Exhibit 8(a)
ACCOUNTING AND FINANCIAL ADMINISTRATION
SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of October, 2007 (the
"Effective Date") by and among Mellon Bank, N.A., a national banking association
having its principal place of business at One Mellon Bank Center, 000 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx, 00000 (referred to herein as "Mellon"), The
Lincoln National Life Insurance Company, an Indiana-domiciled insurance company
having its principal place of business at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx,
Xxxxxxx, 00000 (referred to herein as "Lincoln National") and Lincoln Life &
Annuity Company of New York, a New York-domiciled insurance company, having an
address at 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxx Xxxx, 00000 (referred
to herein as "Lincoln Life"; Lincoln National and Lincoln Life are sometimes
hereinafter referred to collectively as the "Insurance Company"), with respect
to services to be provided to the registered and unregistered separate accounts
which the Insurance Company has established (referred to herein, individually,
as a "Separate Account" and, collectively, as the "Separate Accounts"), and the
sub-accounts thereof (referred to herein, individually as a "Sub-Account" and
collectively as the "Sub-Accounts"), for the variable annuity and variable life
market.
WHEREAS, the Insurance Company has established the Separate Accounts
and Sub-Accounts;
WHEREAS, Mellon is engaged in the investment accounting and financial
administration services business; and
WHEREAS, the Insurance Company desires that Mellon provide the
investment accounting, financial administration and related services described
in this Agreement with respect to each Sub-Account and, where indicated, each
Separate Account, and Mellon is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in exchange for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, and intending to be legally
bound, the Insurance Company and Mellon agree as follows:
1. Services
X. Xxxxxx shall provide to the Insurance Company the investment
accounting, financial administration and related services set forth in Schedule
B to this Agreement ("Services") with respect to each Sub-Account and, where
indicated, each Separate Account. Concurrent with the execution of this
Agreement, the Insurance Company shall deliver to Mellon a list of current,
active Separate Accounts and Sub-Accounts with respect to which the Insurance
Company requests Mellon to perform Services. Thereafter, the Insurance Company
may add one or more additional Sub-Accounts and/or Separate Accounts, with as
much advance notice as is reasonably practicable under the circumstances, but in
all cases upon no less than thirty (30) business days' advance written notice
and completion of Mellon's new account establishment documents. The Insurance
Company may delete one or more Sub-Accounts and/or Separate Accounts by
providing Mellon with as much advance notice as is reasonably practicable under
the circumstances, but in all cases upon no less than five (5) business days'
written notice. In the event that the Insurance Company cannot provide at least
thirty (30) business days' advance written notice to add a Sub-Account and/or
Separate Account or cannot provide at least five (5) business days' advance
written notice to delete a Sub-Account and/or Separate Account, Mellon shall use
its reasonable best efforts to accommodate such shorter period of time.
Notwithstanding the foregoing, if the Insurance Company seeks to add a
Sub-Account and/or Separate Account, or seeks support for an existing
Sub-Account and/or Separate Account, that: (i) proposes to follow an investment
strategy that is materially different from the investment strategies followed by
a Sub-Account or Separate Account currently serviced under this Agreement, or
(ii) proposes to make an investment that is not in the same asset class as
investments made by a Sub-Account or Separate Account currently serviced by this
Agreement (a "Novel Account"), then the Insurance Company shall provide as much
advance notice as is reasonably practicable under the circumstances, but in all
cases no less than sixty (60) days' prior written notice, and obtain the prior
written consent of Mellon. Mellon may perform other services for each
Sub-Account and/or Separate Account, and will perform services for Novel
Accounts, if at all, only upon terms, conditions and compensation that Mellon
and the Insurance Company mutually agree to, as evidenced by an amendment to
this Agreement or Schedule X.
X. Xxxxxx may enter into additional agreements with the Insurance
Company and, if applicable, a duly authorized affiliate from time to time with
respect to: (i) certain operational functions that Mellon will perform in
connection with this Agreement; and (ii) performance measures pursuant to which
Mellon will be expected to provide the Services (the "Service Level Documents").
The Service Level Documents will be designed to provide operational guidance and
performance metrics information that may be used by the Insurance Company and
Mellon to assist in the delivery of the Services and to measure Mellon's
performance in providing the Services. The Insurance Company and Mellon agree
that the Service Level Documents will reflect the division of operational
functions among the Insurance Company, Mellon and third parties (whether
affiliated or not affiliated), and specific performance measures for Mellon,
rather than imposing specific contractual obligations under this Agreement.
Notwithstanding the foregoing, (i) Mellon's material and systemic failure to
perform its operational functions or to satisfy the performance measures
pursuant to the Service Level Documents may be considered a material breach of
the "For Cause" provisions described in Section 3.B of this Agreement; (ii) the
Service Level Documents may provide remedies for the failure to satisfy the
operational functions or performance measures contemplated thereunder that are
separate and apart from any right that the Insurance Company or Mellon may
exercise under this Agreement; and (iii) Mellon's performance or non-performance
of the Services, separate and apart from the operational functions and
performance measures reflected in any Service Level Document, may give rise to
any remedies that the Insurance Company may assert against Mellon under the
terms of this Agreement.
X. Xxxxxx'x present intention is to utilize the Eagle STAR/PACE
platform as its investment accounting platform, with the understanding of the
parties that Mellon reserves the right to utilize other accounting platform(s)
that allow(s) Mellon to perform the Services at a quality and level equivalent
to the quality and level set forth in the Service Level Documents. Mellon shall
be responsible for the costs and expenses incurred by Mellon and the Insurance
Company for converting from the Eagle STAR/PACE platform to other accounting
platform(s) in accordance with this subparagraph C. Insurance Company
acknowledges and agrees with Mellon that the types of costs and expenses of
Insurance Company for which Mellon shall be responsible under this Section 1.C
are in the nature of deconversion costs and expenses and that under no
circumstance shall they include costs and expenses of the type contemplated in
the definitions of "One Time Conversion Costs" and "Incremental Systems and
Human Resources Costs" (each of which has been reproduced in Schedule E attached
hereto).
2. Compensation and Expenses
A. In return for performing the Services, the Insurance Company shall
compensate Mellon as set forth in this Section and in Schedule C to this
Agreement. Fees due will be accrued daily. If this Agreement is lawfully
terminated before the end of any month, fees shall be calculated on a pro rated
basis through the date of such termination and shall be due upon such
termination date.
B. The Insurance Company will assume responsibility for all expenses
that are incurred in the operation and management of each Sub-Account and
Separate Account that are not specifically assumed by Mellon hereunder. Without
limiting the generality of the foregoing, expenses to be borne by the Insurance
Company with respect to each Sub-Account and/or Separate Account include, but
are not limited to: pricing, security and other similar data information vendor
services; organizational expenses; costs of services of any independent
registered public accounting firm ("Independent Accountant") and outside legal
and tax counsel of the Insurance Company, Separate Account or Sub-Account
(including such counsel's review of any applicable registration statement, proxy
materials, federal and state tax qualification and any review of reports and
materials prepared by Mellon under this Agreement); any costs of any services
contracted for by the Insurance Company directly from parties other than Mellon;
trade association dues; any costs of trading operations and brokerage fees,
commissions and transfer taxes in connection with the purchase and sale of
securities for the Sub-Account and/or Separate Account; investment advisory
fees; taxes; insurance premiums and other insurance-related fees and expenses
applicable to the operation of each Sub-Account and Separate Account; costs
incidental to any meetings of contract holders, including but not limited to,
legal and auditor fees, proxy filing fees and the costs of printing and mailing
of any proxy materials; costs incidental to board meetings, including fees and
expenses of board members, but excluding costs specifically assumed by Mellon;
the salary and expenses of any officer, director/trustee or employee of the
Insurance Company who is not also a Mellon employee; registration fees, filing
fees, and costs incidental to the preparation, typesetting, printing and/or
distribution, if applicable, of any registration statements on Forms N-3, N-4,
N-6 and N-14, and any amendments thereto, contract holder reports on Form N-CSR,
Form N-SARs, Form N-Q, Form N-PX, tax returns, and all notices, registrations
and amendments associated with applicable federal and state tax and securities
laws, legal and auditor fees of the Insurance Company or Separate Accounts; and
other expenses properly payable by the Insurance Company, the Sub-Accounts
and/or the Separate Accounts.
