Exhibit 23(h)(2)(b)
AMENDMENT NO. 1
TO THE FUND ACCOUNTING AND
FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT
BY AND AMONG
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, LINCOLN NATIONAL VARIABLE
ANNUITY FUND A, EACH FUND IN THE LINCOLN
VARIABLE INSURANCE PRODUCTS TRUST LISTED ON SCHEDULE A AND
DELAWARE SERVICE COMPANY, INC.
The Lincoln National Life Insurance Company ("Lincoln Life"); Lincoln National
Variable Annuity Fund A ("Fund A"); each fund in the Lincoln Variable Insurance
Products Trust listed on Schedule A (each, a "Fund" and collectively with Fund
A, the "Funds"), and Delaware Service Company, Inc. ("DSC") have previously
entered into a Fund Accounting and Financial Administration Oversight Agreement
dated October 1, 2007 ("Agreement"). The parties now desire to amend the
Agreement in this amendment (the "Amendment").
Except as modified hereby, all other terms and conditions of the Agreement shall
remain in full force and effect. Unless otherwise indicated, the terms defined
in the Agreement shall have the same meaning in this Amendment.
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree to amend the Agreement as follows:
1. All references to Mellon Bank, N.A. in the Agreement are replaced by
references to The Bank of New York Mellon ("BNY Mellon").
2. Section 3. Length and Termination of Agreement is amended and restated in its
entirety as follows:
A. The term of this Agreement shall begin on the Effective Date and
continue for an initial term of one (1) year (the "Initial Term"). Unless
otherwise terminated in accordance with its terms, this Agreement will be
extended for additional one (1) year terms (the "Renewal Term" or "Renewal
Terms").
B. This Agreement may be terminated for one or more of the following
reasons, provided the terminating party provides the applicable written
notice to the other party or parties of the reason for such termination:
(i) Mutual Agreement: The parties may mutually agree in writing to
terminate this Agreement at any time;
(ii) Unilateral Termination: A party may terminate this Agreement at
any time with no less than six (6) months' written notice to the other
party or parties;
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(iii) "For Cause": A party may terminate this Agreement "For Cause,"
as defined below, by providing the other party or parties with 60 days'
advance written notice;
(iv) Termination of Investment Manager: Upon the termination of the
investment management agreement(s) between a Fund (on behalf of its
Portfolio(s)) and its investment adviser, whether terminated by the
investment adviser, the Fund, its board of directors/trustees or its
shareholders, this Agreement shall automatically terminate; provided,
however, that neither (a) a change in such Fund's investment adviser to
another investment adviser that is under common ownership with such Fund's
investment adviser or its successor, nor (b) entering into a new investment
management agreement with any such investment adviser shall automatically
terminate this Agreement. In the event of the automatic termination of this
Agreement with respect to a Fund due to the termination of such Fund's
investment management agreement, DSC agrees to negotiate in good faith with
the applicable Fund in connection with DSC's provision of Services during
the transition to a new fund accounting and financial administration
oversight service provider. For purposes of this subparagraph B(iv) only,
the term "investment adviser" does not include any subadvisers; and
(v) Termination of BNY Mellon Fund Accounting Agreement: This
Agreement shall automatically terminate in the event that the BNY Mellon
Fund Accounting Agreement is terminated, provided that DSC agrees to
negotiate in good faith with the Funds to enter into a new fund accounting
and financial administration oversight agreement reflecting the appropriate
scope of services to be provided by DSC given the scope of services to be
provided by BNY Mellon's successor as fund accounting provider.
For purposes of subparagraph (iii) above, "For Cause" shall mean:
(a) a material breach of this Agreement that has not been remedied for
30 days following written notice by the non-breaching party or parties
that identifies in reasonable detail the alleged failure of the other
party or parties to perform, provided that if such default is capable
of being cured, then the defaulting party or parties are entitled to
such longer period as may reasonably be required to cure such default
if the defaulting party or parties have commenced such cure and are
diligently pursuing same, but such cure must be completed within 120
days in any event;
(b) when a party commits any act or omission that constitutes
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 other party or parties;
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(c) a final, unappealable judicial, regulatory or administrative
ruling or order in which the party or parties to be terminated have
been found guilty of criminal or unethical behavior in the conduct of
their business that directly relates to the subject matter of the
Services; or
(d) when a party shall make a general assignment for the benefit of
its creditors or any proceeding shall be instituted by or against such
party to adjudicate it as bankrupt or insolvent, or to seek to
liquidate, wind up, or reorganize such party, or protect or relieve
such party's 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 such party has
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 (regardless of whether it
is terminated pursuant to paragraph B. above or for any reason other than
those specified in paragraph B. above), the Funds shall pay to DSC on or
before the effective date of such termination any undisputed and unpaid
fees, and shall reimburse DSC for any undisputed and unpaid out-of-pocket
costs and expenses owed to DSC under this Agreement prior to its
termination.
