THE AAL MUTUAL FUNDS
SUB-ADVISORY AGREEMENT FOR
THE AAL INTERNATIONAL FUND
WITH
XXXXXXX INTERNATIONAL ADVISORS, LLC
AGREEMENT made this 30th day of October, 1998, by and among THE AAL MUTUAL FUNDS
(the "Fund"), a Massachusetts Business Trust, AAL Capital Management Corporation
(the "Adviser"), a Delaware Corporation and XXXXXXX INTERNATIONAL ADVISORS, LLC
(the "Sub-Adviser"), a Delaware Limited Liability Corporation.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. In General
The Sub-Adviser agrees, as more fully set forth herein, to act as Sub-Adviser to
the Fund with respect to the investment and reinvestment of the assets of the
Fund's series of shares described as The AAL International Fund. It is
understood that the Fund may create one or more additional Fund series from time
to time and that this Agreement may be amended by the mutual written agreement
of the parties to include such additional funds under the terms to this
Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to Investment of
Assets of The AAL International Fund
(a) Subject to the succeeding provisions of this section and subject to
the oversight and review of the Adviser and the direction and control
of the Board of Trustees ("Trustees") of the Fund, the Sub-Adviser, as
agent and attorney-in-fact with respect to the Fund, is authorized, in
its discretion and with prior consultation with the Fund to:
(i) Buy, sell, exchange, convert, lend and otherwise trade in any
stocks, bonds, currencies, and any other securities or assets;
(ii) Place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select; including brokers and dealers that may be
affiliates of the Sub-Adviser, and
(iii)Enter into and execute agreements on behalf of the Fund,
relating to the acquisition or disposition of investment assets
and the execution of portfolio transactions, including foreign
exchange contracts and other transactional agreements. Nothing
contained herein, however, shall be deemed to authorize the
Sub-Adviser to take or receive physical possession of any cash or
securities held for the Fund, it being intended that sole
responsibility for safekeeping thereof and the consummation of
all such purchases, sales, deliveries, and investments made
pursuant to the Sub-Adviser's direction shall rest upon the
Fund's Custodian.
(iv) Provide the Adviser and the Trustees with such reports as may
reasonably be requested in connection with the discharge of the
foregoing responsibilities and the discharge of the Adviser's
responsibilities under the Investment Advisory Agreement with the
Fund and those of AAL Capital Management Corporation under the
Primary Underwriting Agreement with the Fund.
Written procedures with respect to (i), (ii) and (iii) above may be set forth as
agreed to among the Fund, the Adviser and Sub-Adviser.
(b) Any investment purchases or sales made by the Sub-Adviser under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment Company
Act of 1940 (the "Act") and of any rules or regulations in force
thereunder; (2) any other applicable provisions of law; (3) the
provisions of the Articles of Incorporation and By-Laws of the Fund as
amended from time to time; (4) any policies and determinations of the
Board of Trustees of the Fund; and (5) the fundamental policies of the
Fund, as reflected in its Registration Statement under the Act, or as
amended by the shareholders of the Fund; provided that copies of the
items referred to in clauses (3), (4) and (5) shall have been
furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties ("disabling conduct") hereunder on the part of
the Sub-Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity
affiliated with the Sub-Adviser) the Sub-Adviser shall not be subject
to 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, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection
with the matters to which this Agreement relates, except to the extent
specified in Section 36 (b) of the Act concerning loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation
for services. Except for such disabling conduct, the Fund shall
indemnify the Sub-Adviser (and its officers, directors, agents,
employees, controlling persons, shareholders and any other person or
entity affiliated with the Sub-Adviser) against any liability arising
from the Sub-Adviser's conduct under this Agreement to the extent
permitted by the Articles of Incorporation and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or any
"affiliated person" (as defined in the Act) of the Sub-Adviser from
acting as investment adviser or manager for any other person, firm or
corporation and shall not in any way limit or restrict the Sub-Adviser
or any such affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts of others
for whom it or they may be acting, provided, however, that the
Sub-Adviser expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations to the Fund under this Agreement. It is agreed that the
Sub-Adviser shall have no responsibility or liability for the accuracy
or completeness of the Fund's Registration Statement under the Act and
the Securities Act of 1933 except for information supplied by the
Sub-Adviser for inclusion therein. The Sub-Adviser shall be deemed to
be an independent contractor and, unless otherwise expressly provided
or authorized, have no authority to act or represent the Fund in any
way or otherwise be deemed an agent of the Fund.
