Execution Version
Exhibit 29(b)(3)
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
THIS AGREEMENT, effective as of the 31st day of August, 2007, and is by and
among LINCOLN NATIONAL VARIABLE ANNUITY FUND A (referred to herein as the
"Fund") a registered investment company with its principal place of business at
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY (referred to herein as "Lincoln Life") an Indiana-domiciled
insurance company with its principal place of business at 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, and MELLON BANK, N.A. (referred to herein as
the "Custodian") a national banking association with its principal place of
business at One Mellon Bank Center, 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000.
WITNESSETH:
WHEREAS, Lincoln Life established the Fund as a segregated investment
account under Indiana law;
WHEREAS, the Fund is authorized to issue units ("Units"); and
WHEREAS, the Fund, Lincoln Life and the Custodian desire to set forth their
agreement with respect to the custody of the Fund's Securities and cash and the
processing of Securities transactions.
NOW THEREFORE, the Fund, Lincoln Life and the Custodian agree as follows:
DEFINITIONS
The following words and phrases, unless the context requires otherwise,
shall have the following meanings:
1. "Act": the Investment Company Act of 1940 and the Rules and Regulations
thereunder, all as amended from time to time.
2. "Agreement": this agreement and any amendments.
3. "Assets": any Securities and other assets and investments of the Fund and
such cash and cash equivalents as are reasonably necessary to effect the Fund's
transactions in such investments.
4. "Authorized Person": any person, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Fund to give Instructions on
behalf of the Fund which is listed in the Certificate annexed hereto as Appendix
A or such other Certificate as may be received by the Custodian from time to
time.
5. "Board": the Board of Directors/Trustees (or the body authorized to exercise
authority similar to that of the board of directors of a corporation) of the
Fund.
6. "Book-Entry System": the Federal Reserve/Treasury book-entry system for
United States and federal agency Securities, its successor or successors and its
nominee or nominees.
7. "Business Day": any day on which the Fund, Lincoln Life, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open for business.
8. "Certificate": any notice, instruction or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, which is
actually received by the Custodian and signed on behalf of the Fund by an
Authorized Person or Persons designated by the Board to issue a Certificate.
9. "Instructions": (i) all directions to the Custodian from an Authorized Person
pursuant to the terms of this Agreement; (ii) all directions by or on behalf of
the Fund to the Custodian in its corporate capacity (or any of its affiliates)
with respect to contracts for foreign exchange; (iii) all directions by or on
behalf of the Fund pursuant to an agreement with Custodian (or any of its
affiliates) with respect to benefit disbursement services or information or
transactional services provided via a web site sponsored by the Custodian (or
any of its affiliates) (e.g., the "Workbench web site") and (iv) all directions
by or on behalf of the Fund pursuant to any other agreement or procedure between
the Custodian (or any of its affiliates) and the Fund, if such agreement or
procedure specifically provides that authorized persons thereunder are deemed to
be authorized to give instructions under this Agreement. Instructions shall be
in writing, transmitted by first class mail, overnight delivery, private
courier, facsimile, or shall be an electronic transmission subject to the
Custodian's policies and procedures, other institutional delivery systems or
trade matching utilities as directed by an Authorized Person and supported by
the Custodian, or other methods agreed upon in writing by the Fund and
Custodian. The Custodian may, in its discretion, accept oral directions and
instructions from an Authorized Person and may require confirmation in writing.
However, where the Custodian acts on an oral direction prior to receipt of a
written confirmation, the Custodian shall not be liable if a subsequent written
confirmation fails to conform to the oral direction.
10. "Primary Custodian": the meaning set forth in Rule 17f-7(b)(2).
11. "Prospectus": the Fund's current registration statement, including the
prospectus(es) and statement(s) of additional information relating to the
registration of the Units under the Securities Act of 1933, as amended, and the
Act.
12. "Rules 17f-4 and 17f-7": such Rules as promulgated under Section 17(f) of
the Act, as such rules (and any successor rules or regulations) may be amended
from time to time.
13. "Security" or "Securities": bonds, debentures, notes, stocks, shares,
evidences of indebtedness, and other securities, commodities, interests and
investments from time to
time owned by the Fund.
14. "Securities Depository": a system for the central handling of securities as
defined in Rule 17f-4.
15. "Units": units of the Fund, however designated.
ARTICLE I. - CUSTODY PROVISIONS
1. Appointment of Custodian. The Board appoints the Custodian, and the Custodian
accepts appointment, as custodian of all the Assets at the time owned by or in
the possession of the Fund during the period of this Agreement. The Board shall
not appoint any other custodian for any Assets of the Fund during the Initial
Term.
2. Custody of Cash and Securities.
a. Receipt and Holding of Assets. The Fund will deliver or cause to be
delivered to the Custodian all Assets owned by it at any time during the period
of this Custody Agreement. The Custodian will not be responsible for such Assets
until actually received. The Board specifically authorizes the Custodian to hold
Assets or other property of the Fund with any domestic subcustodian or
Securities Depository, as may be directed by the Fund or its investment adviser
or subadviser, as the case may be. Assets of the Fund deposited in a Securities
Depository will be reflected in an account or accounts which include only assets
held by the Custodian for its customers.
b. Disbursements of Cash and Delivery of Securities. The Custodian shall
disburse cash or deliver out Securities only for the purposes listed below.
