Exhibit 99.23(d)(14)
SUB-ADVISORY AGREEMENT
Sub-Advisory Agreement executed as of June 8, 1987 between LINCOLN NATIONAL
INVESTMENT MANAGEMENT COMPANY, an Illinois corporation (the "Adviser"), and THE
XXXXXX MANAGEMENT COMPANY, INC., a Delaware 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 Xxxxxx Master Fund, Inc. (the "Fund"), a Maryland
corporation, which is an eligible investment fund for
Lincoln National Pension 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 (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, dealers of futures commission
merchants 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, dealer, or futures commission merchant
involved; and the quality of service rendered by the broker,
dealer or futures commission merchant 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, dealer or futures commission
merchant 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, dealer or futures commission
merchant 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,
dealer or futures commission merchant, 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.
(a) 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.
(b) The Adviser agrees that if any additional funds are created
by the Variable Annuity for which the Adviser undertakes to
act as investment adviser, it will discuss with the
Sub-Adviser obtaining investment advisory services from the
Sub-Adviser for any such additional fund before seeking such
services from other investment adviser not affiliated with
the Adviser.
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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 the greater of (a) $40,000, or (b) 0.47% of the first $200 million
of average net assets of the Fund, 0.42% of the next $200 million of
average net assets, and 0.40% 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 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 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
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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 of 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.
5. 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 Sub-Adviser shall cease to be a direct or
indirect wholly-owned subsidiary of Xxxxx & XxXxxxxx Companies, Inc. and
(d) the President of the Sub-Adviser or any portfolio manager of 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
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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.
(a) 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, rendering services hereunder.
(b) Failure by the Sub-Adviser to assure that the investment program
for the Fund meets the diversification requirements of Section 817(h) of
the Code, as required by Article 1(a) of this Agreement, shall constitute
gross negligence per se under sub-paragraph 8(a) just above.
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 or the Fund, pursuant to the requirements of Section
817(h) of the Code, and the regulations issues thereunder (including, but
not by way of limitation, Temporary Reg. Sec. 1.817-5T, September 12, 1986,
51 F.R. 32633), relating to the diversification requirements for variable
annuity, endowment, and life insurance contracts, provided that the
Sub-Adviser shall have been given prompt written notice concerning any
matter for which indemnification is otherwise afforded hereunder.
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IN WITNESS WHEREOF, LINCOLN NATIONAL INVESTMENT MANAGEMENT COMPANY and THE
XXXXXX MANAGEMENT COMPANY, 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/ Xxxxxx X. Xxxxxxx
----------------------------
Title: President
----------------------------
THE XXXXXX MANAGEMENT COMPANY, INC.
By: /s/ illegible
----------------------------
Title: Senior Managing Director
----------------------------
Accepted and agreed to
As of the day and year
first above written:
LINCOLN NATIONAL XXXXXX MASTER FUND, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Title: President
----------------------------
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Notice of Informal Agreement with Securities and Exchange Commission with
Respect to this Sub-Advisory Agreement
Dated 12/12/89
In response to a comment from the SEC which resulted from a routine inspection
of the Account C fund complex in 1989, the Xxxxxx Master Fund voluntarily agreed
that LNIMC's management will not terminate this sub-advisory contract without a
vote either of the directors of the Fund or of the shareholders of the Fund.
This informal agreement is embodied in a letter from Xxxxxx X. Xxxxxx to Xxxxx
Xxxx of the SEC dated October 25, 1989.
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