EXHIBIT A
INVESTMENT SUBADVISORY AGREEMENT
By and Among
Lutheran Brotherhood
and
LB Series Fund, Inc.
and
X. Xxxx Price International, Inc.
INVESTMENT SUBADVISORY AGREEMENT, made as of the 8th day of August,
2000, between Lutheran Brotherhood ("Adviser"), a fraternal benefit society
organized and existing under the laws of the State of Minnesota, LB Series
Fund, Inc., a corporation organized and existing under the laws of the State
of Minnesota ("Fund"), and X. Xxxx Price International, Inc. ("Subadviser"),
a corporation organized and existing under the laws of the State of
Maryland.
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated as of the 15th day of January, 1996 ("Advisory Agreement") with the
Fund, which is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund is authorized to issue shares of the World Growth
Portfolio ("Portfolio"), a separate series of the Fund;
WHEREAS, the Subadviser is engaged principally in the business of
rendering investment supervisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers
Act"); and
WHEREAS, the Fund and Adviser desires to retain the Subadviser as
subadviser to furnish certain investment advisory services to the Adviser
and the Portfolio and the Subadviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT. Adviser hereby appoints the Subadviser as its
investment subadviser with respect to the Portfolio for the period and on
the terms set forth in this Agreement. The Subadviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DUTIES OF THE SUBADVISER.
A. INVESTMENT SUBADVISORY SERVICES. Subject to the supervision of
the Fund's Board of Directors ("Board") and the Adviser, the Subadviser
shall act as the investment subadviser and shall supervise and direct the
investments of the Portfolio in accordance with the Portfolio's investment
objectives, policies, and restrictions as provided in the Fund's Prospectus
and Statement of Additional Information, as currently in effect and as
amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as the Fund may impose by notice
in writing to the Subadviser. The Subadviser shall obtain and evaluate such
information relating to the economy, industries, businesses, securities
markets, and securities as it may deem necessary or useful in the discharge
of its obligations hereunder and shall formulate and implement a continuing
program for the management of the assets and resources of the Portfolio in a
manner consistent with the Portfolio's investment objective(s), policies,
and restrictions. In furtherance of this duty, the Subadviser, on behalf of
the Fund, is authorized, in its discretion and without prior consultation
with the Fund or the Adviser, to:
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, and other securities or assets; and
(2) 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 Subadviser may
select.
B. FURTHER DUTIES OF SUBADVISER. In all matters relating to the
performance of this Agreement, the Subadviser shall act in conformity with
the Fund's Articles of Incorporation, By-Laws, and currently effective
Registration Statement (as defined below) and with the written instructions
and directions of the Board and the Adviser, and shall comply with the
requirements of the 1940 Act, the Advisers Act, the rules thereunder, and
all other applicable federal and state laws and regulations.
3. COMPENSATION. For the services provided and the expenses assumed
by the Subadviser pursuant to this Agreement, the Subadviser shall receive a
monthly investment management fee as set forth in Schedule 1, attached
hereto and incorporated herein by reference. The management fee shall be
payable monthly to the Subadviser on or before the 10th day of the next
succeeding calendar month. If this Agreement becomes effective or
terminates before the end of any month, the investment management fee for
the period from the effective date to the end of such month or from the
beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proration which such period bears to the
full month in which such effectiveness or termination occurs.
4. DUTIES OF THE ADVISER.
A. The Adviser shall continue to have responsibility for all
services to be provided to the Fund pursuant to the Advisory Agreement and
shall oversee and review the Subadviser's performance of its duties under
this Agreement.