Instructions must specify or evidence the purpose for which any transaction is
to be made and the Fund shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Fund:
(1) In payment for Securities purchased for the Fund;
(2) In payment for Units which have been redeemed by the Fund;
(3) In payment of taxes;
(4) When Securities are sold, called, redeemed, retired, or otherwise
become payable;
(5) In exchange for, or upon conversion into, other securities alone
or other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization, readjustment or other similar transactions;
(6) Upon conversion of Securities pursuant to their terms into other
securities;
(7) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(8) For the payment of interest, management or supervisory fees,
distributions or operating expenses;
(9) In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund;
(10) In connection with any borrowings by the Fund or short sales of
securities requiring a pledge of Assets, but only against receipt of amounts
borrowed;
(11) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall reflect any
restrictions applicable to the Fund;
(12) For the purpose of redeeming Units and the delivery to, or the
crediting to the account of, the Custodian or the Fund's transfer agent, such
Units to be purchased or redeemed;
(13) For the purpose of redeeming in kind Units against delivery to
the Custodian, its subcustodian or the Fund's transfer agent of Units to be so
redeemed;
(14) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund. The Custodian will act only in accordance with
Instructions in the delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not returned
promptly when due other than to make proper requests for such return;
(15) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(16) Upon the termination of this Agreement;
(18) In connection with non-certificated investments including, but
not limited to: deposit obligations, repurchase agreements, and swap
transactions, loan participations, options and futures transactions and other
derivative investments;
(19) For other proper purposes as may be specified in Instructions
issued by an Authorized Person of the Fund which shall include a statement of
the purpose for which the delivery or payment is to be made, the amount of the
payment or specific Assets to be delivered, the name of the person or persons to
whom delivery or payment is to be made, and a Certificate stating that the
purpose is a proper purpose under the instruments governing the Fund; and
(20) For delivery of Assets of the Fund as set forth under Article I,
Section 7.
c. Actions Which May be Taken Without Instructions. Unless an Instruction
to the contrary is received, the Custodian shall:
(1) Collect all income due or payable, provided that the Custodian
shall not be responsible for the failure to receive payment of (or late payment
of) distributions or other payments with respect to Assets held in the account;
(2) Present for payment and collect the amount payable upon all Assets
which may mature or be called, redeemed, retired or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall have no responsibility to the
Fund for monitoring or ascertaining any call, redemption or retirement dates
with respect to put bonds or similar instruments which are owned by the Fund and
held by the Custodian or its nominees where such dates are not published in
sources routinely used by the Custodian. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund for any missed
payments or other defaults resulting therefrom, unless the Custodian received
timely notification from the Fund specifying the time, place and manner for the
presentment of any such put bond owned by the Fund and held by the Custodian or
its nominee. The Custodian shall not be responsible and assumes no liability for
the accuracy or completeness of any notification the Custodian may furnish to
the Fund with respect to put bonds or similar instruments;
(3) Surrender Securities in temporary form for definitive Securities;
(4) Hold directly, or through a Securities Depository with respect to
Securities therein deposited, for the account of the Fund all rights and similar
Securities issued with respect to any Securities held by the Custodian hereunder
for that Fund;
(5) Submit or cause to be submitted to the Fund or its investment
advisor as designated by the Fund information actually received by the Custodian
regarding ownership rights, including proxies pertaining to Assets held for the
Fund;
(6) Deliver or cause to be delivered any Securities held for the Fund
in exchange for other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(7) Deliver or cause to be delivered any Securities held for the Fund
to any protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence such
delivery;
(8) Make or cause to be made such transfers or exchanges of the Assets
specifically allocated to the Fund and take such other steps as shall be stated
in Instructions to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization of the
Fund;
(9) Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into by the Fund;
(10) Deliver Securities owned by the Fund to the issuer thereof or its
agent when such Securities are called, redeemed, retired or otherwise become
payable; provided, however, that in any such case the cash or other
consideration is to be delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the Fund for monitoring
or ascertaining any call, redemption or retirement dates with respect to the put
bonds or similar instruments which are owned by the Fund and held by the
Custodian or its nominee where such dates are not published in sources routinely
used by the Custodian. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss by the Fund for any missed payment or other
default resulting therefrom unless the Custodian received timely notification
from the Fund specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability to the Fund for the
accuracy or completeness of any notification the Custodian may furnish to the
Fund with respect to put bonds or similar investments but shall provide the Fund
with information concerning such notices received;
(11) Endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund;
(12) Report the Asset positions of the Fund as of such dates as the
Fund and the Custodian may agree upon, in accordance with methods consistently
followed and uniformly applied. It is hereby expressly acknowledged and agreed
that any Asset values that may be reflected in any such report shall be
furnished by the Custodian solely on an accommodation basis and is provided to
or for the benefit of the Fund (or the Fund's service provider or agent) as
general information and is not intended to be a comprehensive summary or report
of the value of the Assets comprising the Fund. No representation is made by the
Custodian as to the accuracy or completeness of any such values. The Custodian
does not undertake any duty or responsibility to notify or otherwise provide any
updates or other revisions with respect to any such values. It is hereby further
expressly acknowledged and agreed that the Custodian shall not be liable for any
loss, cost, damage, expense, liability or claim directly or indirectly relating
to any such values reflected on any such report for the Fund provided by the
Custodian; and
(13) Execute any and all documents, agreements or other instruments
and take all actions as may be necessary or desirable for the accomplishment of
the purposes of this Agreement.
d. Confirmation and Statements. Promptly after the close of business on
each Business Day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund during such Business
Day. Where Securities purchased by the Fund are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of a Securities Depository, the Custodian shall
by book-entry or otherwise identify the quantity of those securities belonging
to the Fund. At least monthly, the Custodian shall furnish the Fund with a
detailed statement of the Securities and other Assets held for the Fund under
this Custody Agreement.
e. Registration of Securities. The Custodian is authorized to hold all
Securities, Assets, or other property of the Fund in nominee name, in bearer
form or in book-entry form. The Custodian may register any Securities, Assets or
other property of the Fund in the name of the Fund, in the name of the Custodian
or any domestic subcustodian, in the name of any duly appointed registered
nominee of such entity, or in the name of a Securities Depository or its
successor or successors, or its nominee or nominees. The Fund agrees to furnish
to the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of a domestic subcustodian or Securities
Depository, any Securities which the Custodian may hold for the account of the
Fund and which may from time to time be registered in the name of the Fund.
f. Reporting and Recordkeeping. The ownership of the property whether
securities, cash and/or other property, and whether held by the Custodian or a
subcustodian or in a depository, clearing agency or clearing system, shall be
clearly recorded on the Custodian's books as belonging to the Fund and not for
the Custodian's own interest. Where certificates are legended or otherwise not
fungible with publicly traded certificates (and in other cases where the
Custodian and the Fund may agree), the Fund reserves the right to instruct the
Custodian as to the name only in which such securities shall be registered and
the Custodian, to the extent reasonably practicable, shall comply with such
Instructions; provided, however, if the Custodian reasonably determines that
compliance with such Instructions is not reasonably practicable or otherwise may
conflict with applicable law, rule or regulation, the Custodian shall promptly
notify the Fund and shall comply with reasonable alternatives as to which the
parties may agree. The Custodian shall keep accurate and detailed accounts of
all investments, receipts, disbursements and other transactions for the Fund.
