--May NOT be Amended without Prior Approval of Board AND Shareholders--
ADVISORY AGREEMENT
Agreement, made this 14th day of December, 1981 between Lincoln National
Special Opportunities Fund, Inc., a Maryland corporation (the "Fund"), and
Lincoln National Investment Management Company (the "Adviser"),
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory and administrative services to the Fund, and the Adviser is willing to
render such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund and to administer its corporate affairs, subject
to the supervision of the Board of Directors of the Fund for the period and on
the terms set forth in this Agreement. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Investment Advisory Duties. Subject to the supervision of the Board of
Directors of the Fund, the Adviser shall manage the investment operations of the
Fund, subject to the following:
(a) the Adviser shall provide supervision of the Fund's investments,
furnish a continuous investment program for the Fund's portfolio, determine from
time to time what securities will be purchased, retained or sold by the Fund,
and what portion of the assets will be invested or held uninvested as cash;
(b) the Adviser shall use the same skill and care in the management of the
Fund's portfolio as it uses in the management of other accounts for which it has
investment responsibility;
(c) the Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Articles of Incorporation,
By-laws and Prospectus of the Fund and with the instructions and directions of
the Board of Directors of the Fund and will conform to and comply with the
requirements of the 1940 Act and all other applicable Federal and state laws and
regulations;
(d) the Adviser shall determine the securities to be purchased or sold by
the Fund and will place orders pursuant to its determinations either directly
with the issuer or with any broker and/or dealer who specializes in the
securities in which the Fund is active, but shall in no event place such orders
with any affiliated person of the Adviser. In placing orders with brokers and/or
dealers the Adviser shall attempt to obtain the best price and the most
favorable execution of its orders, subject to such other considerations as may
be set forth in the then most recent prospectus of the Fund;
(e) the Adviser shall maintain books and records with respect to the
Fund's securities transactions and shall render to the Fund's Board of Directors
such periodic and special reports as the Fund's Board of Directors may
reasonably request;
(f) the investment advisory services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar services to others. In addition, it is understood that the
persons employed by the Adviser to assist in the performance of its duties under
this Agreement will not necessarily devote their full time to such activity.
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3. Administrative Functions. The Adviser will administer the Fund's
corporate affairs, subject to the overall supervision of the Board of Directors
of the Fund and, in connection therewith, shall furnish the Fund with office
space and all necessary office facilities, equipment and personnel, and shall
provide all necessary executive and other personnel (including certain of its
officers and employees) for managing the investments and affairs of the Fund.
In connection with its administration of the affairs of the Fund, the
Adviser will bear all of the following expenses:
(i) the salaries and expenses of all personnel, except the fees and
expenses of directors who are not "interested persons" of the Fund, as
that term is defined in the 1940 Act;
(ii) all expenses incurred by the Adviser in connection with
administering the Fund's business other than those assumed by the Fund
herein; and
The Fund assumes and will pay the following expenses, except to the extent
incurred in connection with the organization of the Fund:
(a) the fee of the Adviser;
(b) the compensation and expenses of directors who are not
"interested persons" of the Fund;
(c) the fees and expenses of the custodian of the Fund's assets;
(d) the fees and expenses of independent accountants for the Fund;
(e) brokerage commissions and securities transaction costs incurred
by the Fund, including any portion of such commissions attributable to
research and brokerage services as defined by Section 28(e) of the
Securities Exchange Act of 1934, as amended;
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(f) all taxes and corporate fees payable by the Fund to federal,
state or other governmental agencies;
(g) the fees of any trade association of which the Fund may be a
member;
(h) the cost of stock certificates representing shares of the Fund;
(i) the fees and expenses involved in registering and maintaining
registrations of the Fund and its shares with the Securities and Exchange
Commission (the "Commission"), and qualifying its shares under state
securities laws, including the preparation and printing of the Fund's
registration statements and updated prospectuses provided to current
stockholders;
(j) expenses of stockholders' and directors' meetings and of
preparing and printing proxy material and mailing reports to stockholders;
(k) the charges and expenses of outside legal counsel for the Fund,
including legal services rendered in connection with the Fund's corporate
existence, corporate and financial structure and relations with its
stockholders, registrations and qualifications of securities and
litigation; and
(l) expenses of any extraordinary nature (including litigation and
indemnification expenses) which are not incurred in the ordinary course of
the Fund's business.