D. If either (i) DSC terminates this Agreement with respect to a Fund at
any time for any reason other than those specified in paragraph B. above,
or (ii) a Fund terminates this Agreement with respect to such Fund at any
time "For Cause" under subparagraph B(iii) of this Section, then DSC shall
reimburse such Fund for any Costs and Expenses incurred by such Fund in
connection with converting such Fund to a successor service provider with
respect to the Services (which successor service provider may be Lincoln
Life), including, without limitation, the delivery to such successor
service provider, such Fund and/or other Fund service providers any of such
Fund's property, records, data, instruments and documents.
E. If this Agreement is terminated (i) by DSC and/or the Funds, as the case
may be, at any time "upon mutual agreement" or "unilaterally" under
subparagraphs B(i) and B(ii), respectively, (ii) by DSC at any time as a
result of the "termination of investment manager" under subparagraph B(iv),
(iii) by the Funds at any time for any reason other than those specified in
paragraph B above, or (iv) by DSC at any time "For Cause" under
subparagraph B(iii) of this Section, the Funds shall reimburse DSC promptly
for any Costs and Expenses incurred by DSC in connection with effecting
such termination and converting the Funds to a successor service provider
with respect to the Services, including, without limitation, the delivery
to such successor service provider, the Funds and/or other Fund service
providers any of the Funds' property, records, data, instruments and
documents.
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F. 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 DSC or sub-contractors' personnel; unused equipment expense;
and non-cancelable payments or termination charges regarding hosting and
other subcontracting services that were not incurred at the written
direction of the Funds and that cannot be transferred on redeployed by DSC.
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.
G. In the event of the termination of this Agreement, DSC agrees to
cooperate and act in good faith to facilitate an orderly transition to
DSC's successor with respect to the Services provided herein. Without
limiting the generality of the foregoing sentence, DSC agrees that, in the
event that this Agreement is terminated by a party or the parties, DSC
shall deliver the Funds' property, records, data, instruments and documents
to the Funds, their successor service providers and/or their other service
providers, as the case may be, in a non-proprietary, commercially available
format.
H. The termination of this Agreement with respect to any given Fund or
Portfolio shall in no way affect the continued validity of this Agreement
with respect to any other Fund or Portfolio.
3. Schedules A and B of the Agreement are hereby deleted in their entirety and
replaced with the Schedules A and B attached hereto, respectively.
4. Due to the reorganization of Fund A, which was effective July 17, 2009, The
Lincoln National Life Insurance Company and Fund A shall no longer be parties to
the Agreement.
5. All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
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This Amendment is executed effective as of December 29, 2009.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed all as of the day and year first above written.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY DELAWARE SERVICE COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxx X. Xxxxx
Title: 2nd VP Title: SVP
LINCOLN VARIABLE INSURANCE
PRODUCTS TRUST, on behalf of the Funds
listed on Schedule A
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: 2nd VP
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SCHEDULE A
TO THE FUND ACCOUNTING
AND FINANCIAL ADMINISTRATION OVERSIGHT AGREEMENT BETWEEN
DELAWARE SERVICE COMPANY, INC. AND LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
DATED DECEMBER 29, 2009
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
LVIP Baron Growth Opportunities Fund
LVIP Capital Growth Fund
LVIP Xxxxx & Steers Global Real Estate Fund
LVIP Columbia Value Opportunities Fund
LVIP Delaware Bond Fund
VLIP Delaware Foundation(R) Aggressive Allocation FunD
LVIP Delaware Foundation(R) Conservative Allocation Fund'
LVIP Delaware Foundation(R) Moderate Allocation Fund
LVIP Delaware Growth and Income Fund
LVIP Delaware Social Awareness Fund
LVIP Delaware Special Opportunities Fund
LVIP Global Income Fund
LVIP Janus Capital Appreciation Fund
LVIP Xxxxxxx International Growth Fund
LVIP MFS Value Fund
LVIP Mid-Cap Value Fund
LVIP Mondrian International Value Fund
LVIP Money Market Fund
LVIP SSgA Bond Index Fund
LVIP SSgA Developed International 150 Fund
LVIP SSgA Emerging Markets 100 Fund
LVIP SSgA International Index Fund
LVIP SSgA Large Cap 100 Fund
LVIP SSgA S&P 500 Index Fund
LVIP SSgA Small-Cap Index Fund
LVIP SSgA Small-Mid Cap 200 Fund
LVIP X. Xxxx Price Growth Stock Fund
LVIP X. Xxxx Price Structured Mid-Cap Growth Fund
LVIP Xxxxxxxxx Growth Fund
LVIP Xxxxxx Mid-Cap Growth Fund
LVIP Xxxxx Fargo Intrinsic Value Fund
LVIP Wilshire Aggressive Profile Fund
LVIP Wilshire Conservative Profile Fund
LVIP Wilshire Moderate Profile Fund
LVIP Wilshire Moderately Aggressive Profile Fund
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LVIP Wilshire 2010 Profile Fund
LVIP Wilshire 2020 Profile Fund
LVIP Wilshire 2030 Profile Fund
LVIP Wilshire 2040 Profile Fund
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SCHEDULE B
TO THE FUND ACCOUNTING AND FINANCIAL
ADMINISTRATION OVERSIGHT AGREEMENT BETWEEN
DELAWARE SERVICE COMPANY, INC. AND LINCOLN VARIABLE
INSURANCE PRODUCTS TRUST
DATED DECEMBER 29, 2009
DSC shall perform for each Fund and each of its Portfolios the following
fund accounting and financial administration oversight and related services.