(e) In connection with its duties to arrange for the purchase and sale of
The AAL International Fund's securities and other assets, the
Sub-Adviser shall follow the principles set forth in any investment
advisory agreement in effect from time to time between the Fund and
the Adviser, provided that a copy of any such agreement shall have
been provided to the Sub-Adviser. The Sub-Adviser will promptly
communicate to the Adviser and to the officers and the Trustees of the
Fund such information relating to portfolio transactions as they may
reasonably request.
(f) The Sub-Adviser may place orders both as to sales and purchases of
assets directly through any broker or dealer it chooses. Brokers or
dealers may be selected who provide brokerage and/or research services
to the Fund and/or other accounts over which the Sub-Adviser or its
affiliates exercise investment discretion. Brokers or dealers who
execute portfolio transactions on behalf of the Fund may receive
commissions which are in excess of the amount of commissions which
other brokers or dealers would have charged for effecting such
transactions. In order to cause the Fund to pay such higher
commissions, the Sub-Adviser must determine in good faith that such
commissions are reasonable in relation to the value of the brokerage
and/or research services provided by such executing brokers or dealers
viewed in terms of a particular transaction or the Sub-Adviser's
overall responsibilities to the Fund or its other discretionary client
accounts.
(g) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients, the Sub-Adviser, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be sold or purchased
in order to obtain the best execution and lower brokerage commissions,
if any. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the Fund
and to such clients.
The Sub-Adviser may purchase or sell for the Fund, pursuant to the Fund's Rule
10f-3 Procedures, any security (including securities of the same class as those
underwritten or other securities of the same or related issuer) for which any
affiliate of the Sub-Adviser acts as (1) an underwriter (either as lead
underwriter or syndicate member), both during the pendency of any underwriting
or selling syndicate and thereafter, or (2) a market maker, provided that such
security is purchased from a non-affiliated party.
(h) The Sub-Adviser shall be responsible for 13F reporting for the
securities held by The AAL International Fund.
3. Allocation of Expenses
During the term of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities, commodities, and other investments (including brokerage
commissions and other transaction charges, if any) purchased for the Fund. The
Sub-Adviser agrees that it will furnish the Fund, at the Sub-Adviser's expense,
with all office space, facilities, equipment, and clerical personnel necessary
for carrying out its duties under this Agreement.
4. Certain Records
Any records required to be maintained and preserved pursuant to the provisions
of Rule 31a-1 and Rule 31a-2 under the Act that are prepared or maintained by
the Sub-Adviser on behalf of the Fund are the property of the Fund and will be
surrendered promptly to the Fund or Adviser on request.
5. Reference to the Sub-Adviser
Neither the Fund, the Adviser or any affiliate or agent thereof shall make
reference to or use the name of the Sub-Adviser or any of its affiliates in any
advertising or promotional materials without the prior approval of the
Sub-Adviser, which approval shall not be unreasonably withheld.
6. Compensation of the Sub-Adviser
The Adviser agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept
as full compensation for all services rendered by the Sub-Adviser as such, a
management fee, payable quarterly in arrears and computed on the average daily
net asset value of The AAL International Fund at rates shown on Exhibit A
attached hereto.