B. The Adviser has furnished the Subadviser with copies of each of
the following documents and will furnish to the Subadviser at its principal
office all future amendments and supplements to such documents, if any, as
soon as practicable after such documents become available:
(1) The Articles of Incorporation of the Fund, as filed with the
State of Minnesota, as in effect on the date hereof and as amended from
time to time ("Articles");
(2) The By-Laws of the Fund as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Fund authorizing the
appointment of the Adviser and the Subadviser and approving the form of
the Advisory Agreement and this Agreement;
(4) The Fund's Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-IA, as filed with the
Securities and Exchange Commission ("SEC") relating to the Portfolio
and its shares and all amendments thereto ("Registration Statement");
(5) The Notification of Registration of the Fund under the 1940 Act
on Form N-8A as filed with the SEC and any amendments thereto;
(6) The Portfolio's Prospectus (as defined above); and
(7) A certified copy of any financial statement or report prepared
for the Fund by certified or independent public accountants, and copies
of any financial statements or reports made by the Fund to its
shareholders or to any governmental body or securities exchange.
The Adviser shall furnish the Subadviser with any further documents,
materials or information that the Subadviser may reasonably request to
enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Adviser shall furnish to
the Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Subadviser or its clients in any way, prior to the use thereof, and the
Adviser shall not use any such materials if the Subadviser reasonably
objects in writing fifteen (15) business days (or such other time as may be
mutually agreed) after receipt thereof. The Adviser shall ensure that
materials prepared by employees or agents of the Adviser or its affiliates
that refer to the Subadviser or its clients in any way are consistent with
those materials previously approved by the Subadviser as referenced in the
preceding sentence.
5. BROKERAGE.
A. The Subadviser agrees that, in placing orders with broker-
dealers for the purchase or sale of portfolio securities, it shall attempt
to obtain quality execution at favorable security prices; provided that, on
behalf of the Fund, the Subadviser may, in its discretion, agree to pay a
broker-dealer that furnishes brokerage or research services as such services
are defined under Section 28(e) of the Securities Exchange Act of 1934, as
amended ("1934 Act"), a higher commission than that which might have been
charged by another broker-dealer for effecting the same transactions, if the
Subadviser determines in good faith that such commission is reasonable in
relation to the brokerage and research services provided by the broker-
dealer, viewed in terms of either that particular transaction or the overall
responsibilities of the Subadviser with respect to the accounts as to which
it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be
purchased from or sold to the Subadviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder.
B. On occasions when the Subadviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as other clients
of the Subadviser, the Subadviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to, aggregate
the securities to be purchased or sold to attempt to obtain a more favorable
price or lower brokerage commissions and efficient execution. 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 Subadviser in the
manner the Subadviser considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to its other clients.
6. OWNERSHIP OF RECORDS. The Subadviser shall maintain all books and
records required to be maintained by the Subadviser pursuant to the 1940 Act
and the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Portfolio. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees
(i) that all records that it maintains for the Portfolio are the property of
the Fund, (ii) to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any records that it maintains for the Fund and that are
required to be maintained by Rule 31a-1 under the 1940 Act, and (iii) agrees
to surrender promptly to the Fund any records that it maintains for the Fund
upon request by the Fund; provided, however, the Subadviser may retain
copies of such records.
7. REPORTS. The Subadviser shall furnish to the Board or the Adviser,
or both, as appropriate, such information, reports, evaluations, analyses
and opinions as the Subadviser and the Board or the Adviser, as appropriate,
may mutually agree upon from time to time.
8. SERVICES TO OTHER CLIENTS. Nothing contained in this Agreement
shall limit or restrict (i) the freedom of the Subadviser, or any affiliated
person thereof, to render investment management and corporate administrative
services to other investment companies, to act as investment manager or
investment counselor to other persons, firms, or corporations, or to engage
in any other business activities, or (ii) the right of any director,
officer, or employee of the Subadviser, who may also be a director, officer,
or employee of the Fund, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
9. SUBADVISER'S USE OF THE SERVICES OF OTHERS. The Subadviser may (at
its cost except as contemplated by Paragraph 5 of this Agreement) employ,
retain, or otherwise avail itself of the services or facilities of other
persons or organizations for the purpose of providing the Subadviser or the
Fund or Portfolio, as appropriate, with such statistical and other factual
information, such advice regarding economic factors and trends, such advice
as to occasional transactions in specific securities, or such other
information, advice, or assistance as the Subadviser may deem necessary,
appropriate, or convenient for the discharge of its obligations hereunder or
otherwise helpful to the Fund or the Portfolio, as appropriate, or in the
discharge of Subadviser's overall responsibilities with respect to the other
accounts that it serves as investment manager or counselor.