C. The Insurance Company agrees to reimburse Mellon for its actual
out-of-pocket expenses, as necessarily incurred, in providing the Services,
including without limitation, the following:
(i) the electronic transmission expenses incurred by Mellon in communicating
with the Insurance Company or custodian, dealers or others as required for
Mellon to perform the Services, if an Authorized Person requests such electronic
transmission and provides Mellon with prior written approval;
(ii) the costs of creating microfilm, microfiche or electronic copies of records
relating to the Services, and the costs of storage of paper and electronic
copies of such records; provided, that Mellon must obtain the prior written
approval of an Authorized Person if such costs exceed $7,500 in any calendar
year;
(iii) the charges for services provided by vendors set forth in Schedule D;
(iv) any additional expenses Mellon shall incur at the written direction of an
"Authorized Person";
(v) any additional expenses reasonably incurred by Mellon in the performance of
the Services, provided that, (a) if an individual expense is less than $1,000,
Mellon shall provide advance written notice to the Insurance Company to the
extent practicable, and (b) if any individual expense is $1,000 or more, Mellon
must obtain the prior written approval of an Authorized Person; and
(vi) in the event that Mellon is requested or authorized by the Insurance
Company, or is required by law, summons, subpoena, investigation, examination or
other legal or regulatory process, to produce documents or personnel with
respect to the Services, and so long as Mellon is not the subject of the
investigation or proceeding in question, the Insurance Company will reimburse
Mellon for its actual out-of-pocket expenses (including reasonable attorneys'
fees) incurred in responding to these requests. In addition, when non-routine,
extensive or extraordinary productions or investigations occur, Mellon will
notify the Insurance Company (as soon as reasonably practicable) and the
Insurance Company will reimburse Mellon for its personnel's professional time
(at Mellon's standard billing rates or other mutually agreed upon rates).
X. Xxxxxx shall be entitled to receive the following amounts:
(i) Any systems development and project fees for new or enhanced products or
services requested by the Insurance Company with respect to a Separate Account
(including significant enhancements required by regulatory changes), and all
systems-related expenses associated with the provision of special reports and
services, in each case as agreed upon in advance by an Authorized Person; and
(ii) Ad hoc reporting fees billed at an agreed upon rate.
X. Xxxxxx will xxxx the Insurance Company on a monthly basis for the
fees and expenses owed to Mellon under this Agreement. The monthly xxxx shall be
set forth on a detailed invoice in a form mutually agreed upon by Mellon and the
Insurance Company. Mellon shall send such invoice to the Insurance Company no
later than fifteen (15) days after the last day of each month; provided,
however, that the failure by Mellon to do so shall not be considered a breach of
this Agreement. The Insurance Company shall pay such invoice within fifteen (15)
days of receipt of such invoice by Insurance Company. Any undisputed fees or
expenses that are not paid within the required time frame set forth in Section
2.A. and this Section 2.E. shall be subject to a late fee of 1.5% of the amount
billed for each month that such fees or expenses remain unpaid, and the late fee
shall be due and payable upon demand. The Insurance Company shall not dispute
the minimum fees set forth in Schedule C. If any fees, over and above the
minimum fees set forth in Schedule C, or expenses are disputed by the Insurance
Company, then Mellon and the Insurance Company shall work together in good faith
to resolve the dispute promptly.
X. Xxxxxx will assume responsibility for the costs of its ordinary and
necessary office facilities (including telephone, telephone transmission, and
telecopy expenses), equipment and personnel to perform the Services, including
the compensation of its employees. In the event that Mellon is the subject of an
examination, subpoena, investigation, proceeding or legal or regulatory process
relating to the Services it provides to the Insurance Company ("Mellon Services
Inquiry"), and if Mellon requests that the Insurance Company provide, or if the
Insurance Company is required by law, summons, subpoena, investigation,
examination or other legal or regulatory process, to produce documents or
personnel with respect to the Services, then Mellon will reimburse the Insurance
Company for its actual out-of-pocket expenses (including reasonable attorneys'
fees) incurred in responding to these requests. Furthermore, if the Mellon
Services Inquiry is non-routine, extensive or extraordinary, then Mellon will
reimburse the Insurance Company for its personnel's professional time at
mutually agreed upon rates.
3. Length and Termination of Agreement
A. The term of this Agreement shall begin on the Effective Date and
continue for an initial term of seven (7) years (the "Initial Term"). Unless
otherwise terminated in accordance with its terms, Mellon shall either (i)
request that this Agreement be extended for an additional three (3) year period
or (ii) indicate that this Agreement will be terminated upon the expiration of
the Initial Term or a Renewal Term (as the case may be), in either case by
sending a written notice of its intent to the Insurance Company no later than
three (3) months prior to the fifth anniversary of the Effective Date of the
Initial Term or the first anniversary of the effective date of a Renewal Term
(as the case may be). If Mellon requests that this Agreement be extended for an
additional three (3) year period and the Insurance Company does not reject such
request in writing to Mellon by the sixth anniversary of the Effective Date of
the Initial Term or the second anniversary of the effective date of a Renewal
Term (as the case may be), then this Agreement shall be extended for an
additional three (3) year period (a "Renewal Term"). If either (a) Mellon
indicates that this Agreement will be terminated upon the expiration of the
Initial Term or a Renewal Term (as the case may be) by sending a written notice
of its intent to the Insurance Company no later than three (3) months prior to
the fifth anniversary of the Effective Date of the Initial Term or the first
anniversary of the effective date of a Renewal Term (as the case may be), or (b)
the Insurance Company responds to Mellon's request to extend for an additional
three (3) year period by rejecting such request in writing to Mellon no later
than the sixth anniversary of the Effective Date of the Initial Term or the
second anniversary of the effective date of a Renewal Term (as the case may be),
then this Agreement shall terminate upon the expiration of the Initial Term or
such Renewal Term (as the case may be).
B. This Agreement may be terminated by the following party or parties,
as the case may be, for one or more of the following reasons, provided the
terminating party provides the applicable written notice to the other party or
parties, as the case may be, of the reason for such termination:
(i) NonRenewal: Mellon or the Insurance Company may decline to
extend the terms of this Agreement beyond the Initial Term under subparagraph A
of this Section;
(ii) Mutual Agreement: Mellon and the Insurance Company may
mutually agree in writing to terminate this Agreement at any time;
(iii) "For Cause": (a) Mellon may terminate this Agreement
"For Cause," as defined below, by providing the Insurance Company with written
notice of termination "For Cause" at least 60 days prior to the date of the "For
Cause" termination of this Agreement, or (b) the Insurance Company may terminate
this Agreement "For Cause," as defined below, by providing Mellon with written
notice of termination "For Cause" at least 60 days prior to the date of the "For
Cause" termination of this Agreement;
(iv) Failure to Pay: Mellon may terminate this Agreement if
Mellon has notified the Insurance Company that it has failed to pay Mellon any
undisputed amounts when due under this Agreement and the Insurance Company has
failed to cure such default within 30 days of receipt of such notice (or, if the
Insurance Company has disputed in good faith any fees over and above the minimum
fees set forth in Schedule C or any expenses, upon final resolution of such
dispute); or
(v) Internalization of Accounting Support. The Insurance
Company may terminate this Agreement in order to provide the Services by solely
utilizing internal resources of the Insurance Company or any Affiliate.
For purposes of subparagraph (iii) above, "For Cause" shall mean:
(a) a material breach of this Agreement by the other
party that has not been remedied for 30 days following written
notice by the terminating party that identifies in reasonable
detail the alleged failure of the other party to perform,
provided that if such default is capable of being cured, then
the other party is entitled to such longer period as may
reasonably be required to cure such default if the other party
has commenced such cure and is diligently pursuing same, but
such cure must be completed within 120 days in any event;
(b) when the other party commits any act or omission
that constitutes gross negligence, willful misconduct, fraud
or reckless disregard of its duties under this Agreement and
that act or omission results in material adverse consequences
to the terminating party;
(c) a final, unappealable judicial, regulatory or
administrative ruling or order in which the other party has
been found guilty of criminal or unethical behavior in the
conduct of its business that directly relates to the subject
matter of the Services; or
(d) when the other party shall make a general
assignment for the benefit of its or their creditors or any
proceeding shall be instituted by or against the other party
to adjudicate it as bankrupt or insolvent, or to seek to
liquidate, wind up, or reorganize, the other party or protect
or relieve its debts under any law, or to seek the entry of an
order for relief or the appointment of a receiver, trustee or
other similar official for it or for a substantial portion of
its assets, which proceeding shall remain unstayed for sixty
(60) days or the other party has taken steps to authorize any
of the above actions or has become unable to pay its debts as
they mature.
For purposes of subparagraph (v) above, "Affiliate" shall mean any
entity controlling, controlled by, or under common control with, the
Insurance Company, where "control" means the power to exercise a
controlling influence over the management or policies of a company,
unless such power is solely as a result of an official position with
such company.
C. If this Agreement is terminated by any party (regardless of whether
it is terminated pursuant to paragraph B. above or for any reason other than
those specified in paragraph B. above), the Insurance Company shall pay to
Mellon on or before the effective date of such termination any undisputed and
unpaid fees owed to, and shall reimburse Mellon for any undisputed and unpaid
out-of-pocket costs and expenses owed to, Mellon under this Agreement prior to
its termination.
