROVIDED BY LINCOLN LIFE
DATA PROVIDED BY LINCOLN LIFE
The following information represents data which will be provided by Lincoln
Life to Delaware for the purpose of enabling Delaware to perform the
accounting services pursuant to the Services Agreement.
1) By 9:00 am New York time each Business Day, Lincoln Life will provide
Delaware with trade activity (by Sub-Account - e.g. Separate Account C
Growth Fund trades) for the purpose of adding this information to the
outstanding assets of each Sub-Account. This daily trade activity will
include a net purchase or redemption amount by Sub-Account, the net
number of units purchased by Sub-Account by Lincoln Life clients
preceding Business Day or days and Fund share purchases and sales in
dollars and share amounts.
2) By 9:00 am New York time each Business Day, Lincoln Life will provide
Delaware with the number of outstanding units within each Sub-Account
for purposes of balancing to the number of units used in the daily Unit
Value calculation and the number of outstanding shares within each
Fund.
Note: In the event that Lincoln Life identifies erroneous data in their
daily transmission of trade activity while performing their balancing
routine subsequent to the transmission, Lincoln Life will inform
Delaware of the erroneous information via telephone.
SCHEDULE 3.2
UNAFFILIATED MUTUAL FUNDS
AND
SERVICE PROVIDERS
DATA PROVIDED BY UNAFFILIATED MUTUAL FUNDS AND SERVICE PROVIDERS
The following information represents data which will be provided by third
parties to Delaware pursuant to section 3.2 of the Services Agreement.
1) Each evening of a business day, all applicable Fund managers, advisors
and subadvisors will provide to Delaware (via fax), the daily net asset
values of such funds no later than 6:00 p.m. New York Time.
(See note below)
2) Each evening of a business day, Delaware will obtain the daily Net Asset
Values of such of its own funds as are underlying investments in Lincoln
Life's Separate Accounts in a timely fashion to meet Lincoln Life's
delivery timelines specified in this Services Agreement.
3) Delaware will accept data from and work with Lincoln Life business
partners in a relationship accepted in the industry as a normal working
relationship. These types of relationships would include cooperating with
custodians, portfolio managers, etc. for the purpose of conducting daily
business transactions.
Note: In the event that Delaware does not receive timely NAVs or trade
information from Fund managers, advisors or subadvisors which causes
Delaware to be incapable of calculating a Unit Value using mutually
agreed upon processing procedures, or causes Delaware to estimate a
Unit Value, then Delaware and Lincoln Life must mutually agree upon
the processing activities to take place on that particular valuation
date.
SCHEDULE 6.1
FEE SCHEDULE
SERVICES FEE SCHEDULE
The following schedule outlines the fees charged to the various Funds and
Separate Accounts for services rendered by Delaware pursuant to the Services
Agreement and the accompanying Cutover Schedule. Following the fee schedule
at the top of each of the following pages there will be an illustration of
how the fees are to be applied to each of the funds and Separate Accounts.
The Account Asset base to which the fees are applied will change from day to
day, thus the asset fees will be calculated using daily average net assets
and prorated monthly (the foregoing does not apply, however, to "fund of
funds" fees, which are not asset-based).
EXPLANATION OF THE FEE SCHEDULE
AS IT PERTAINS TO
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT M
As of August 3, 2001
The cost to compute unit value calculations depends upon the aggregate number
of variable annuity and variable life insurance unit values to be calculated
per year for all LNC insurer affiliates. It is not based upon activity in
any one Separate Account.
Unit values are calculated daily when the New York Stock Exchange is open for
trading. The current cost to Lincoln Life for Separate Account M, per unit
value calculation, is $1,111.11 per year.