10. LIMITATION OF LIABILITY OF THE SUBADVISER. Neither the Subadviser
nor any of its officers, directors, or employees, nor any person performing
executive, administrative, trading, or other functions for the Fund, the
Portfolio (at the direction or request of the Subadviser) or the Subadviser
in connection with the Subadviser's discharge of its obligations undertaken
or reasonably assumed with respect to this Agreement, shall be liable for
(i) any error of judgment or mistake of law or for any loss suffered by the
Fund or Portfolio or (ii) any error of fact or mistake of law contained in
any report or data provided by the Subadviser, except for any error, mistake
or loss resulting from willful misfeasance, bad faith, or gross negligence
in the performance of its or his duties on behalf of the Fund or Portfolio
or from reckless disregard by the Subadviser or any such person of the
duties of the Subadviser pursuant to this Agreement.
11. REPRESENTATIONS OF SUBADVISER. The Subadviser represents,
warrants, and agrees as follows:
A. The Subadviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or
the Advisers Act from performing the services contemplated by this
Agreement; (iii) has met, and will continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and
perform the services contemplated by this Agreement; and (v) will
immediately notify the Adviser of the occurrence of any event that would
disqualify the Subadviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
B. The Subadviser, including Access Persons (as defined in
subsection (e) of Rule 17j-1 under the Investment Company Act of 1940) has
adopted a written code of ethics complying in all material respects with the
requirements of Rule 17j-1 under the 1940 Act, as may be amended from time
to time, and, if it has not already done so, will provide the Adviser and
the Fund with a copy of such code of ethics, together with evidence of its
adoption. On a quarterly basis, the Subadviser will either; (i) certify to
the Adviser that the Subadviser and its Access Persons have complied with
the Subadviser's Code of Ethics with respect to the Portfolio, or (ii)
identify any material violations which have occurred with respect to the
Portfolio. In addition, the Subadviser will report at least annually to the
Adviser concerning any other material violations of the Subadviser's Code of
Ethics with respect to the Portfolio which required significant remedial
action and which were not previously reported.
C. The Subadviser has provided the Adviser and the Fund with a
copy of its Form ADV as most recently filed with the SEC and will, promptly
after filing any amendment to its Form ADV with the SEC, furnish a copy of
such amendment to the Adviser.
12. TERM OF AGREEMENT. This Agreement shall become effective upon
the date first above written, provided that this Agreement shall not take
effect unless it has first been approved by a vote of a majority of those
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Unless sooner terminated as provided
herein, this Agreement shall continue in effect through December 31, 2000.
Thereafter, this Agreement shall continue in effect from year to year, with
respect to the Portfolio, subject to the termination provisions and all
other terms and conditions hereof, so long as such continuation shall be
specifically approved at least annually (a) by either the Board, or by vote
of a majority of the outstanding voting securities of the Portfolio; (b) in
either event, 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 parties to this Agreement or interested persons of any such
party; and (c) the Subadviser shall not have notified the Fund, in writing,
at least 60 days prior to such approval that it does not desire such
continuation. The Subadviser shall furnish to the Fund, promptly upon its
request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal, or amendment hereof.
13. TERMINATION OF AGREEMENT. Notwithstanding the foregoing, this
Agreement may be terminated at any time, without the payment of any penalty,
by vote of the Board or by a vote of a majority of the outstanding voting
securities of the Portfolio on at least 60 days' prior written notice to the
Subadviser. This Agreement may also be terminated by the Adviser: (i) on at
least 120 days' prior written notice to the Subadviser, without the payment
of any penalty; (ii) upon material breach by the Subadviser of any of the
representations and warranties set forth in Paragraph 11 of this Agreement,
if such breach shall not have been cured within a 20-day period after notice
of such breach; or (iii) if the Subadviser becomes unable to discharge its
duties and obligations under this Agreement. The Subadviser may terminate
this Agreement at any time, without the payment of any penalty, on at least
60 days' prior notice to the Adviser. This Agreement shall terminate
automatically in the event of its assignment or upon termination of the
Advisory Agreement.