D. If either (i) the Insurance Company terminates this Agreement during
the Initial Term for any reason other than those specified in paragraph B.
above, or (ii) Mellon terminates this Agreement during the Initial Term "For
Cause" or the Insurance Company's "failure to pay" under subparagraphs B(iii) or
B(iv) of this Section, respectively, then the Insurance Company shall make a
one-time cash payment (a "Termination Fee") to Mellon on the effective date of
the termination in an amount equal to (w) $400,000 if the effective date of the
termination of this Agreement is in the first year of the Initial Term, (x)
$400,000 if the effective date of the termination of this Agreement is in the
second year of the Initial Term, (y) $300,000 if the effective date of the
termination of this Agreement is in the third year of the Initial Term, or (z)
$200,000 if the effective date of the termination of this Agreement is in the
fourth year of the Initial Term. In addition, the Insurance Company shall
reimburse Mellon promptly for any actual, provable, extraordinary, non-customary
and direct costs and expenses (other than any Costs and Expenses), incurred by
Mellon in connection with effecting such termination and converting to a
successor service provider, including without limitation the delivery to such
successor service provider of the Insurance Company's property, records, data,
instruments and documents.
The parties acknowledge and agree that, upon the occurrence of any of
such events giving rise to a Termination Fee: (i) a determination of actual
damages incurred by Mellon would be extremely difficult, (ii) the Termination
Fee is intended to adequately compensate Mellon for damages incurred and is not
intended to constitute any form of penalty, and (iii) the Termination Fee is
intended to include the Costs and Expenses incurred by Mellon in connection with
effecting such termination and converting the Separate Accounts and Sub-Accounts
to a successor service provider, including, without limitation, the delivery to
such successor service provider, the Insurance Company and/or other Separate
Account service providers of any of the Separate Accounts' or Sub-Accounts'
property, records, data, instruments and documents. The parties further
acknowledge and agree that, upon the occurrence of a significant change in the
number of Separate Accounts or Sub-Accounts during the Initial Term, they will
discuss in good faith a possible adjustment to the Termination Fee; provided,
however, that no party shall be obligated to agree to any such adjustment.
E. If either (i) Mellon terminates this Agreement at any time for any
reason other than those specified in paragraph B. above, or (ii) the Insurance
Company terminates this Agreement at any time "For Cause" under subparagraph
B(iii) of this Section, then Mellon shall reimburse the Insurance Company for
any Costs and Expenses incurred in connection with converting to a successor
service provider, including without limitation the delivery to such successor
service provider or the Insurance Company, any of the Insurance Company's
property, records, data, instruments and documents.
F. If this Agreement is terminated (i) by Mellon and/or the Insurance
Company at any time for "nonrenewal", "upon mutual agreement", or "upon
internalization of accounting support" under subparagraphs B(i), B(ii), and B(v)
respectively, (ii) by the Insurance Company at any time after the Initial Term
for any reason other than those specified in paragraph B above, or (iii) by
Mellon at any time after the Initial Term "For Cause" or the Insurance Company's
"failure to pay" under subparagraphs B(iii) or B(iv) of this Section,
respectively, then the Insurance Company shall promptly reimburse Mellon for any
Costs and Expenses incurred by Mellon in connection with effecting such
termination and converting to a successor service provider, including without
limitation the delivery to such successor service provider or the Insurance
Company, any of the Insurance Company's property, records, data, instruments and
documents.
G. For purposes of this Section 3, "Costs and Expenses" incurred by a
party shall mean any actual, provable, reasonable, customary and direct costs
and expenses actually incurred by such party. For purposes of this Section 3,
Costs and Expenses shall not include any wind-down costs, including without
limitation, non-cancelable lease payments; severance payments due and payable to
personnel of Mellon or its Subcontractors that were not engaged by Mellon at the
instruction of the Insurance Company; unused equipment expenses; and
non-cancelable payments or termination charges regarding hosting and other
subcontracting services that were not incurred at the instruction of the
Insurance Company and that cannot be transferred or redeployed by Mellon. For
purposes of this Agreement, "Subcontractor" shall include any third party,
whether affiliated or unaffiliated with Mellon, engaged by Mellon in connection
with the performance of the Services.
Such party must provide the other party with written evidence of such
costs and expenses before the other party is obligated to pay them. Such party
also has a duty to mitigate, and must exercise its duty to mitigate, such costs
and expenses. Except as expressly set forth in Sections 3 and 9 and Schedule C,
no party hereto shall be responsible for any costs and expenses or damages of
any kind whatsoever resulting from, related to or otherwise in connection with
the termination of this Agreement.
H. In the event that this Agreement is terminated by a party, the
parties hereto agree to cooperate and act in good faith to ensure an orderly
conversion to a successor service provider with respect to the Services provided
under this Agreement. Without limiting the generality of the foregoing sentence,
Mellon agrees that, in the event this Agreement is terminated by a party or the
parties, it will deliver the Insurance Company's property, records, data,
instruments and documents to the Insurance Company, its successor service
provider and/or its other service providers, as the case may be, in a
non-proprietary, commercially-available format.
4. Amendments, Assignment and Delegation
A modification of this Agreement (which term includes all Schedules)
will be effective only if in writing and signed by the affected parties. No
party shall assign the rights or delegate the duties, or outsource a significant
portion of the Services, pursuant to this Agreement without the prior written
consent of the other party or parties, except as follows:
(i) Mellon may employ such person or persons it may deem desirable to assist it
in performing the Services without notice to the Insurance Company;
(ii) Mellon shall provide written notice to the Insurance Company before Mellon
engages an unaffiliated third party to provide significant services or functions
to assist Mellon in performing the Services under this Agreement;
(iii) Mellon may delegate one or more of the functions or assign this Agreement
to any direct or indirect majority-owned subsidiary of The Bank of New York
Mellon Corporation or its successor with timely notice to the Insurance Company;
and
With respect to (i), (ii) and (iii) above, Mellon shall (a) be
responsible for the acts or omissions of such persons, third parties and
subsidiaries to the same extent as Mellon's own acts or omissions under this
Agreement, (b) be responsible for the compensation of such persons, third
parties and subsidiaries, and (c) not be relieved of any of its responsibilities
under this Agreement by virtue of the use of such persons, third parties and
subsidiaries. However, if the Insurance Company instructs Mellon to engage a
Subcontractor for the performance of any of the Services, Mellon will not be
responsible for any acts or omissions by, or compensation payable to, such
Subcontractor.
This Agreement shall be binding upon, and shall inure to the benefit
of, the parties and their respective successors and permitted assigns.
5. Documentation
A. The Insurance Company represents that it has provided or made
available and, as applicable, during the Initial Term or any Renewal Term will
continue to provide or make available, to Mellon (or has given Mellon an
opportunity to examine) copies of the following documents:
(i) copies of all pertinent Insurance Company policies and
procedures that affect the Services, including but not limited to any pertinent
Insurance Company policies and procedures relating to valuation, pricing errors,
Section 2(a)(41) of the 1940 Act and Rules 2a-4 and 2a-7 thereunder, unit value
errors, and "as-of" processing (such as those relating to error corrections,
post trade revisions or similar processing policies that may exist);
(ii) if applicable, a copy of each registered Separate
Account's currently effective registration statement under the Securities Act of
1933 and the 1940 Act;
(iii) such other documents, certificates or opinions which
Mellon reasonably believes to be necessary or appropriate in the proper
performance of the Services, subject to the agreement of the Insurance Company,
which shall not be unreasonably withheld; and
(iv) any amendment, revocation or other document altering,
adding, qualifying or repealing any document or authority called for under this
Section.
B. The Insurance Company will provide Mellon with notice and/or a copy
of any material amendment to documents, certificates or opinions provided or
made available pursuant to this Section. Mellon will not be responsible for
changing or conforming the Services to any such amendment until Mellon has
received notice or a copy of such change, and the parties have negotiated in
good faith to reach mutually agreeable terms applicable to such additional
service(s) and have amended any affected Schedules.
6. Representations and Warranties of the Insurance Company
The Insurance Company represents and warrants the following:
A. The Insurance Company is duly organized and validly existing under
the laws of the jurisdiction of its organization, and qualified to do business
in each jurisdiction in which the nature or conduct of its business requires
such qualification
B. The Insurance Company has requisite authority and power under its
organizational documents, applicable law and the Insurance Company's agreements
with its Separate Account clients to execute, deliver, consummate and perform
this Agreement with respect to each Separate Account, and to engage Mellon to
perform the Services.
C. This Agreement is legally valid, binding and enforceable against the
Insurance Company and the Insurance Company has all registrations and/or
licenses necessary to provide services to the Sub-Accounts and Separate
Accounts.
D. There is no pending or threatened legal proceeding or regulatory
action that would materially impair the Insurance Company's ability to contract
for the Services and perform its obligations under this Agreement. The Insurance
Company's retention of Mellon to perform the Services, and performance by the
Insurance Company of its obligations under this Agreement, will not conflict
with or result in a breach of any terms or provisions of any agreement to which
the Insurance Company is a party or bound, and does not violate any applicable
law.
E. The Insurance Company will use commercially reasonable efforts to
ensure that Mellon has sufficient access to the Insurance Company's service
providers, brokers, and other authorized agents (each a "Authorized Agent"), and
related parties of any of them, in order to obtain the information Mellon will
need to perform the Services; provided that, Mellon shall bear no liability with
respect to such Authorized Agent information to which Mellon had no access.