All accounts, books and records of the Custodian relating thereto shall be open
to inspection and audit at all reasonable times during normal business hours of
the Custodian by any person designated by the Fund. All such books, records and
accounts shall be maintained and preserved in the form reasonably requested by
the Fund and in accordance with the Act and the Rules and Regulations
thereunder, including, without limitation, Section 31 thereof and Rule 31a-1 and
31a-2 thereunder. All books, records and accounts pertaining to the Fund, which
are in the possession of the Custodian, shall be the property of the Fund and
such materials or (unless the delivery of original materials is required
pursuant to applicable law) legible copies thereof in a format reasonably
acceptable to the Fund, shall be surrendered promptly upon request; provided,
however, that the Custodian shall be entitled to retain a copy or the original
of any such books, records and accounts as may
be required or permitted by applicable law and the Custodian's own policies and
procedures. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, a statement in respect to any property of the Fund held by the
Custodian or by a subcustodian.
g. Segregated Accounts. Upon receipt of Instructions, the Custodian will,
from time to time establish, segregated accounts on behalf of the Fund to hold
and deal with specified Assets as shall be directed.
3. Settlement of Fund Transactions.
a. Customary Practices. Settlement of transactions may be effected in
accordance with trading and processing practices customary in the jurisdiction
or market where the transaction occurs. The Fund acknowledges that this may, in
certain circumstances, require the delivery of Assets without the concurrent
receipt of Securities (or other property) or cash. In such circumstances, the
Custodian shall have no responsibility for nonreceipt of payments (or late
payment) or nondelivery of Securities or other property (or late delivery) by
the counterparty.
b. Contractual Income. The Custodian shall credit the Fund, in accordance
with the Custodian's standard operating procedure, with income and maturity
proceeds on Securities on the contractual payment dates net of any taxes or upon
actual receipt. To the extent the Custodian credits income on contractual
payment date, the Custodian may reverse such accounting entries to the
contractual payment date if the Custodian reasonably believes that such amount
will not be received.
c. Contractual Settlement. The Custodian will attend to the settlement of
Securities transactions in accordance with the Custodian's standard operating
procedure, on the basis of either contractual settlement date accounting or
actual settlement date accounting. To the extent the Custodian settles certain
Securities transactions on the basis of contractual settlement date accounting,
the Custodian may reverse to the contractual settlement date any entry relating
to such contractual settlement if the Custodian reasonably believes that such
amount will not be received.
4. Lending of Securities. The Custodian may lend the Assets of the Fund to the
extent that the Fund enters into, and in accordance with the terms and
conditions of, one or more separate securities lending agreements, approved by
the Fund.
5. Persons Having Access to Assets of the Fund.
a. No trustee or agent of the Fund or Lincoln Life, and no officer,
director, employee or agent of the Fund or Lincoln Life, of the Fund's
investment adviser, of any sub-investment adviser of the Fund, or of the Fund's
administrator, shall have physical access to the assets of the Fund held by the
Custodian or be authorized or permitted to withdraw any investments of the Fund,
nor shall the Custodian deliver any Assets of the Fund to any such person. No
officer, director, employee or agent of the Custodian who holds any similar
position with Lincoln Life, with the Fund's investment adviser, with
any sub-investment adviser of the Fund or with the Fund's administrator shall
have access to the Assets of the Fund.
b. Nothing in this Section 5 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer, director,
employee or agent of Lincoln Life, of the Fund's investment adviser, of any
sub-investment adviser of the Fund or of the Fund's administrator, from giving
Instructions to the Custodian or executing a Certificate so long as it does not
result in delivery of or access to Assets of the Fund prohibited by paragraph
(a) of this Section 5.
6. Standard of Care; Scope of Custodial Responsibilities.
a. Standard of Care. The Custodian shall be required to exercise reasonable
care with respect to its duties under this Agreement unless otherwise provided.
(1) Notwithstanding any other provision of this Agreement, the
Custodian shall not be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, except for any such
loss or damage arising out of the negligence or willful misconduct of the
Custodian or of any agent, subcustodian or Foreign Custodian appointed by the
Custodian.
(2) The Custodian may consult with the Custodian's or the Fund's
counsel with respect to any matter arising in connection with this Agreement,
and the Custodian shall not be liable nor accountable for any action taken or
omitted by it in good faith in accordance with the advice of such counsel. To
the extent possible, the Custodian shall notify the Fund at any time the
Custodian believes it needs advice of the Fund's counsel with regard to the
Custodian's responsibilities and duties pursuant to this Agreement. If the
Custodian wishes to seek and rely on legal advice from counsel that is neither
the Custodian's counsel nor the Fund's counsel, and the Custodian seeks to be
reimbursed for the counsel fees, then the Custodian must notify and seek prior
approval of the Fund, which shall not be unreasonably withheld. The Custodian
shall in no event be liable to the Fund or any Fund unitholder or beneficial
owner for any action reasonably taken or omitted pursuant to such advice.
b. Scope of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall not be
liable for:
(1) The acts or omissions of any agent appointed pursuant to
Instructions of the Fund or its investment advisor including, but not limited
to, any broker-dealer or other entity to hold any Assets of the Fund as
collateral or otherwise pursuant to any investment strategy.