14. AMENDMENT OF AGREEMENT. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge, or termination is sought, and no material amendment of
this Agreement shall be effective until approved by vote of a majority of
the Portfolio's outstanding voting securities.
15. OVERRIDE PROVISIONS. Notwithstanding any other provision of this
Agreement:
(a) prior to this Agreement being approved by a vote of a majority of
the Portfolio's outstanding voting securities in accordance with
the 1940 Act: (i) in no event shall compensation paid to the
Subadviser hereunder exceed the amount permitted by Rule 15a-4
under the 1940 Act; (ii) all compensation paid to the Subadviser
hereunder shall be held in an interest-bearing escrow account with
the Fund's custodian or a bank (the "Escrow Account"); and (iii)
this Agreement may be terminated at any time without the payment of
any penalty, by vote of the Board or by a vote of a majority of the
outstanding voting securities of the Portfolio on 10 days' prior
written notice to the Subadviser. Funds held in the Escrow Account,
including interest earned, shall be paid to the Subadviser promptly
after approval of this Agreement by the vote of a majority of the
Portfolio's outstanding voting securities in accordance with the
1940 Act, provided that such approval is obtained no later than 150
days after the date of this Agreement.
(b) If this Agreement is not approved by a vote of a majority of the
Portfolio's outstanding voting securities within the time period
stated above, (i) this Agreement shall immediately terminate; and
(ii) the Subadviser shall receive from the Escrow Account the
lesser of: (a) the sum of the amount of any costs incurred by the
Subadviser in performing its duties under this Agreement prior to
such termination plus any interest earned on that amount, and (b)
the sum of the amount deposited in the Escrow Account plus any
interest earned on that amount.
16. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Maryland without giving effect to the
conflicts of laws principles thereof and the 1940 Act. To the extent that
the applicable laws of the State of Maryland conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. CAPTIONS. The captions contained 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.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any
prior agreements between the parties relating to the subject matter hereof,
and all such prior agreements shall be deemed terminated upon the
effectiveness of this Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Board of its responsibility for and control of the conduct of
the affairs of the Portfolio.
E. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to
such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations, or orders of the SEC
validly issued pursuant to the Act. As used in this Agreement, the terms
"majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," broker," "investment adviser," "net
assets," "sale," "sell," and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by
the SEC by any rule, regulation, or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of
this Agreement is made less restrictive by a rule, regulation, or order of
the SEC, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation, or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year
first above written.
LUTHERAN BROTHERHOOD
Attest:
/s/ Xxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxx
------------------------------ -----------------------------------
Xxxx X. Xxxxx By: Xxxxxxx X. Xxxxxxx
LB SERIES FUND, INC.
Attest:
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxx
------------------------------ -----------------------------------
Xxxx X. Xxxxx By: Xxxx X. Xxxxxxxx
X. XXXX PRICE INTERNATIONAL, INC.
Attest:
/s/ Xxxxxxx Xxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------ -----------------------------------
Xxxxxxx Xxxxxx By: Xxxxx X. Xxxxxx
SCHEDULE 1
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------------------
$0 to $20 Million .75%
Above $20 to $50 Million .60%
Above $50 to $200 Million .50%
Above $200 Million .50%*
Above $500 Million .45%*
*When average daily net assets exceed this amount, the annual rate
asterisked is applicable to all amounts in the World Growth Portfolio of LB
Series Fund, Inc.
For purposes of determining breakpoints, assets invested in the Lutheran
Brotherhood World Growth Fund shall be included in determining average daily
net assets.
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