F. To the best of the Insurance Company's knowledge, all the
information provided to Mellon in connection with the transactions contemplated
by this Agreement is full, complete and accurate, and Mellon may reasonably rely
on such information until it receives written notice from or on behalf of the
Insurance Company of any changes to such information.
G. The Insurance Company has provided Mellon with a current list of all
approved independent pricing, fair value information, and other data information
vendors that are to be used by Mellon in rendering the Services, as set forth in
Schedule D to this Agreement, and the Insurance Company will promptly reflect
any changes to such list in a revised Schedule D.
H. The Insurance Company has appropriate procedures and agreements in
place to protect the confidentiality of any non-public portfolio holdings
information of the Sub-Accounts and Separate Accounts that the Insurance Company
or its agents direct Mellon to disclose or transmit to third parties before any
public disclosure of such information.
I. The Insurance Company and/or the Separate Accounts have an
appropriate amount and scope of fidelity bond coverage, and have directors' and
officers' errors and omissions insurance coverage.
7. Representations and Warranties of Mellon
Mellon represents and warrants to the Insurance Company the following:
X. Xxxxxx is duly organized as a national banking association; is in
good standing; and is qualified to do business in each jurisdiction in which the
nature or conduct of its business requires such qualification.
X. Xxxxxx has requisite authority and power under its organizational
documents and applicable law to execute, deliver, consummate and perform this
Agreement; this Agreement is legally valid, binding and enforceable against
Mellon; and Mellon has all necessary registrations and/or licenses necessary to
perform the Services described in Schedule B.
C. There is no pending or threatened legal proceeding or regulatory
action that would materially impair Mellon's ability to provide the Services.
Mellon's performance of the Services will not conflict with or result in a
breach of any of the terms or provisions of any agreement to which Mellon is a
party or bound, and does not violate any applicable law to which Mellon is
subject.
X. Xxxxxx has completed, obtained and performed all registrations,
filings, approvals, and authorizations, consents or examinations required by any
government or governmental authority to which Mellon is subject, to perform the
Services contemplated by this Agreement and will maintain the same in effect for
so long as this Agreement remains in effect.
E. To the best of Mellon's knowledge, all the information relating to
Mellon that Mellon or its authorized agents have given to the Insurance Company
in connection with the transactions contemplated by this Agreement is full,
complete and accurate and the Insurance Company may reasonably rely on such
information until it receives written notice from Mellon of any changes.
X. Xxxxxx will maintain a fidelity bond and an insurance policy with
respect to errors and omissions coverage in form and amount that are
commercially reasonable in light of Mellon's duties and responsibilities under
this Agreement.
X. Xxxxxx has implemented and maintains reasonable procedures and
systems (including reasonable disaster recovery and business continuity plans
and procedures consistent with legal, regulatory and business needs applicable
to Mellon's delivery of the Services) to safeguard the Insurance Company's
records and data and Mellon's records, data, equipment facilities and other
property that it uses in the performance of its obligations hereunder from loss
or damage attributable to fire, theft, or any other cause, and Mellon will make
such changes to the procedures and systems from time to time as are reasonably
required for the secure performance of its obligations hereunder.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS OR
IMPLIED REPRESENTATIONS OR WARRANTIES AS TO THE SERVICES UNDER THIS AGREEMENT OR
THE PERFORMANCE THEREOF, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE SERVICES (IRRESPECTIVE OF ANY COURSE OF
DEALING, CUSTOM OR USAGE OF TRADE).
8. Standard of Care
Mellon shall act in good faith and exercise reasonable care in
performing the Services under this Agreement. Mellon's duties shall be confined
to those expressly set forth herein, and no implied duties are assumed by or may
be asserted against Mellon hereunder. In that regard, Mellon shall have no
responsibility for the actions or activities of any other party, including
service providers, except as provided in Section 4.
9. Indemnification and Limitation of Liability
A. Except as set forth in subparagraph F. below, Mellon will not be
liable to the Insurance Company or any Separate Account for any loss incurred by
the Insurance Company or Separate Account as a result of any error of judgment,
mistake of law, act or omission in the course of, or in connection with the
Services rendered by, Mellon under the Agreement in the absence of fraud,
negligence or willful misconduct of Mellon or the reckless disregard of its
duties under the Agreement.
B. Except as set forth in subparagraph F. below, Mellon agrees to
indemnify, defend, and hold harmless the Insurance Company, its directors,
officers, employees, agents, and nominees and their respective successors and
permitted assigns from and against claims, demands, actions, suits, judgments,
liabilities, losses, fines, damages, costs, charges, and counsel fees
(collectively, "Losses") resulting directly and proximately from Mellon's fraud,
negligence or willful misconduct in the performance of the Services, or reckless
disregard of its duties under this Agreement. Notwithstanding the foregoing, the
parties acknowledge and agree that (i) Mellon will obtain and rely (without
independent verification) upon prices and quotes from authorized pricing, data
and fair valuation information vendors as identified in Schedule D or otherwise
authorized under this Agreement, and (ii) Mellon will be without liability or
responsibility for any errors or loss occasioned by such reliance on such
vendors or any errors caused by or attributable to such vendors, subject to
Mellon's material compliance with the tolerance checks set forth in the
appropriate Service Level Document.
C. The Insurance Company agrees to indemnify, defend and hold harmless
Mellon, its directors, officers, employees, agents, and nominees and their
respective successors and permitted assigns from and against any Losses
resulting directly and proximately from Mellon's actions taken or omissions with
respect to or in connection with the performance of the Services or based, if
applicable, upon Mellon's reasonable reliance on information, records,
instructions or requests reasonably believed to be accurate and genuine
pertaining to the Services that are given or made to Mellon by the Insurance
Company or any service providers to the Sub-Accounts and/or Separate Accounts
with which Mellon must interface in providing the Services; provided that this
indemnification shall not apply to actions or omissions of Mellon involving
fraud, negligence, willful misconduct, or reckless disregard in the performance
of its duties under this Agreement.
D. In order for these indemnification provisions to apply, a party
seeking indemnification or to be held harmless shall fully and promptly advise
the indemnifying party in writing of all pertinent facts concerning the
situation in question. A party seeking indemnification will use reasonable care
to identify and notify the indemnifying party in writing promptly concerning any
situation which presents or appears likely to present the probability of an
indemnification claim. However, failure to do so in good faith shall not affect
the rights under this provision unless the indemnifying party is materially
prejudiced by such failure. As to any matter eligible for indemnification, the
indemnified party shall act reasonably and in accordance with good faith
business judgment, and shall not effect any settlement or confess judgment
without the consent of the indemnifying party, which consent shall not be
withheld or delayed unreasonably.
E. The indemnifying party shall be entitled to participate in the
defense at its own expense, or assume the defense, of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense, it shall be conducted by counsel of its
choosing that is reasonably satisfactory to the indemnified party; the
indemnified party shall bear the fees and expenses of any additional counsel it
retains. If the indemnifying party does not elect to assume the defense of such
suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel the indemnified party retains, which is reasonably
satisfactory to such indemnifying party. The indemnifying party shall not effect
any settlement without the consent of the indemnified party (which shall not be
withheld or delayed unreasonably) unless such settlement imposes no liability,
responsibility or other obligation upon the indemnified party and relieves such
indemnified party of all fault.
X. Xxxxxx agrees to reimburse the Insurance Company or each Separate
Account or Sub-Account for any losses and reasonable reprocessing costs incurred
by the Insurance Company or Separate Account or Sub-Account resulting directly
and proximately from Mellon's negligence in calculating the unit value ("Unit
Value") of the Separate Account or Sub-Account. Mellon's responsibility for
reimbursing the Insurance Company or Separate Account or Sub-Account will be in
accordance with and subject to the Insurance Company's policies and procedures
for addressing Unit Value errors set forth in the appropriate Service Level
Document, including without limitation a materiality threshold of one
(unrounded) whole cent per unit per Unit Value error (or such other materiality
threshold as agreed upon by the parties in the appropriate Service Level
Document).
Notwithstanding the foregoing, the parties acknowledge and agree that
(i) Mellon will obtain and rely (without independent verification) upon prices
and quotes from authorized pricing, data and fair valuation information vendors
as identified in Schedule D or otherwise authorized under this Agreement, and
(ii) Mellon will be without liability or responsibility for any errors or loss
occasioned by such reliance on such vendors or any errors caused by or
attributable to such vendors, subject to Mellon's material compliance with the
tolerance checks set forth in the appropriate Service Level Document.