(2) The title, genuineness or validity of the issue of any Securities
purchased by the Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
(3) The legality of the sale of any Securities by the Fund or the
propriety of the amount for which the same are sold;
(4) The legality of the issue or sale of any Units, or the sufficiency
of the amount to be received therefor;
(5) The legality of the redemption of any Units, or the propriety of
the amount to be paid therefor;
(6) The legality of the declaration or payment of any distribution of
the Fund; or
(7) The legality of any borrowing for temporary administrative or
emergency purposes.
c. No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by it on
behalf of the Fund, until the Custodian actually receives and collects such
money.
d. Amounts Due from Transfer Agent. The Custodian shall not be required to
effect collection of any amount due to the Fund from the Fund's transfer agent
nor be required to cause payment or distribution by such transfer agent of any
amount paid by the Custodian to the transfer agent.
e. Collection Where Payment Refused. The Custodian shall not be required to
take action to effect collection of any amount, if the Securities upon which
such amount is payable are in default, if payment is refused after due demand or
presentation, or with respect to any insolvency or similar proceeding, unless
and until it shall be directed to take such action and it shall be assured to
its satisfaction of reimbursement of its related costs and expenses.
f. No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Assets at any time delivered to or
held by it for the Fund are such as may properly be held by the Fund under the
provisions of its governing instruments or Prospectus.
g. Reliance on Instructions. The Custodian shall be entitled to rely upon
any Instruction, notice or other instrument in writing received by the Custodian
and reasonably believed by the Custodian to be genuine and to be signed by an
Authorized Person of the Fund. Where the Custodian is issued Instructions
orally, the Fund acknowledges that if written confirmation is requested, the
validity of the transactions or enforceability of the transactions authorized by
the Fund shall not be affected if such confirmation is not received or is
contrary to oral Instructions given. The Custodian shall be fully protected in
acting in accordance with all such Instructions and in failing to act in the
absence thereof. The Custodian shall be under no duty to question any direction
of an Authorized Person with respect to the portion of the account over which
such Authorized Person has authority, to review any property held in the
account, to make any suggestions with respect to the investment and reinvestment
of the Assets in the account, or to evaluate or question the performance of any
Authorized Person. The Custodian
shall not be responsible or liable for any diminution of value of any Assets
held by the Custodian or its subcustodians pursuant to Instructions. In
following Instructions, the Custodian shall be fully protected and shall not be
liable for the acts or omissions of any person or entity not selected or
retained by the Custodian in its sole discretion, including but not limited to,
any broker-dealer or other entity designated by the Fund or Authorized Person to
hold Assets of the account as collateral or otherwise pursuant to an investment
strategy.
7. Appointment of Subcustodians; Transfer of Assets to Subcustodians or Brokers.
The Custodian is hereby authorized to appoint one or more domestic subcustodians
(which may be an affiliate of the Custodian) to hold Assets at any time owned by
the Fund. The Custodian is also hereby authorized, when acting pursuant to
Instructions, to settle or place Assets with a broker or any such domestic
subcustodian in connection with derivative transactions of any kind, including
futures, options, short selling, swaps or other transactions. When acting
pursuant to such Instructions, the Custodian shall not be liable for the acts or
omissions of any such broker or subcustodian.
8. Overdraft Facility and Security for Payment. In the event that the Custodian
receives Instructions to make payments or transfers of Assets on behalf of the
Fund for which there would be, at the close of business on the Business Day of
such payment or transfer, insufficient monies held by the Custodian on behalf of
the Fund, the Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a) shall be payable on
the next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue interest from the date of the Overdraft to the date of
payment in full by the Fund at a rate agreed upon from time to time by the
Custodian and the Fund or, in the absence of specific agreement, by such rate as
charged to other customers of the Custodian under procedures uniformly applied.
The Custodian and the Fund acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt delivery in accordance
with the terms hereof, to meet unanticipated or unusual redemptions, to allow
the settlement of foreign exchange contracts or to meet other unanticipated Fund
expenses. The Custodian shall promptly notify the Fund (an "Overdraft Notice")
of any Overdraft. To secure payment of any Overdraft and related interest and
expenses, the Fund hereby grants to the Custodian a first priority security
interest in and right of setoff against the Assets in the Fund's account,
including all income, substitutions and proceeds, whether now owned or hereafter
acquired (the "Collateral"), in the full amount of such Overdraft, interest and
expenses; provided that the Fund does not grant the Custodian a security
interest in any Securities issued by an affiliate of the Custodian (as defined
in Section 23A of the Federal Reserve Act). The Custodian and the Fund intend
that, as the securities intermediary with respect to the Collateral, the
Custodian's security interest shall automatically be perfected when it attaches.
Should the Fund fail to pay promptly any amounts owed hereunder (other than the
Lincoln Life's compensation obligations in Article IV), the Custodian shall be
entitled to use available Assets in the Fund's account and to liquidate
Securities in the account as necessary to meet the Fund's obligations relating
to such Overdraft, interest and expenses. In any such case, and without limiting
the foregoing, the Custodian shall be entitled to take such other actions(s) or
exercise
such other options, powers and rights as the Custodian now or hereafter has as a
secured creditor under the Pennsylvania Uniform Commercial Code or any other
applicable law.
9. Tax Obligations. For purposes of this Agreement, "Tax Obligations" shall mean
taxes, withholding, certification and reporting requirements, claims for
exemptions or refund, interest, penalties, additions to tax and other related
expenses. To the extent that the Custodian has received relevant and necessary
information with respect to the account, the Custodian shall perform the
following services with respect to Tax Obligations:
a. The Custodian shall file claims for exemptions or refunds with respect
to withheld foreign (non-U.S.) taxes in instances in which such claims are
appropriate upon receipt of sufficient information;
b. The Custodian shall withhold appropriate amounts, as required by U.S.
tax laws, with respect to amounts received on behalf of nonresident aliens upon
receipt of Instructions; and
c. The Custodian shall provide to the Fund or the Authorized Person such
information received by the Custodian which could, in the Custodian's reasonable
belief, assist the Fund or the Authorized Person in the submission of any
reports or returns with respect to Tax Obligations. The Fund shall inform the
Custodian in writing as to which party or parties shall receive information from
the Custodian.
d. The Custodian shall provide such other services with respect to Tax
Obligations, including preparation and filing of tax returns and reports and
payment of amounts due (to the extent funded), as requested by the Fund and
agreed to by the Custodian in writing. The Custodian shall have no independent
obligation to determine the existence of any information with respect to, or the
extent of, any Tax Obligations now or hereafter imposed on the Fund or the
account by any taxing authority. Except as specifically provided herein or
agreed to in writing by the Custodian, the Custodian shall have no obligations
or liability with respect to Tax Obligations, including, without limitation, any
obligation to file or submit returns or reports with any state, foreign or other
taxing authorities.
e. In making payments to service providers pursuant to Instructions, the
Fund acknowledges that the Custodian is acting as a paying agent and not as the
payor, for tax information reporting and withholding purposes.