4. Contractual Services. The Adviser may contract with other entities to
assist it in rendering services described in this Agreement; provided, however,
that the Adviser will continue to be contractually bound with respect to the
performance of its duties and obligations as set forth herein.
5. Books and Records. The Adviser shall keep the Fund's books and records
required to be maintained by it pursuant to paragraph 2 hereof. The Adviser
agrees that all records which it maintains for the Fund are the property of the
Fund and it
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will surrender promptly to the Fund any of such records upon the Fund's request.
The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
of the Commission under the 1940 Act any such records as are required to be
maintained by Rule 31a-1 of the Commission under the 1940 Act.
6. Compensation. The Fund shall pay the Adviser, as full compensation for
all services rendered and all facilities and personnel furnished hereunder, a
monthly fee at the annual rate of .48 of 1% of the first $200,000,000 of average
daily net asset value of the Fund, .40 of 1% of the next $200,000,000 and .30 of
1% of the average daily net asset value of the Fund in excess of $400,000,000
during the fiscal year computed in the manner used for the determination of the
offering price of shares of the Fund. The fee for each month shall be payable to
the Adviser not later than the tenth day of the following month.
7. Reimbursement of Expenses. If, in any fiscal year, the total of the
Fund's expenses (including the fee payable pursuant to paragraph 6 hereof, but
excluding taxes, interest, brokerage commissions relating to the purchase or
sale of portfolio securities and extraordinary non-recurring expenses) exceeds
1-1/2% of the average daily net asset value of the Fund, computed in the manner
above described, the Adviser will pay such excess. For purposes of this
paragraph, the term "fiscal year" shall include the portion of any fiscal year
which shall have elapsed at the date of termination of this Agreement, and the
expense limitation
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shall be that part of 1-1/2% proportioned to the portion of a full fiscal year
elapsed.
8. Limitation of Liability. The Adviser shall not be liable for any error
of judgment or mistake of law or fact or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
9. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall continue until the earlier of one year from the effective
date of the Fund's Registration Statement or the date of the first annual or
special meeting of the stockholders of the Fund, and, if approved by a majority
of the Fund's outstanding voting securities (as defined in the 1940 Act),
thereafter shall continue automatically for periods of one calendar year so long
as such continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities or by the Fund's Board
of Directors, and (b) by the vote of a majority of those members of the Board
of Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party, cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that this Agreement may be terminated by the Fund at any time, without the
payment of any penalty, by vote of a majority of the entire Board of Directors
of the Fund or
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by vote of a majority of the Fund's outstanding voting securities on 60 days'
written notice to the Adviser, or by the Adviser at any time, without the
payment of any penalty, on 90 days' written notice to the Fund. This Agreement
will automatically and immediately terminate in the event of its "assignment"
(as defined in the 1940 Act).
10. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by vote of a majority
of those members of the Board of Directors of the Fund who are not "interested
persons" of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such amendment, and (b) by vote of a majority of the
Fund's outstanding voting securities, provided, however, that compliance with
subparagraph (b) of this paragraph 10 shall not be required to amend this
Agreement so as to lower the Adviser's compensation under paragraph 6 hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Lincoln National Special Opportunities
Fund, Inc.
(CORPORATE SEAL)
By /s/ Xxxxxx X. Xxxxxx
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Vice President
ATTEST:
/s/ Xxxx X. Xxxxxxxxx
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Lincoln National Investment Management
Company
(CORPORATE SEAL)
By /s/ [ILLEGIBLE]
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Senior Vice President
ATTEST:
/s/ Xxxx Xx Xxxxxxx
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Asst. Secy.
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