G. Each party shall have a duty to mitigate damages for which the other
party may become responsible. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, IN NO EVENT SHALL THE INSURANCE COMPANY, THE SEPARATE ACCOUNTS,
MELLON, THEIR AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS'
FEES), EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. Books and Records, Disclosure, Retention, and Rights of Ownership
X. Xxxxxx shall maintain all books and records which are customary or
which are legally required to be kept in connection with Mellon's performance of
Services ("Records"). Mellon will prepare and maintain the Records at the
Insurance Company's expense, and the Records shall be the property of the
Insurance Company. Mellon will make the Records available for inspection by any
Governmental Authority, including giving any such Governmental Authority access
to the Records, and otherwise surrender the Records promptly upon request of the
Insurance Company or such Governmental Authority. Mellon will allow the
Insurance Company and its authorized persons and representatives to review the
Records during Mellon's normal business hours or, upon reasonable notice, at
such other reasonable times as the Insurance Company may request.
X. Xxxxxx shall keep the Records confidential, except when: (i)
disclosure is required by law, (ii) Mellon is advised by counsel that it may
incur liability for failure to make a disclosure, (iii) Mellon is requested to
divulge such information by duly-constituted authorities or court process, or
(iv) as requested or authorized by the Insurance Company (including pursuant to
its policies and procedures regarding selective disclosure of non-public
portfolio information). Mellon shall use commercially reasonable efforts to
provide reasonable advance notice to the Insurance Company of requests for
disclosure pursuant to items (i) - (iii) of the previous sentence, and to the
extent reasonably practicable to secure instructions as to such inspection, but
shall not be deemed to violate the confidentiality provisions of this Section or
Section 11 if Mellon discloses such Records upon reasonable belief that it is
obliged to do so by applicable law or regulatory authority.
C. Upon and subject to payment of any undisputed and unpaid amounts
owed to Mellon under this Agreement, Mellon may at its option at any time after
termination of this Agreement, and shall promptly upon the Insurance Company's
demand or upon termination of this Agreement, turn over to the Insurance Company
or its designated agent, and cease to retain in Mellon's files, any Records
created and maintained by Mellon pursuant to this Agreement which are no longer
needed by Mellon in the performance of the Services or for its legal protection.
If not so turned over to the Insurance Company, such Records will be retained by
Mellon, at the expense of the Insurance Company (which shall be equal to the
actual costs incurred by Mellon), for at least six (6) calendar years from the
year of creation or for such other period of time as is required under
applicable law. At the end of such period, such Records will be turned over to
the Insurance Company unless the Insurance Company authorizes in writing the
destruction of such Records.
D. Notwithstanding the foregoing, all computer programs, systems and
procedures employed or developed by or on behalf of Mellon, or on behalf of
Mellon by system providers or vendors used by Mellon, to perform the Services
that are not Records are the sole and exclusive property of Mellon.
11. Confidential Information; Trade Names, Trademarks and Service Marks
A. "Confidential Information" of a party shall be maintained
confidential by any other party, and shall include: (a) any data or information
that is competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer profiles,
customer lists, sales estimates, business plans, and internal performance
results relating to the past, present or future business activities of the
Insurance Company or Mellon, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them; (b) any
scientific or technical information, design, process, procedure, formula, or
improvement that is commercially valuable and secret in the sense that its
confidentiality affords the Insurance Company or Mellon a competitive advantage
over its competitors; (c) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how, and trade secrets,
whether or not patentable or copyrightable; (d) non-public portfolio holdings
information of a Separate Account; (e) financial or personal information about
the Insurance Company and its Sub-Account(s) and/or Separate Account(s); and (f)
anything designated as confidential. Mellon shall maintain adequate safeguards
to prevent the use of each Separate Account's non-public portfolio holdings
information by Mellon, its employees and affiliates for any purpose other than
performing the Services under this Agreement. Mellon also shall maintain
adequate safeguards to limit the dissemination of each Separate Account's
non-public portfolio holdings information to third parties in accordance with
non-disclosure agreements with the Insurance Company, Instructions pursuant to
Section 14, or directions of the Insurance Company under Section 15.C. However,
Confidential Information shall not be subject to such confidentiality
obligations if it: (a) is already known to a receiving party at the time it is
obtained; (b) is or becomes publicly known or available through no wrongful act
of a receiving party; (c) is rightfully received from a third party who, to the
best of a receiving party's knowledge, is not under a duty of confidentiality;
(d) is released by a protected party to a third party without restriction; (e)
is required to be disclosed pursuant to a requirement of a court order,
subpoena, governmental or regulatory agency or law (provided the disclosing
party will promptly provide the other party written notice of such requirement,
to the extent such notice is permitted); (f) is relevant to the defense of any
claim or cause of action asserted against a receiving party; or (g) has been or
is independently developed or obtained by a receiving party.
X. Xxxxxx also acknowledges Confidential Information includes nonpublic
personal information about the Insurance Company's customers ("Customer
Information") that the Insurance Company is required by privacy provisions of
Title V of the Xxxxx-Xxxxx-Xxxxxx Act, and the regulations promulgated
thereunder applicable to Insurance Company ("Privacy Regulations"), to keep
confidential. Accordingly, Mellon agrees that, to the extent it receives such
Customer Information, it shall not:
(i) use or disclose Customer Information other than to carry
out the purposes for which the Insurance Company or one of its affiliates
disclosed such Customer Information to Mellon; or
(ii) disclose any Customer Information other than:
(a) to Insurance Company affiliates;
(b) to Mellon affiliates, provided that such
affiliates need the Customer Information to be able to provide
the Services hereunder and shall be restricted in use and
disclosure of the Customer Information to the same extent as
Mellon;
(c) to subcontractors of Mellon or the Insurance
Company, provided that such subcontractors need the Customer
Information to be able to provide the Services hereunder and
shall have entered into a confidentiality agreement no less
restrictive than the terms hereof; and
(d) to comply with federal, state or local laws,
rules and other applicable legal requirements; to comply with
a properly authorized civil, criminal, or regulatory
investigation, or subpoena or summons by federal, state, or
local authorities; or to respond to judicial process or
government regulatory authorities having jurisdiction for
examination, compliance, or other purposes as authorized by
law (provided Mellon will promptly provide the Insurance
Company written notice of such requirement, to the extent such
notice is permitted).
For purposes of this paragraph, the term "affiliate"
shall have the meaning set forth in Privacy Regulations. To
the extent any provisions of this paragraph conflict with
other terms of this Agreement, this paragraph shall control.
C. Neither party shall use the trade name, trademark or service xxxx of
the other party without the prior written consent of the other party; provided,
however, that either party may use the trade name, trademark or service xxxx of
the other party in connection with providing the Services under the Agreement.
12. Reports
X. Xxxxxx shall furnish reports to the Insurance Company, its
Authorized Agents and to others that the Insurance Company designates in writing
at such times as are prescribed pursuant to this Agreement to be provided or
completed by Mellon, or as subsequently agreed upon by the parties pursuant to
this Agreement or any amendment thereto. The Insurance Company agrees to
promptly examine, or cause to be promptly examined, each report and will
communicate or cause to be communicated any errors or discrepancies therein. If
there are errors or discrepancies in a report (except such errors and
discrepancies as may not reasonably be expected to be discovered by the
recipient after conducting a diligent examination) that are not so reported
promptly, then a report will for all purposes be accepted by and binding on the
Insurance Company absent fraud, negligence, willful misconduct, or reckless
disregard of Mellon's duties under this Agreement, and Mellon shall have no
further responsibility with respect to such report other than to correct and
revise it.
B. For the two month period ending on December 31, 2007, Mellon shall
cause its auditors to perform a Type I SAS 70 audit of Mellon's internal
controls and procedures relating to the Services provided to the Insurance
Company with respect to those Sub-Accounts and/or Separate Accounts that have
been converted onto Mellon's fund accounting platform from November 1, 2007
until December 31, 2007. For each Sub-Account and/or Separate Account that has
been converted onto Mellon's fund accounting platform during the period from
November 1, 2007 until December 31, 2007, Mellon shall provide the Insurance
Company (together with its chief compliance officer or its designated
representative) with a copy of the report resulting from such Type I SAS 70
audit no later than 45 days after December 31, 2007. For the six month period
ending on June 30 of each year and the twelve month period ending on December 31
of each year commencing in 2008, Mellon shall cause its auditors to perform a
Type II SAS 70 audit of Mellon's internal controls and procedures relating to
the Services provided to the Insurance Company with respect to those
Sub-Accounts and/or Separate Accounts that have been converted onto Mellon's
fund accounting platform prior to the end of the applicable audit period. For
each Sub-Account and/or Separate Account that has been converted onto Mellon's
fund accounting platform prior to the end of the applicable audit period, Mellon
shall provide the Insurance Company (together with its chief compliance officer
or its designated representative) with a copy of the report resulting from such
Type II SAS 70 audit no later than 45 days after the end of the applicable audit
period. All SAS 70 audit reports shall be treated as Confidential Information.
13. Notices
Any communication, notice or demand pursuant to this Agreement shall be
properly addressed, in writing and delivered by personal service (including
express or courier service), registered or certified mail, or by facsimile with
proof of proper transmission and a means for confirmation of delivery to
recipient, as follows:
If to Mellon:
Mellon Bank, N.A.
000 Xxxxxxxx Xxxxxxx, AIM 026-0026
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, First Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Mellon Bank, N.A.
