SUB-ADVISORY AGREEMENT
Sub-Advisory Agreement executed as of , between LINCOLN
INVESTMENT MANAGEMENT, INC., an Illinois corporation (the "Adviser"), and
DELAWARE INTERNATIONAL ADVISERS LIMITED, a company formed under the laws of
England (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
and one or more other separate accounts of The Lincoln National Life
Insurance Company (the "Separate Accounts"), 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 (as provided in
writing to the Sub-Adviser) 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 (as provided in writing to the Sub-Adviser). 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
or best 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 or best 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 (and which are delivered in writing to Sub-Adviser), 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 one or more Separate
Accounts, 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 0.50 of 1% of the first $200 million of average net assets of the
Fund, 0.40 of 1% of the next $200 million of average net assets, and 0.35
of 1% of any excess over $400 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.
Sub-Adviser agrees to indemnify the Adviser, the Separate Accounts and the
Depositor of the Separate Accounts 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 Separate
Accounts or the Depositor of the Separate Accounts 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 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 separate accounts, endowment, and life insurance contracts.
IN WITNESS WHEREOF, LINCOLN INVESTMENT MANAGEMENT, INC. and DELAWARE
INTERNATIONAL ADVISERS LIMITED 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 INVESTMENT
MANAGEMENT, INC.
By:
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Printed Name:
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Title:
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DELAWARE INTERNATIONAL ADVISERS LIMITED
By:
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Printed Name:
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Title:
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Accepted and agreed to as of the day and year
first above written:
LINCOLN NATIONAL INTERNATIONAL FUND, INC.
By:
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Printed Name:
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Title:
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