ARTICLE II. - [RESERVED]
ARTICLE III. - [RESERVED]
ARTICLE IV. - GENERAL PROVISIONS
1. Compensation.
a. Lincoln Life will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth on Appendix C (the
"Fees"), which schedule may be modified by the Custodian after the Initial Term
upon not less than sixty days prior written notice to, and the consent of,
Lincoln Life. Any undisputed Fees not paid within sixty (60) days of the invoice
date will be subject to a late charge equal to 1.5% of the Fees remaining
unpaid. Additional charges of 1.5% per month will accrue and be owing on such
undisputed and unpaid Fees for each additional month during which such Fees
remain unpaid, subject to any maximum amounts imposed by law. If any Fees are
disputed by Lincoln Life, the Custodian and Lincoln Life shall work together in
good faith to resolve the dispute promptly.
b. The Custodian will xxxx Xxxxxxx Life as soon as practicable after the
end of each calendar month. Lincoln Life will promptly pay to the Custodian the
amount of such billing.
c. If not paid directly or timely by Lincoln Life, the Custodian may, with
prior approval of the Fund which may not be unreasonably withheld, charge
against Assets held on behalf of the Fund compensation and any expenses incurred
by the Custodian in the performance of its duties pursuant to this Agreement.
The Custodian shall also be entitled, subject to the approval of the Fund, to
charge against Assets of the Fund the amount of any loss, damage, liability or
expense incurred with respect to the Fund, including counsel fees, for which it
shall be entitled to reimbursement under the provisions of this Agreement.
2. Liability for Depositories. The Custodian shall not be responsible for any
losses resulting from the deposit or maintenance of Securities, Assets or other
property of the Fund with a Securities Depository.
3. Damages. Under no circumstances shall the Custodian be liable for any
indirect, consequential or special damages with respect to its role as Custodian
or information vendor.
4. Indemnification; Liability of the Fund.
a. Lincoln Life and the Fund shall indemnify and hold the Custodian
harmless from all liabilities and costs and expenses, including reasonable
counsel fees and expenses, relating to or arising out of the performance of the
Custodian's obligations under this Agreement except to the extent resulting from
the negligence or willful misconduct of the Custodian, any agent or subcustodian
appointed by the Custodian or any of its or their directors, officers, agents,
nominees or employees, in the performance of any functions hereunder, or any
other failure to comply with the standard of care required by this Agreement.
This provision shall survive the termination of this Agreement.
b. The Custodian shall indemnify and hold Lincoln Life and the Fund
harmless from all liabilities and costs and expenses, including reasonable
counsel fees and expenses, resulting from: (i) the negligence or willful
misconduct of the Custodian, any agent or subcustodian appointed by the
Custodian or any of its or their directors, officers, agents, nominees or
employees, in the performance of any functions hereunder, or any other failure
to comply with the standard of care required by this Agreement; or (ii) any
burglary, robbery, hold-up, theft, or mysterious disappearance, including loss
by damage or destruction. This provision shall survive the termination of this
Agreement.
c. The Fund, Lincoln Life and the Custodian agree that the obligations of
the Fund and Lincoln Life under this Agreement shall not be binding upon any of
the directors/trustees, unitholders, nominees, officers, employees or agents,
whether past, present or future, of the Fund and Lincoln Life, individually, but
are binding only upon the Assets and other property of the Fund and Lincoln
Life.
5. Force Majeure; Disaster Recovery and Business Continuity. Notwithstanding
anything in this Agreement to the contrary contained herein, the Custodian shall
not be responsible or liable for its failure to perform under this Agreement or
for any losses to the account resulting from any event beyond the reasonable
control of the Custodian, its agents or its subcustodians (other than
subcustodians that were engaged by the Custodian at the instruction of the
Fund). In the event of such event, or any disaster that causes a business
interruption, the Custodian 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.
The Custodian represents and warrants that it 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 the Custodian's duties under this Agreement) to
safeguard the Fund's records and data and the Custodian'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 the Custodian 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.
6. Term and Termination.
a. The term of this Agreement shall begin on the date hereof (the
"Effective Date") and continue for an initial term of three (3) years (the
"Initial Term"). After the Initial Term expires, this Agreement shall continue
but either (1) the Custodian may terminate this Agreement with respect to the
Fund by giving the Fund and Lincoln Life one hundred twenty (120) days notice in
writing, specifying the date of such termination, or (2) Lincoln Life or the
Fund may terminate this Agreement with respect to the Fund by giving the
Custodian sixty (60) days notice in writing, specifying the date of such
termination.
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 or parties provides the applicable written notice to the other
party or parties of the reason for such termination:
(1) NonRenewal: This Agreement shall terminate with respect to the
Fund at the end of the Initial Term if either the Custodian, Lincoln Life or the
Fund provides notice that it does not want to renew or extend this Agreement at
the end of the Initial Term;
(2) Mutual Agreement: The Custodian, Lincoln Life and the Fund may
mutually agree in writing to terminate this Agreement with respect to the Fund
at any time;
(3) "For Cause": (A) The Custodian may terminate this Agreement with
respect to the Fund "For Cause," as defined below, by providing Lincoln Life and
the Fund with written notice of termination "For Cause" at least 60 days prior
to the date of termination of this Agreement with respect to the Fund, or (B)
the Fund may terminate this Agreement with respect to the Fund "For Cause," as
defined below, by providing the Custodian with written notice of termination
"For Cause" at least 60 days prior to the date of termination of this Agreement
with respect to the Fund; or
(4) Failure to Pay: The Custodian may terminate this Agreement with
respect to the Fund if the Custodian has notified the Fund and Lincoln Life that
Lincoln Life has failed to pay the Custodian any undisputed amounts when due
under this Agreement and it has failed to cure such default within 60 days of
receipt of such notice (or, if Lincoln Life has disputed any amounts in good
faith, upon resolution of the dispute).