135 Xxxxxxxx Highway, AIM 026-0011
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq., First Vice President
& Senior Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Bank of New York Mellon Corporation
One Mellon Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq., Senior Vice President
and Associate General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Insurance Company:
The Lincoln National Life Insurance Company
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Lincoln Life & Annuity Company of New York
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
14. Authorized Persons and Instructions
A. The Insurance Company shall deliver to Mellon a list of the names,
titles and signatures of all persons who are authorized to act on behalf of the
Insurance Company and to issue instructions to Mellon ("Authorized Persons" and
"Instructions"), including any limits on the scope of authority of any
Authorized Persons. The Insurance Company's directors and officers shall be
presumptively considered Authorized Persons unless the Insurance Company
notifies Mellon to the contrary. The Insurance Company shall promptly notify
Mellon of any changes to or limitations on the rights, powers and duties of any
Authorized Person, but in the absence of receiving such notice, Mellon shall be
entitled to deal with any Authorized Person and to act and rely upon any
Instructions reasonably believed to be from such Authorized Person.
B. An Instruction means a writing signed or initialed by one or more
Authorized Person. Each such writing shall set forth the specific transaction or
type of transaction involved. Oral instructions will be deemed Instructions if
Mellon reasonably believes them to have been given by an Authorized Person, and
the oral instructions are promptly confirmed in writing.
15. Advice, Reliance and Instructions
X. Xxxxxx may apply to the Insurance Company at any time for
Instructions and may consult with Mellon's or the Insurance Company's counsel,
Independent Accountant, and other experts with respect to any matter arising in
connection with the Services performed by Mellon, and Mellon shall not be liable
nor accountable for any action taken or omitted by it in good faith in
accordance with such Instructions or on the advice of such counsel, Independent
Accountant, or other experts. To the extent possible, Mellon shall notify the
Insurance Company at any time Mellon believes it needs advice of the Insurance
Company's counsel, Independent Accountant or experts with regard to Mellon's
responsibilities and duties pursuant to this Agreement. If Mellon wishes to seek
and rely on legal advice from counsel that is neither the Insurance Company's
counsel nor counsel in the regular employ of Mellon or its affiliated companies,
and Mellon seeks to be reimbursed for such counsel fees, then Mellon must notify
and seek prior approval of the Insurance Company, which shall not be
unreasonably withheld. Mellon shall in no event be liable to the Insurance
Company, a Separate Account or any Separate Account holder or beneficial owner
for any action reasonably taken, or omitted, pursuant to such advice.
X. Xxxxxx may rely conclusively upon the terms of any document provided
by the Insurance Company and/or an Authorized Person that Mellon reasonably
believes to be genuine unless and until Mellon receives Instructions to the
contrary.
C. Subject to the Instructions of an Authorized Person, Mellon may
provide information pertaining to any Sub-Account's and/or any Separate
Account's portfolio holdings to entities designated by such Authorized Persons.
The Insurance Company understands and acknowledges that the Services are
intended to assist the Insurance Company in its obligations to price and monitor
pricing of Separate Account portfolios, but Mellon does not assume
responsibility for the accuracy or appropriateness of pricing information
received from the Insurance Company or other non-Mellon entities or pricing
methodologies, including any fair value pricing information or adjustment
factors. The Insurance Company further understands and acknowledges that it
retains overall responsibility to: (i) adopt policies and procedures to monitor
for circumstances that may necessitate the use of fair value prices; (ii)
establish criteria for determining when market quotations are no longer reliable
for a particular portfolio security; (iii) determine a methodology or
methodologies by which the Insurance Company or third party determines the
current fair value of portfolio securities; (iv) regularly review the
appropriateness and accuracy of the method used in valuing securities and make
any necessary adjustments; and (v) promptly communicate the foregoing in writing
to Mellon pursuant to Section 14.
D. Subject to Instructions, the Insurance Company authorizes Mellon to
communicate, as required, with the Insurance Company's service providers,
brokers, futures commission merchants, and/or other authorized agents and
related parties of any of them to obtain the information Mellon needs to perform
the Services. In that regard, Mellon agrees to reasonably cooperate with the
Insurance Company's Independent Accountants and internal audit department to
reasonably support their review of Mellon's provision of the Services. Mellon
also agrees to provide periodic certifications to the Insurance Company relating
to the Services Mellon performs, based on a form of certification that Mellon
and the Insurance Company reasonably agree to, and subject to such limitations
as may be reasonable or necessary to not make a material misstatement, omission
or untrue statement of fact.
16. Compliance with Law
A. In performing the Services, Mellon shall comply with all applicable
laws, and its standard of performance shall be in accord with such standards as
may be imposed by law and the requirements of all regulatory authorities.
However, unless specifically identified in the Services, nothing expressly or
implicitly contained in this Agreement is intended or shall be interpreted to
confer upon Mellon a duty to ensure that the Insurance Company is acting in
compliance with any applicable laws.
X. Xxxxxx shall use its commercially reasonable efforts to make its
employees who are responsible for providing the Services ("Relevant Employees")
available to federal, state and local governmental and regulatory and
supervisory authorities having jurisdiction over the performance of the Services
("Governmental Authorities") as may be required by such Governmental Authorities
pursuant to applicable law, subpoena or order, and as may be requested by any
Governmental Authorities on behalf of or with respect to the Insurance Company
or any of its affiliates or as may be requested by the Insurance Company to be
made available to such Governmental Authorities. To the extent legally
permitted, Mellon shall promptly notify the Insurance Company of any request by
any Governmental Authorities for any Relevant Employees (except when the request
for access to Relevant Employees was made by the Insurance Company). The
Insurance Company shall cooperate, and shall use commercially reasonable efforts
to cause each of its affiliates and service providers to cooperate, with Mellon
in complying with any notice, order, subpoena or request of any Governmental
Authority. Except as provided in Sections 8 and 9, Mellon shall have no
liability to the Insurance Company, a Separate Account or any third party for
any claims, obligations, penalties or fines which may arise out of or in
relation to Mellon's compliance with this provision. In accordance with Section
2.C.(vi), the Insurance Company shall reimburse Mellon in connection with
providing such access. Nothing contained in this paragraph shall require Mellon
to disclose any proprietary or confidential information of Mellon or its other
customers and clients.
17. Governing Law and Jurisdiction
This Agreement and performance hereunder and all suits and proceedings
hereunder shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Pennsylvania, without giving effect to conflict of
law principles. Each of the parties to this Agreement expressly and irrevocably
submits to the exclusive jurisdiction of the courts of Pennsylvania and waives
any claims of inconvenient forum or venue. To the extent that the laws of the
Commonwealth of Pennsylvania conflict with the applicable provisions of the
Investment Company Act of 1940 (the "1940 Act") and/or the Investment Advisers
Act of 1940 (the "Advisers Act"), the applicable provisions of the 1940 Act
and/or the Advisers Act shall control.
18. Services Not Exclusive
X. Xxxxxx'x Services are not exclusive to the Insurance Company or the
Sub-Account(s) and/or Separate Account(s), and Mellon shall be free to render
similar services to others.
X. Xxxxxx shall perform the Services solely as an independent
contractor and no joint venture, partnership, employment, agency or any other
relationship is intended, accomplished or embodied in this Agreement. Mellon
shall have the sole and exclusive right to supervise, manage, control and direct
its performance of the Services, except that Mellon may be subject to
performance standards and measurements for performing the Services.
C. In performing the Services, Mellon is acting solely on behalf of the
Insurance Company and no contractual or service relationship shall be deemed to
be established between Mellon and any other person, including without limitation
the custodian of the assets of the Sub-Accounts, the Separate Accounts or any
Separate Account or Sub-Account holders.
19. Force Majeure and Uncontrollable Events
Mellon shall maintain adequate and reliable computer and other
equipment necessary or appropriate to carry out its obligations under this
Agreement. Upon the Insurance Company's reasonable request, Mellon shall provide
supplemental information concerning the aspects of its disaster recovery and
business continuity plan that are relevant to the Services. Notwithstanding the
foregoing or any other provision of this Agreement, Mellon assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data,
business interruption, delay or any other loss whatsoever caused by "Force
Majeure Events." "Force Majeure Events" are events beyond the reasonable control
of Mellon, its agents and its Subcontractors (other than Subcontractors engaged
by Mellon at the instruction of the Insurance Company). In the event of Force
Majeure Events, or any disaster that causes a business interruption, Mellon
shall act in good faith and follow applicable procedures in its disaster
recovery and business continuity plan and use all commercially reasonable
efforts to minimize service interruptions.
20. Severability
If any provision of this Agreement shall be held or made invalid, the
remainder of this Agreement and the parties' rights and obligations under it
shall not be affected by such action, and the invalid provisions of the
Agreement shall be deemed to be severable only in the jurisdiction that so
determines.
