Exhibit 5
SUB-ADVISORY AGREEMENT
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Sub-Advisory Agreement executed as of August 29, 1996, between LINCOLN
NATIONAL INVESTMENT MANAGEMENT COMPANY, an Illinois corporation (the "Adviser"),
and XXXX XXXXXX INC., a New York corporation (the "Sub-Adviser").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE FUND.
(a) Subject always to the control of the Directors of Lincoln National
International Fund, Inc. (the "Fund"), a Maryland corporation, which is an
eligible investment fund for Lincoln National Variable Annuity Account C (the
"Variable Annuity"), the Sub-Adviser, at its expense, will furnish continuously
an investment program for the Fund which shall at all times meet the
diversification requirements of Section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code"). The Sub-Adviser will make investment decisions on
behalf of the Fund and place all orders for the purchase and sale of portfolio
securities. In the performance of its duties, the Sub-Adviser will comply with
the provisions of the organizational documents and Bylaws of the Fund and the
stated investment objective, policies and restrictions of the Fund, and will use
its best efforts to safeguard and promote the welfare of the Fund, and to comply
with other policies which the Directors or the Adviser, as the case may be, may
from time to time determine. The Sub- Adviser shall make its officers and
employees available to the Adviser from time to time at such reasonable times as
the parties may agree to review investment policies of the Fund and to consult
with the Adviser regarding the investment affairs of the Fund.
(b) The Sub-Adviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties faithfully and (ii) administrative facilities, including
bookkeeping, clerical personnel and equipment necessary for the efficient
conduct of the investment affairs of the Fund (excluding determination of net
asset value per share and shareholder accounting services).
(c) In the selection of brokers and dealers and the placing of orders for the
purchase and sale of portfolio investments for the Fund, the Sub-Adviser shall
use its best efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below. In
using its best efforts to obtain for the Fund the most favorable price and
execution available, the Sub-Adviser, bearing in mind the Fund's best interests
at all times, shall consider all factors it deems relevant, including by way of
illustration: price; the size of the transaction; the nature of the market for
the security; the amount of the commission; the timing of the transaction taking
into account market prices and trends; the reputation, experience and financial
stability of the broker or dealer involved; and the quality of service rendered
by the broker or dealer in other transactions. Subject to such policies as the
Directors of the Fund may determine, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and research
services to the Sub-Adviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Sub-Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Sub-Adviser's over-all responsibilities with respect to the Fund and to other
clients of the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion.
(d) The Sub-Adviser shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Sub-Adviser pursuant to this Section 1 other
than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Directors, officers and employees
of the Fund may be a shareholder, director, officer or employee of, or be
otherwise interested in, the Sub-Adviser, and in any person controlled by or
under common control with the Sub-Adviser; and that the Sub-Adviser and any
person controlled by or under common control with the Sub-Adviser may have an
interest in the Fund or the Variable Annuity, or any other investment vehicle
for which the Fund is an eligible investment fund.
3. COMPENSATION TO BE PAID BY THE ADVISER TO THE SUB-ADVISER.
The Adviser will pay to the Sub-Adviser as compensation for the Sub- Adviser's
services rendered and for the expenses borne by the Sub-Adviser pursuant to
Section 1, a fee, computed and paid at the annual rate of 0.665 of 1% of the
first $50 million of average net assets of the Fund, 0.475 of 1% of the next $50
million of average net assets, and 0.250 of 1% of any excess over $100 million.
Such fee shall be paid by the Adviser, and not by the Fund, and without regard
to any reduction in the fees paid by the Fund to the Adviser under its
management contract as a result of any statutory or regulatory limitation on
investment company expenses or voluntary fee reduction assumed by the Adviser.
Such fee shall be payable for each month within 10 business days after the end
of such month.