For purposes of subparagraph (3) above, "For Cause" shall mean:
(A) a material breach of this Agreement by any 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 shall be entitled to
such longer period as may reasonably be required to cure such default
if the other party shall have commenced such cure and is diligently
pursuing same, but such cure must be completed within 120 days in any
event;
(B) when any other party commits any act or omission that
constitutes gross negligence, willful misconduct, fraud or reckless
disregard of its or their 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 any 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 provided
hereunder; or
(D) when any other party shall make a general assignment for the
benefit of its 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 shall have taken steps to authorize any of the above
actions or has become unable to pay its debts as they mature.
c. If this Agreement is terminated by any party with respect to the Fund
(regardless of whether it is terminated pursuant to paragraph (b) above or for
any reason other than those specified in paragraph (b) above), Lincoln Life
shall pay to Custodian on or before the date of such termination any undisputed
and unpaid fees owed to, and shall reimburse Custodian for any undisputed and
unpaid out-of-pocket costs and expenses owed to, Custodian under this Agreement
prior to its termination.
d. If either (1) Lincoln Life or the Fund terminates this Agreement with
respect to the Fund during the Initial Term for any reason other than those
specified in paragraph (b) above, or (2) the Custodian terminates this Agreement
with respect to the Fund during the Initial Term "For Cause" or Lincoln Life's
"failure to pay" under subparagraphs (b)(3) or (b)(4) of this Section,
respectively, then Lincoln Life shall be liable to the Custodian for all
provable actual damages of Custodian arising from such termination, excluding
punitive, special, indirect, incidental and consequential damages, and shall
reimburse all Costs and Expenses incurred by the Custodian in connection with
effecting such termination and converting the Fund to a successor custodian,
including without limitation the delivery to such successor custodian, the Fund
and/or the Fund's service providers, any of the Fund's Assets, property,
records, data, instruments and documents. In addition, Lincoln Life shall
reimburse the Custodian promptly for any actual, provable, extraordinary,
non-customary and direct costs and expenses (other than any Costs and Expenses)
incurred by the Custodian in connection with effecting such termination and
converting the Fund to a successor custodian, including without
limitation the delivery to such successor custodian, the Fund and/or the Fund's
service providers, any of the Fund's Assets, property, records, data,
instruments and documents.
e. If either (1) the Custodian terminates this Agreement with respect to
the Fund at any time for any reason other than those specified in paragraph (b)
above, or (2) the Fund terminates this Agreement with respect to the Fund at any
time "For Cause" under subparagraph (b)(3) of this Section, then the Custodian
shall reimburse the Fund for any Costs and Expenses incurred by the Fund in
connection with converting the Assets of the Fund to a successor custodian,
including without limitation the delivery to such successor custodian, the Fund
and/or the Fund's service providers, any of the Fund's Assets, property,
records, data, instruments and documents.
f. If this Agreement is terminated: (1) by either the Custodian, Lincoln
Life, or the Fund for "nonrenewal" under subparagraph (b)(1); (2) by the
Custodian, Lincoln Life, and the Fund "upon mutual agreement" under subparagraph
(b)(2); (3) by Lincoln Life or the Fund at any time after the Initial Term for
any reason other than those specified in paragraph (b) above; or (4) by
Custodian at any time after the Initial Term "For Cause" or Lincoln Life's
"failure to pay" under subparagraphs (b)(3) or (b)(4) of this Section,
respectively, then Lincoln Life shall reimburse Custodian promptly for any Costs
and Expenses incurred by Custodian in connection with effecting such termination
and converting the Fund to a successor custodian, including without limitation
the delivery to such successor custodian, the Fund and/or the Fund's service
providers any of the Fund's Assets, property, records, data, instruments and
documents.
g. For purposes of this Section 7 of this Article IV, "Costs and Expenses"
incurred by a party shall mean any actual, provable, reasonable, customary and
direct costs and expenses incurred by such party. For purposes of this Section 7
of this Article IV, 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 the Custodian or its subcustodians (other than
subcustodians that were engaged by the Custodian at the instruction of the
Fund); unused equipment expense; and non-cancelable payments or termination
charges regarding subcustodial services that were not incurred at the
instruction of the Fund and that cannot be transferred or redeployed by Mellon.
Such party must provide the other party or parties with written evidence of
such costs and expenses before the other party or parties are 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 herein, 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
of the Assets, property, records, data, instruments and documents of the Fund to
a successor custodian with respect to the services provided under this
Agreement. Without limiting the generality of the foregoing sentence, the
Custodian agrees that, in the event this
Agreement is terminated by a party or the parties, it will deliver the Fund's
Assets, property, records, data, instruments and documents to the Fund, its
successor service providers and/or its other service providers, as the case may
be, in a non-proprietary, commerically-available format.
i. If, following termination of this Agreement with respect to the Fund,
Custodian continues to perform any one or more of the services governed hereby
with the express consent of the Fund, then the provisions of this Agreement,
including without limitation the provisions dealing with indemnification and
compensation, shall continue in full force and effect.
j. In the event notice of termination is given by the Custodian, which
notice shall be given at least 60 days prior to the date of termination
(notwithstanding the reason for termination), the Fund shall, on or before the
termination date, deliver to the Custodian a Certificate evidencing the vote of
the Board designating a successor custodian. In the absence of such designation,
the Custodian may designate a successor custodian, which shall be a person
qualified to so act under the Act for the Fund. If the Fund fails to designate a
successor custodian, the Fund shall, upon the date specified in the notice of
termination, and upon the delivery by the Custodian of all Assets then owned by
the Fund, be deemed to be its own custodian and the Custodian shall thereby be
relieved of all obligations under this Agreement other than the duty with
respect to Securities held in the Book-Entry System which cannot be delivered to
the Fund.
k. Upon termination of the Agreement, the Custodian shall, upon receipt of
a notice of acceptance by the successor custodian, deliver to the successor all
Assets then held by the Custodian on behalf of the Fund, after deducting all
fees, expenses and other amounts owed, if any, that are not disputed in good
faith by the Fund.
l. Following termination, the Custodian will promptly forward income and
principal received, if any, with respect to the Fund, including but not limited
to tax reclaim payments for tax reclaims filed prior to termination, to a
designated successor custodian.
m. In the event of a dispute following the expiration or termination of
this Agreement, all relevant provisions shall be deemed to continue to apply to
the obligations and liabilities of the parties.