7. Duration and Termination
(a) This Agreement shall go into effect for The AAL International Fund on
November 1, 1998 or as soon thereafter as it receives shareholder
approval, and shall, unless terminated as hereinafter provided,
continue in effect thereafter from year to year, but only so long as
such continuance is specifically approved at least annually by a
majority of the Fund's Board of Trustees, or by the vote of the
holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the Fund, with respect to The AAL International
Fund, and, in either case, a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in the
Act) of any such party cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may be terminated by the Sub-Adviser at any time
without penalty upon giving the Fund and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund and Adviser)
and may be terminated by the Fund or the Adviser at any time without
penalty upon giving the Sub-Adviser sixty (60) days' written notice
(which notice may be waived by the Sub-Adviser), provided that such
termination by the Fund shall be directed or approved by the vote of a
majority of all of the Trustees in office at the time or by the vote
of the holders of a majority (as defined in the Act) of the voting
securities of the Fund, with respect to The AAL International Fund, or
with respect to any Fund by the vote of a majority of the outstanding
shares of such Fund. This Agreement shall automatically terminate in
the event of its "assignment" (as defined in the Act). This Agreement
will also terminate in the event that the Investment Advisory
Agreement is terminated.
8. Agreement Binding Only On Fund Property
The Sub-Adviser understands that the obligations of this Agreement are not
binding upon any shareholder of the Fund personally, but bind only the Fund's
property; the Sub-Adviser represents that it has notice of the provisions of the
Fund's Articles of Incorporation disclaiming shareholder liability for acts or
obligations of the Fund.
9. Action By An Individual Fund
The provisions of this Agreement and any amendments hereto with respect to a
Series may be approved by the shareholders of that Series and become effective
with respect to the assets of that Series without the necessity of approval
thereof by shareholders of any other Series. The Adviser represents that the
holders of a majority (as defined in the "Act") of The AAL International Fund,
will vote on approval of the entry into this Agreement on behalf of said fund.
10. Notices
The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of any
of the following events:
(a) any change in any of the Sub-Adviser's members or portfolio managers;
(b) the Sub-Adviser fails to be registered as an investment adviser under
the Advisers Act or 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;
(c) the Sub-Adviser is the subject of any action, suit, proceeding,
inquiry or investigation at law or in equity, before any court, public
board or body, involving the affairs of The AAL International Fund, or
(d) any change in ownership or control, or membership of the Sub-Adviser.
11. Manner of Notice
Any notice given hereunder shall be in writing and may be served by being sent
by telex, facsimile or other electronic transmission, or sent by registered mail
or by courier to the address set forth below for the party for which it is
intended. A notice served by mail shall be deemed served seven days after
mailing and in the case of telex, facsimile or other electronic transmission,
twelve hours after confirmed receipt thereof. Addresses for notice may be
changed by written notice to the other party.
The Adviser
Xxxxxx X. Xxxxxxxx, President and Chief Executive Officer
AAL Capital Management Corporation
000 Xxxx Xxxxxxx Xxx.
Xxxxxxxx, XX 00000-0000
The Sub-Adviser
Xxxxxxx Xxxxxx
Xxxxxxx International Advisors, LLC
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax (000) 000-0000
No provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by both parties.
The Adviser acknowledges receipt of the Sub-Adviser's Part II, Form ADV at least
48 hours in advance of signing this Agreement.
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby.
This Agreement shall be governed by the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
THE AAL MUTUAL FUNDS
/s/ Xxxxxx. X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxx, President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxxx, Assistant Secretary
AAL Capital Management Corporation
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxx, President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary
XXXXXXX INTERNATIONAL ADVISORS, LLC by its Member Manager,
OECHSLE GROUP, LLC
/s/ L. Xxxx Xxxxx
--------------------------------------------
L. Xxxx Xxxxx, Managing Principal
ATTEST
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxxx
EXHIBIT A
TO
THE AAL Mutual Funds
SUB-ADVISORY AGREEMENT
(Dated October 30, 1998)
1. The AAL International Fund
The management fee for The AAL International Fund, payable to the Sub-Adviser by
the Adviser, calculated in accordance with paragraph 6 of The AAL Mutual Funds
Sub-Advisory Agreement, shall be at the annual rate of:
0.40 of 1% of the average daily net assets of $50 million or less;
0.35 of 1% of the average daily net assets over $50 million.