21. Survivability
The following provisions shall survive beyond the expiration and
termination of this Agreement:
o all compensation provisions, including Section 2 Compensation and Expenses,
-------------------------
Section 3 regarding termination fees, costs and expenses, and Schedule C;
------------
o Section 4. Amendments, Assignment and Delegation;
o Section 6. Representations and Warranties of the Insurance Company;
-------------------------------------------------------
o Section 7. Representations and Warranties of Mellon;
----------------------------------------
o Section 9. Indemnification and Limitation of Liability;
-------------------------------------------
o Section 10. Books and Records, Disclosure, Retention, and Rights of
-------------------------------------------------------
Ownership
---------
o Section 11. Confidential Information;
------------------------
o Section 14. Authorized Persons and Instructions;
-----------------------------------
o Section 19. Force Majeure and Uncontrollable Events; and
---------------------------------------
o Section 20. Severability.
------------
22. Contract Terms To Be Exclusive
This Agreement constitutes the complete agreement of the parties about
the covered subject matter, and supersedes all prior negotiations,
understandings and agreements bearing upon the covered subject matter. As noted
in Section 1.B., Mellon and the Insurance Company, and, if applicable, its duly
authorized affiliate, may enter into Service Level Documents or other
interpretive documents in connection with this Agreement. Any such Service Level
Documents or interpretive agreements may be in writing and signed by all
parties, but shall not be deemed to be an amendment to this Agreement, and
because the intent of such agreements is to generally facilitate operations in a
flexible manner, the breach of any such agreement shall not necessarily
constitute a breach of this Agreement, and the parties shall be free to change
the terms of such agreements as provided therein.
23. Waiver
A party's waiver of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach by any party. A
party's failure to insist upon strict adherence to any provision of the
Agreement shall not constitute a waiver or deprive such party of the right to
insist upon strict adherence to such provision.
24. Counterparts and Reproduction of Documents
This Agreement may be executed in any number of counterparts, each of
which is deemed an original and all of which together evidence the entire
Agreement. This Agreement and any amendments may be reproduced by any
commercially acceptable process. The parties agree that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceedings, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course of
business, and that any enlargement facsimile or further reproduction of such
reproduction shall be likewise admissible in evidence.
25. Miscellaneous
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE LINCOLN NATIONAL LIFE INSURANCE MELLON BANK, N.A.
COMPANY
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxxxxxx X. Xxxxx
----------------------------------------------- --------------------------------------
Title: Second Vice President Title: First Vice President
--------------------------------------------- ------------------------------------
Date: September 28, 2007 Date: October 1, 2007
---------------------------------------------- ----------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: /s/ Xxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------------------
Title: Second Vice President
---------------------------------------------
Date: September 28, 2007
----------------------------------------------
SCHEDULE A
TO THE
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES AGREEMENT AMONG
MELLON BANK, N.A.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
ON BEHALF OF THEIR SEPARATE ACCOUNTS
Dated October 1, 2007
[INTENTIONALLY OMITTED]
SCHEDULE B
TO THE
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES AGREEMENT AMONG
MELLON BANK, N.A.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
ON BEHALF OF THEIR SEPARATE ACCOUNTS
Dated October 1, 2007
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES
Mellon shall perform the following accounting, financial administration
and related services for each Separate Account. Unless otherwise noted,
capitalized terms used herein shall have the same meanings assigned to them in
the Agreement.
A. Valuations
In accordance with the 1940 Act (as applicable), the Insurance Company's pricing
policies and procedures delivered to Mellon, and Instructions, Mellon will
perform the following pricing and valuation services:
1. Perform the necessary functions to (i) value the assets of each
Sub-Account and (ii) calculate the unit values associated with each
Sub-Account.
2. Obtain necessary data (including daily net asset value ("NAV") per
share, dividend distribution data, etc.) from mutual fund companies or
their agents as required to calculate the daily unit values for each
Sub-Account.
3. In accordance with the Insurance Company's unit value error correction
policies delivered to Mellon, notify the Insurance Company promptly
upon discovery of unit value errors and initiate correction processes.
B. Financial Reporting
1. Prepare and communicate to Insurance Company, Separate Account
investment transaction data and/or reports to support the applicable
regulatory reporting requirements (including Insurance Company
statutory financial statements - Schedule D).
2. In accordance with Instructions (based upon requirements under federal
and state insurance and other applicable laws and regulations), prepare
reports or other financial documents in accordance with generally
accepted accounting principles, in each case as the parties may agree
upon from time to time.
3. As applicable, provide periodic sub-certifications to the Insurance
Company's chief compliance officer and certifying principal executive
and financial officers relating to the Services Mellon performs, based
on a form of certification that Mellon and the Insurance Company
reasonably agree to, and subject to such limitations as may be
reasonable or necessary to not make a material misstatement, omission
or untrue statement of fact.
4. Based upon information provided by one of the Insurance Company's
Authorized Persons to Mellon, calculate asset-based fees and submit to
the Insurance Company.
5. Accrue expenses and waivers (as applicable) based on Instructions and
provide reporting of accruals of expense waivers.
C. Securities Transactions
Based on information that is provided to Mellon by the Insurance Company and
Insurance Company Authorized Persons, Mellon will perform the following
functions:
1. Maintain records of investment, capital share, and income and expense
activities for each Separate Account and/or each Sub-Account by: (i)
recording purchases and sales of investments; (ii) recording corporate
actions and capital changes relating to investments; (iii) accruing
interest, dividends and expenses on investments; and (iv) maintaining
the historical tax lots and income history for investments.
2. Book corporate action activity upon timely receipt of information and
Instructions. 3. Receive, update and process daily trade files from the
applicable order management system. 4. Based on Instructions, implement
tax lot relief methodology.
5. Based on Instructions from an Authorized Person file proof of claim
notices with respect to class actions involving the portfolio
securities of the Separate Accounts and/or Sub-Accounts, as applicable.
D. Reconciliation and Cash Management
1. Reconcile the investments of each Sub-Account and provide
reconciliation reports to the Insurance Company.
E. Contract Holder Activity
1. Record and reconcile daily contract holder activity, including: (i)
recording subscriptions and redemptions; and (ii) reconciling
outstanding units to the records maintained by the Insurance Company's
transfer agent and communicate exceptions to the transfer agent, which
is responsible for researching exceptions.
2. Support "post-nightly" and "as of" contract holder recording processes.
F. Audit Support
1. Provide timely assistance with audit requests from the Insurance
Company, its internal auditors, its Independent Accountants, and
regulatory agencies. Respond to inquiries from entities performing SAS
70 reviews on the Insurance Company regarding Mellon's processes and
interface with such auditors to support annual SAS 70 audits of
Insurance Company agents.
2. Provide results of Mellon's annual SAS 70 audits to the Insurance
Company and agreed upon third parties, as required.
G. Compliance Monitoring
1. Establish, maintain, and provide summaries of internal operating
policies and procedures to support the performance of the Services by
Mellon.
H. Data Feeds
In accordance with Instructions, Mellon will perform the following functions:
1. (a) As to each Sub-Account's underlying investments, disseminate the
daily NAV per share and dividend rate factors to the Insurance Company
and (b) as to each Sub-Account, disseminate the daily unit values and
portfolio data to Insurance Company and (c) as to both (a) and (b)
above, maintain quality controls necessary to ensure accuracy of the
data.
2. Provide month-end data feeds on the 1st business day of the new month
and subsequent month-end feeds as requested by Insurance Company.
3. Provide the necessary data feeds to retirement systems (mainframe). 4.
Provide the capability to re-transmit data feeds for past periods.
5. Provide the release management plan (software development lifecycle
process), release cycle and prior notification of any changes that
affect the data feeds.
I. Business Continuity
1. Provide summaries of Mellon's disaster recovery plan for business
continuity, together with summaries of any disaster recovery testing
and results, with respect to those functions performed by Mellon,
except that Mellon is not responsible for disaster recovery plans for
business continuity with respect to any underlying system upon which
Mellon relies and Mellon neither operates nor controls. Conduct and
participate in pre-defined disaster recovery testing as reasonably
requested.
J. Performance of Services by Mellon
1. Monitor Mellon's performance and provide a monthly performance
monitoring report against mutually agreed upon metrics. 2. Develop and
implement corrective action plans in the event of service requirement
defaults.
K. Relationship Management
1. Provide client service support to the Insurance Company, including
access to day-to-day points of contact and to points of escalation as
necessary.
2. At a minimum, conduct semi-annual meetings with Insurance Company
management to discuss trends, technology and strategic direction.
3. Conduct an annual meeting with Insurance Company management to discuss
the Services provided, system functionality and documentation of
policies and procedures.
L. Books and Records
1. In accordance with the 1940 Act, as applicable, and Instructions (based
upon requirements of applicable rules and regulations in connection
with the Services), maintain the general ledger and other accounts,
books and financial records of each Separate Account and/or
Sub-Account.
2. In accordance with the 1940 Act and Instructions (based upon
requirements of applicable rules and regulations in connection with the
Services), maintain and retain records on-site and off-site as
instructed.
3. Provide the Insurance Company and mutually agreed upon third parties
with view and query access to the accounting systems. 4. Assist with
the set-up of new Separate Accounts, and the related Sub-Accounts, and
the maintenance and termination of
Separate Accounts and related Sub-Accounts.