7. Inspection of Books and Records. The books and records of the Custodian
directly related to the Fund shall be open to inspection and audit at reasonable
times by officers and representatives of the Fund and auditors employed by the
Fund at its own expense and with prior written notice to the Custodian, and by
the appropriate employees of the Securities and Exchange Commission.
8. Miscellaneous.
a. Appendix A is a Certificate signed by the Secretary of the Fund setting
forth the names and the signatures of Authorized Persons. The Fund shall furnish
a new
Certificate when the list of Authorized Persons is changed in any way. Until a
new Certificate is received, the Custodian shall be fully protected in acting
upon Instructions from Authorized Persons as set forth in the last delivered
Certificate.
b. Appendix B is a Certificate signed by the Secretary of the Fund setting
forth the names and the positions of the present officers of the Fund. The Fund
agrees to furnish to the Custodian a new Certificate when any changes are made.
Until a new Certificate is received, the Custodian shall be fully protected in
relying upon the last delivered Certificate.
c. Any required written notice or other instrument shall be sufficiently
given if addressed to the Custodian, Lincoln Life or the Fund, as the case may
be, and delivered to it at its offices at:
The Custodian:
Mellon Bank, N.A.
One Mellon Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq., Senior Vice President and Associate General
Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Fund:
Lincoln National Variable Annuity Fund A
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Chief Accounting Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Lincoln Life:
The Lincoln National Life Insurance Company
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other place as the parties may from time to time designate to
the other in writing.
d. This Agreement may not be amended or modified except by a written
agreement executed by the parties.
e. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement (including the compensation obligations of Lincoln Life) shall
not be assignable by the Fund or Lincoln Life without the written consent of the
Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a vote of the Board, and Lincoln Life; provided,
however, that a fund merger or reorganization where the fund surviving from such
merger or reorganization assumes the duties and obligations of the Fund under
this Agreement shall not require the Custodian's consent; provided further,
however, that the Custodian may assign the Agreement or any function thereof to
any corporation or entity which directly or indirectly is controlled by, or is
under common control with, the Custodian and any other attempted assignment
without written consent shall be null and void.
f. Nothing in this Agreement shall give or be construed to give or confer
upon any third party any rights hereunder.
g. The Custodian represents that it is a U.S. Bank within the meaning of
paragraph (a)(7) of Rule 17f-5 under the 1940 Act. The Fund has the requisite
amount and scope of fidelity bond coverage required by Rule 17g-1 under the 1940
Act, and has directors' and officers' errors and omissions insurance coverage.
The Custodian 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 Custodian's duties and responsibilities under this Agreement.
h. The Fund acknowledges and agrees that, except as expressly set forth in
this Agreement, the Fund is solely responsible to assure that the maintenance of
the Fund's Assets hereunder complies with applicable laws and regulations,
including without limitation the Act and applicable interpretations thereof or
exemptions therefrom.
i. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
j. The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
k. Each party represents to the others that it has all necessary power and
authority, and has obtained any consent or approval necessary to permit it, to
enter into and perform this Agreement and that this Agreement does not violate,
give rise to a default or right of termination under or otherwise conflict with
any applicable law, regulation, ruling, decree or other governmental
authorization or any contract to which it is a party or by which any of its
assets is bound. Each party represents and warrants that the individual
executing this Agreement on its behalf has the requisite authority to bind such
party to this Agreement. Lincoln Life and the Fund have received and read the
"Customer Identification Program Notice", a copy of which is attached to this
Agreement as Exhibit A.
l. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
year first above written.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY MELLON BANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxxxxxx Xxxxx
--------------------------------- ----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx Name: Xxxxxxxxxxx Xxxxx
Title: 2nd Vice President and Title: First Vice President
Assistant Treasurer Date: August 30, 2007
Date: August 30, 2007
LINCOLN NATIONAL VARIABLE
ANNUITY FUND A
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Second Vice President and
Chief Accounting Officer
Date: August 30, 2007
APPENDIX C
FEE SCHEDULE
Basis Point/ Unit Cost
----------------------
Administrative Fee
Domestic
1/10 basis point (.000010) on domestic assets 0.10
Global
Developed Markets Category 1 3.00
Developed Markets Category 2 4.50
Developed Markets Category 3 7.00
Intermediate Markets Category 4 12.00
Intermediate Markets Category 5 20.00
Emerging Markets- Category 6 40.00
Structural Charges
Per Domestic Account waived
Per Global Account waived
Per Fund of Fund waived
Third party Lending Support (per fund) 5,000.00
Transaction Fee
Domestic
Per Depository or Fed Eligible Transaction $ 1.00
Per Physical Transaction $ 15.00
Per Fed Funds Wire Received Or Delivered $ 3.00
Per Paydown $ 1.00
Per Option (per Write, Close, Expire, or Exercise) $ 5.00
Per Forward Contract $ 20.00
Per F/X Not Executed At Mellon $ 30.00
Per Security Segregation $ 3.00
Global
Developed Markets Category 1 $ 25.00
Developed Markets Category 2 $ 25.00
Developed Markets Category 3 $ 25.00
Intermediate Markets Category 4 $ 50.00
Intermediate Markets Category 5 $ 60.00
Emerging Markets- Category 6 $ 85.00
Conversion and Implementation Costs
Conversion and Implementation Waived (see Notes)
Workbench Information Delivery
Client Reporting
Unlimited Workbench User IDs*
Customized Report Development
Per Report (Minimum) for One-time Development Fee $1,000.00
Per Report Annual Maintenance Fee $ 500.00
Per Hour for Special Projects $ 150.00
NOTES
Custodian will pass through to the client any out-of-pocket expenses associated
with the following:
.. Worldwide custody, including but not limited to, postage, courier expenses,
registration fees, stamp duties, and fed wire fees, etc.