If the Sub-Adviser shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the investment
advisory contract between the Adviser and the Fund shall have terminated for any
reason; and this Agreement shall not be amended unless such amendment be
approved at a meeting by the affirmative vote of a majority of the outstanding
shares of the Fund and by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Directors of the Fund
who are not interested persons of the Fund or of the Adviser or of the Sub-
Adviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall remain in
full force and effect continuously thereafter (unless terminated automatically
as set forth in Section 4) until terminated as follows:
(a) The Fund may at any time terminate this Agreement by not more than sixty
days' written notice delivered or mailed by registered mail, postage prepaid, to
the Adviser and the Sub-Adviser; or
(b) If (i) the Directors of the Fund or the shareholders by the affirmative
vote of a majority of the outstanding shares of the Fund and (ii) a majority of
the Directors who are not interested persons of the Fund or of the the Adviser
or of the Sub-Adviser, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Agreement, then this Agreement shall
automatically terminate at the close of business on the second anniversary of
its execution, or upon the expiration of one year from the effective date of the
last such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the Fund for
their approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Sub-Adviser may continue to serve hereunder in
a manner consistent with the Investment Company Act of 1940 and the Rules and
Regulations thereunder; or
(c) The Adviser may at any time terminate this Agreement by not less than
ninety days' written notice delivered or mailed by registered mail, postage
prepaid, to the Sub-Adviser, and the Sub-Adviser may at any time terminate this
Agreement by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser.
Action by the Fund under (a) above may be taken either (i) by vote of a majority
of its Directors, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be without the
payment of any penalty.
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Adviser in writing of the occurrence
of any of the following events:
(a) the Sub-Adviser shall fail to be registered as an investment adviser under
the Investment Advisers Act of 1940, as amended from time to time, and under the
laws of any jurisdiction in which the Sub-Adviser is required to be registered
as an investment adviser in order to perform its obligations under this
Agreement;
(b) the Sub-Adviser shall have been served or otherwise have notice of any
action, suit, proceeding, inquiry or investigation, at law or in equity, before
or by any court, public board or body, involving the affairs of the Fund;
(c) the ownership of more than 51% of the common stock of the Sub- Adviser
issued and outstanding as of the effective date of this Agreement will be
transferred; and
(d) the Chairman of the Board of Directors or the President of the Sub-Adviser,
or any of the Sub-Adviser's portfolio managers for the Fund shall have changed.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority of the
outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Fund present (in person or by proxy) and entitled to vote at such meeting, if
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings
defined in the Investment Company Act of 1940 and the Rules and Regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
8. NONLIABILITY OF SUB-ADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on the part
of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Fund or
to any shareholder of the Fund, for any act or omission in the course of, or
connected with, the rendering of services hereunder.
9. Sub-Adviser agrees to indemnify the Adviser, the Variable Annuity and the
Depositor of the Variable Annuity for, and hold them harmless against, any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Sub-Adviser) or litigation (including legal and
other expenses) to which the Adviser, the Variable Annuity or the Depositor of
the Variable Annuity may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of any failure by
the Sub-Adviser, whether unintentional or in good faith or otherwise, to
adequately diversify the investment program of the Fund, pursuant to the
requirements of Section 817(h) of the Code, and the regulations issued
thereunder (including, but not by way of limitation, Reg. Sec. 1.817-5, March 2,
1989, 54 F.R. 8730), relating to the diversification requirements for variable
annuity, endowment, and life insurance contracts.
IN WITNESS WHEREOF, LINCOLN NATIONAL INVESTMENT MANAGEMENT COMPANY and GLOBE
FINLAY, INC. have each caused this Instrument to be signed in duplicate on its
behalf by its duly authorized representative, all as of the day and year first
above written.
LINCOLN NATIONAL INVESTMENT
MANAGEMENT COMPANY
By: /s/ Xxx X. Xxxxxx
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Printed Name: Xxx X. Xxxxxx
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Title: Senior Vice President
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XXXX XXXXXX INC.
By: /s/ F. Xxxxxxx Xxxxxx
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Printed Name: F. Xxxxxxx Xxxxxx
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Title: C.G.O. & Co-Chairman
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Accepted and agreed to
as of the day and year
first above written:
LINCOLN NATIONAL INTERNATIONAL FUND, INC.
By: /s/ Xxxx X. Xxxxxx
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Printed Name: Xxxx X. Xxxxxx
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Title: Vice President
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