M. Tax Reporting
1. In accordance with Instructions, provide financial information for the
preparation and filing of all federal, state, and city tax returns and
ancillary schedules for the Insurance Company with respect to the
Separate Accounts.
N. Other
1. Provide financial administration and fund accounting support for
special projects and processes as needed and/or required. Examples
include: establishment of new Separate Accounts, Sub-Accounts, and unit
values; Separate Account mergers, liquidations, and conversions; unit
value mergers; proformas; and insurance policy renewals. In the event
that completion of a project or process necessitates Mellon to expend
extraordinary expenses, both parties will negotiate in good faith to
compensate Mellon for all or a portion of these expenses while taking
into consideration other relevant factors such as cost sharing with
other Mellon clients and future revenue projections from such projects
or processes.
2. Cooperate with Insurance Company in complying with the requirements of
Section 404 of the Xxxxxxxx-Xxxxx Act of 2002, Rule 38a-1 of the 1940
Act, or as required for other Insurance Company financial processes.
3. Provide financial and pricing information to support transfer of
portfolio securities in connection with shareholder transfer-in-kind
transactions.
THE LINCOLN NATIONAL LIFE INSURANCE MELLON BANK, N.A.
COMPANY
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxxxxxx X. Xxxxx
----------------------------------------------- --------------------------------------
Title: Second Vice President Title: First Vice President
--------------------------------------------- ------------------------------------
Date: September 28, 2007 Date: October 1, 2007
---------------------------------------------- ----------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: /s/ Xxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------------------
Title: Second Vice President
---------------------------------------------
Date: September 28, 2007
----------------------------------------------
SCHEDULE C
TO THE
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES AGREEMENT AMONG
MELLON BANK, N.A.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
ON BEHALF OF THEIR SEPARATE ACCOUNTS
Dated October 1, 2007
o $525,000 annual flat fee for up to 3000 unit values; $10 annual fee per
unit value for next 3000 unit values; $5 annual fee per unit value for next
10,000 unit values; $2.50 annual fee per unit value for additional unit
values
o Minimum Annual Fee: Years One through Five -- $525,000
The parties acknowledge and agree that, upon the occurrence of a significant
change in the number of unit values during the Initial Term, they will discuss
in good faith a possible adjustment to the Minimum Annual Fee; provided,
however, that no party shall be obligated to agree to any such adjustment.
THE LINCOLN NATIONAL LIFE INSURANCE MELLON BANK, N.A.
COMPANY
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxxxxxx X. Xxxxx
----------------------------------------------- --------------------------------------
Title: Second Vice President Title: First Vice President
--------------------------------------------- ------------------------------------
Date: September 28, 2007 Date: October 1, 2007
---------------------------------------------- ----------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: /s/ Xxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------------------
Title: Second Vice President
---------------------------------------------
Date: September 28, 2007
----------------------------------------------
SCHEDULE D
TO THE
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES AGREEMENT AMONG
MELLON BANK, N.A.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
ON BEHALF OF THEIR SEPARATE ACCOUNTS
Dated October 1, 2007
LIST OF AUTHORIZED DATA INFORMATION VENDORS:
--------------------------------------------------------------------------------
NAME OF VENDOR TYPE OF INFORMATION
--------------------------------------------------------------------------------
AIM INVESTMENTS Net Asset Value ("NAV")-
--------------------------------------------------------------------------------
XXXXX NAV
--------------------------------------------------------------------------------
ALLIANCEBERNSTEIN INVESTMENTS NAV
--------------------------------------------------------------------------------
AMERICAN CENTURY INVESTMENTS NAV
--------------------------------------------------------------------------------
XXXXXXXXX XXXXXX ADVISORS NAV
--------------------------------------------------------------------------------
AMERICAN FUNDS (VIP) NAV
--------------------------------------------------------------------------------
AMERICAN FUNDS (RETAIL) NAV
--------------------------------------------------------------------------------
DWS XXXXXXX - VARIABLE INS PRODUCTS NAV
--------------------------------------------------------------------------------
BARON FUNDS NAV
--------------------------------------------------------------------------------
BLACKROCK FUNDS NAV
--------------------------------------------------------------------------------
DELAWARE VIP NAV
--------------------------------------------------------------------------------
DELAWARE RETAIL FUNDS NAV
--------------------------------------------------------------------------------
DREYFUS SERVICE CORPORATION NAV
--------------------------------------------------------------------------------
EVERGREEN MANAGEMENT COMPANY NAV
--------------------------------------------------------------------------------
FEDERATED NAV
--------------------------------------------------------------------------------
FIDELITY INVESTMENTS NAV
--------------------------------------------------------------------------------
XXXXXXX XXXXX FUNDS NAV
--------------------------------------------------------------------------------
JANUS ASPEN FUNDS NAV
--------------------------------------------------------------------------------
LINCOLN VIP TRUST NAV
--------------------------------------------------------------------------------
X.X. XXXXXX NAV
--------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST FUNDS NAV
--------------------------------------------------------------------------------
M-FUNDS NAV
--------------------------------------------------------------------------------
OP CAP ADVISORS (PREMIER VIP) NAV
--------------------------------------------------------------------------------
XXXXXXXXXXX FUNDS NAV
--------------------------------------------------------------------------------
PIMCO FUNDS NAV
--------------------------------------------------------------------------------
PRO FUNDS NAV
--------------------------------------------------------------------------------
ING FUNDS NAV
--------------------------------------------------------------------------------
XXXXXX INVESTMENTS NAV
--------------------------------------------------------------------------------
T XXXX PRICE VARIABLE ANNUITY FUNDS NAV
--------------------------------------------------------------------------------
XXXXXXXXX NAV
--------------------------------------------------------------------------------
VANGUARD NAV
--------------------------------------------------------------------------------
XXXXX FARGO ADVANTAGE FUNDS NAV
--------------------------------------------------------------------------------
[SIGNATURES ON NEXT PAGE]
THE LINCOLN NATIONAL LIFE INSURANCE MELLON BANK, N.A.
COMPANY
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxxxxxx X. Xxxxx
----------------------------------------------- --------------------------------------
Title: Second Vice President Title: First Vice President
--------------------------------------------- ------------------------------------
Date: September 28, 2007 Date: October 1, 2007
---------------------------------------------- ----------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: /s/ Xxxxx X. Xxxx
-------------------------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------------------
Title: Second Vice President
---------------------------------------------
Date: September 28, 2007
----------------------------------------------
SCHEDULE E
TO THE
ACCOUNTING AND FINANCIAL ADMINISTRATION SERVICES AGREEMENT AMONG
MELLON BANK, N.A.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
ON BEHALF OF THEIR SEPARATE ACCOUNTS
Dated October 1, 2007
One Time Conversion Costs: Any actual, provable, reasonable, customary and
direct costs and expenses incurred by Seller in connection with adapting to the
conversion of Clients to a successor service provider (including but not limited
to (i) all costs of preparing requests for proposals, evaluating such proposals,
and documenting and negotiating definitive conversion contracts, including
reasonable attorneys' fees, (ii) the one time costs of internal or external
information technology resources required to effect such conversion, (iii) costs
associated with bank reconciliation software, hardware and IT feeds, and (iv)
one time stay-back team process and personnel adjustments), but shall
specifically exclude any human resources costs and expenses (other than the one
time information technology resources and stay-back team adjustments mentioned
above) and any re-occurring costs and expenses. Buyer shall be obligated to make
expense reimbursements if and only to the extent necessary to adapt Seller to a
successor third party service provider where such provider delivers a
continuation (but not enlargement) of the services and service levels that Buyer
provided under the respective Fund Accounting/Admin Contracts (Mellon) and
Institutional Accounting Contracts (Mellon).
Incremental Systems and Human Resources Costs: Any incremental actual, provable,
reasonable, customary and direct systems and human resources costs and expenses
incurred by Seller in connection with adapting to the conversion of Clients from
the Eagle/STAR Platform to another accounting software platform owned or
operated by Buyer or an Affiliate of Buyer, in any such case limited as follows:
(a) systems expenses shall be limited to costs associated with bank
reconciliation software, hardware and IT feeds and expenses associated with
making required product functionality changes and creating necessary interfaces,
including the one time costs for internal and external information technology
resources for Seller to adapt to Buyer's conversion to the new accounting
software platform; (b) human resources expenses shall be limited to salary and
bonus amounts for (i) new employees (both temporary and permanent) of Seller
required to be hired and employees reassigned in order to manage functionality
gaps between the Eagle/STAR Platform and such replacement accounting software
platform and (ii) internal information technology personnel as described in
clause (a) above and (iii) one time stay-back team process and personnel
adjustments; and (c) Buyer shall be obligated to make expense reimbursements if
and only to the extent necessary to provide for a continuation (but not
enlargement) of the services and service levels by Buyer under the respective
Fund Accounting/Admin Contracts (Mellon) and Institutional Accounting Contracts
(Mellon).