.. Postage and courier expenses associated with delivery of reports
.. Proxy or tender solicitation expenses incurred with respect to our duties
.. Charges for customized reporting development, programming, interface
development and maintenance at $150 per hour
.. Costs on client specific, customized vendor feeds or data services used to
support client customized reporting
.. Communication and hardware expenses including terminals, printers and
leased lines required to support data transmissions to/from Custodian
.. Legal charges for extraordinary events, such as lawsuits, client initiated
events and regulatory audits, etc.
.. The U.S. depository, physical and foreign market transaction categories
will include buys and sells in the appropriate market, free trades,
maturities, corporate action transactions, pairoff transactions, repurchase
agreements, cross trades and fund mergers as well as transfers out of
Custodian as it relates to a deconversion or transactions related to a
transfer in kind. Subject to the provisions of Article IV, Section 7(f) and
7(g) of the Agreement to which this Appendix E is attached, (i)
transactions related to the change of a sub-custodian will not be billed,
nor will transactions related to a conversion of assets into Custodian be
billed and (ii) Custodian will not charge transaction fees for security
movements related to securities lending provided that Custodian or its
affiliate is the securities lending agent.
.. Memo items and non-affiliated/external sweep products will be included as a
U.S. depository transaction.
.. Non-U.S. cash transfers to/from an outside party are included under foreign
market transactions. (Excludes cash transfers between accounts within
Custodian's Subcustodian network.)
Additional fees may apply in situations where the following may occur: client's
billing requirements are exceptional, client requires "rush" service or systems
development, clients require consulting services and / or manual or otherwise
exceptional pricing for securities, Tax Department support work, or client
requires on-site training.
Market Tiers:
Developed Markets
Category 1: Canada, Euroclear, France, Germany, Italy, Japan, Netherlands, New
Zealand, Spain, Sweden, Switzerland, United Kingdom, CEDEL
Category 2: Austria, Australia, Belgium, Denmark, Finland, Ireland, Luxembourg,
Mexico, Norway, South Africa
Category 3: Argentina, Brazil, Hong Kong, Malaysia, Portugal, Singapore, South
Korea, Sri Lanka, Thailand, Turkey
Intermediate Markets
Category 4: Czech Republic, Greece, Hungary, Indonesia, Israel, Peru, Taiwan,
Zimbabwe
Category 5: Bangladesh, Bermuda, Botswana, Ghana, Kenya, Mauritius, Pakistan,
Philippines, Poland, Uruguay
Emerging Markets
Category 6: Chile, China - Shanghai, China - Shenzhen, Colombia, Cyprus, Egypt,
Estonia, India, Jordan, Morocco, Russia, Slovak Republic, Venezuela, Zambia
Earnings credits and Overdraft Fees:
Earnings credits and overdraft rates will be calculated monthly on the
basis of the following formula: The Account may earn interest on balances,
including disbursement balances and balances arising from purchase and sale
transactions. For each month during which the Custodian holds property for
the Client, there shall be an adjustment to the custody fees, calculated as
follows. For each day of the month in which the closing cash balance of the
Account is more than zero, such cash balance amount will earn interest
calculated by taking the amount of the idle balance multiplied by the
Overnight Federal Funds Rate (defined below) minus .50% divided by 365
days. The amount of interest credit shall be known as the "Daily Credits."
Alternatively, for each day of the month in which the closing balance of
the Account is less than zero (an "overdraft"), the overdraft amount will
be subject to a charge calculated by taking the amount of the overdraft
multiplied by the Overnight Federal Funds Rate (defined below) plus .50%
divided by 365 days. The amount of interest charge shall be known as "Daily
Charges." The net of the Daily Credits and Daily Charges for a particular
month will be credited or debited, as the case may be, to the Monthly
Notification for the applicable period. Monthly credit balances will roll
forward to offset future Custodian fees and expenses. Unused Daily Credits
will expire at calendar year end. Credit balances may not be transferred.
They are used exclusively to offset Custodian fees and expenses and shall
not be applied against investment or other related expenses. A Daily Charge
shall not apply to the extent that an overdraft is solely due to Custodian
error.
The term "Overnight Federal Funds Rate" shall mean, for any month, the
average of daily "Federal Funds Rates" for such month. In turn, the daily
Federal Funds Rates shall mean, for any day, the weighted average of the
rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers on such day, as published
by the Federal Reserve Bank of New York on the business day next succeeding
such day.
Initial Custody Conversion Fee Waiver
Custodian will not charge custody transaction charges (per this fee schedule)
related to the initial conversion of assets to Custodian.
Custodian will not pass thru global custody market charges (including but not
limited to, postage, courier expenses, registration fees, stamp duties, and fed
wire fees, etc.) related to the initial conversion of assets to Custodian
provided that the securities are properly registered at current custodian.
FEES WILL BE PAYABLE AS FOLLOWS
Fees will be calculated and billed on a monthly basis. Fees not paid within 60
days of the due date will be subject to a late charge of 1.5% of the amount
billed. Additional charges of 1.5% per month will be incurred for each
additional month fees remain unpaid.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY MELLON BANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxxxxxx Xxxxx
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx Name: Xxxxxxxxxxx Xxxxx
Title: 2nd Vice President and Title: First Vice President
Assistant Treasurer Date: August 30, 2007
Date: August 30, 2007
LINCOLN NATIONAL VARIABLE
ANNUITY FUND A
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Second Vice President and
Chief Accounting Officer
Date: August 30, 2007