Unless otherwise noted, capitalized terms used herein shall have the same
meanings assigned to them in the Agreement.
A. VALUATIONS
1. Conduct trend analysis review on daily NAVs.
2. Provide oversight of the Funds' pricing process, including the review of
stale pricing reports.
3. Facilitate resolution of NAV errors, and ensure that corrective a action is
implemented, if necessary; review processes with BNY Mellon to verify that
appropriate controls are in place.
B. RECONCILIATION AND CASH MANAGEMENT
1. Review cash and asset reconciliation reports prepared by BNY Mellon to
ascertain that BNY Mellon is completing such reconciliation as agreed upon
in the service level documents between BNY Mellon and the Funds (each a
"Service Level Document") and to mitigate potential NAV impacts resulting
from cash, position or share discrepancies.
2. Monitor the daily delivery of investable cash information to the investment
manager's investment team and respond to questions and ensure timely
resolution of issues. Act as liaison between the investment manager's
investment team and BNY Mellon.
C. PERFORMANCE OF SERVICES BY BNY MELLON
1. Provide assistance to management of the Funds as it establishes certain
service level requirements as detailed in the Service Level Documents with
respect to BNY Mellon's performance of its duties pursuant to the BNY
Mellon Fund Accounting Agreement with the Funds.
2. Monitor certain service level requirements as detailed in the Service Level
Documents with respect to BNY Mellon's performance of its duties pursuant
to the BNY Mellon Fund Accounting Agreement with the Funds and provide
feedback to the Funds.
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3. Evaluate BNY Mellon's performance against the mutually agreed upon
requirements as detailed in the applicable Service Level Document and
recommend adjustments as necessary.
4. Conduct periodic due diligence review of BNY Mellon's processes as detailed
in the applicable Service Level Document.
5. Review the adequacy of corrective action plans that are developed and
implemented by BNY Mellon as a result of a service requirement default as
detailed in the applicable Service Level Documents.
D. RELATIONSHIP MANAGEMENT
1. Participate in meetings with BNY Mellon and Fund management to discuss
trends, technology and strategic direction, and report pertinent
information to the officers of the Funds.
2. Represent interests of each Fund at meetings with BNY Mellon and Fund
management to discuss services provided, system functionality and
policy/procedural documentation.
3. Participate in and, if requested, attend in person, meetings with the Board
or committees of the Funds.
4. Make DSC personnel available from time to time to assist officers of the
Funds with inquiries from internal and independent auditors and compliance
issues.
E. BUSINESS CONTINUITY
1. Provide disaster recovery plan documentation with respect to systems and
processes relating to fund accounting and financial administration
oversight. Notify officers of the Funds when tests of the disaster recover
plans occur and provide officers of the Funds with the results of such
tests.
2. Review the adequacy of disaster recovery plans with respect to systems and
processes of third party vendors selected by DSC and relating to fund
accounting and financial administration oversight.
F. OTHER
1. Maintain effective working relationships with, and provide data to, third
parties at the direction of a Fund officer.
2. Provide any services addressed in the Shared Services Agreement between DSC
and BNY Mellon that are necessary for the operation of the Funds.
3. Provide the Funds, on a quarterly basis, documentation of actions taken by
DSC or certifications that processes and procedures have been followed
throughout the quarter. The specific content of the reports and
certifications will be determined by mutual agreement of the parties.
4. Allow officers of the Funds on-site to observe DSC's processes and
procedures at a mutually agreed upon frequency and with sufficient advance
notice.
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