INVESTMENT ADVISORY AGREEMENT
By and Between
Aid Association for Lutherans
and
LB Series Fund, Inc.
INVESTMENT ADVISORY AGREEMENT, made as of the ___ day of ________, 200_, (the "Effective Date") by
and between Aid Association for Lutherans, a fraternal benefit society organized and existing under
the laws of the State of Wisconsin ("Adviser"), and LB Series Fund, Inc., a corporation organized and
existing under the laws of the State of Minnesota (the "Fund").
WHEREAS, the Fund 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 following Portfolios as separate investment
Portfolios, each having a separate class of shares of capital stock:
o World Growth Portfolio
o Growth Portfolio
o Opportunity Growth Portfolio
o High Yield Portfolio
o Income Portfolio
o Mid Cap Growth Portfolio
o Money Market Portfolio
o FTI Small Cap Growth Portfolio
o MFS Mid Cap Growth Portfolio
o FI All Cap Portfolio
o MFS Investors Growth Portfolio
o TRP Growth Stock Portfolio
o Value Portfolio
o Limited Maturity Bond Portfolio
(the "Initial Portfolios," and together with all other series or Portfolios subsequently established
by the Fund with respect to which Adviser renders investment advisory services pursuant to the terms
of this Agreement, being collectively referred as the "Portfolios" and individually as a
"Portfolio"); and
WHEREAS, Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as
amended ("Advisers Act"); and
WHEREAS, the Fund desires to retain Adviser as adviser to furnish investment advisory services to the
Fund, and Adviser 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:
I. Appointment. (A) The Fund hereby appoints Adviser as its investment adviser with respect to
the Portfolios for the period and on the terms set forth in this Agreement, and (B) Adviser
hereby accepts such appointment and agrees to render the services herein set forth, for the
compensation herein provided.
II. Additional Series. In the event that the Fund establishes one or more series of shares other
than the Initial Portfolios with respect to which the Fund desires to retain Adviser to render
investment advisory services hereunder, the Fund shall so notify Adviser in writing,
indicating the advisory fee to be payable with respect to the additional series of shares. If
Adviser is willing to render such services on the terms provided for herein, it shall so
notify the Fund in writing, whereupon such series shall become a Portfolio hereunder.
III. Duties of Adviser.
A. Adviser is hereby authorized and directed and hereby agrees to (i) furnish
continuously an investment program for the Portfolios, and (ii) determine from time to
time what investments shall be purchased, sold or exchanged and what portion of the
assets of the Portfolios shall be held uninvested. Adviser shall perform these duties
subject always to (1) the overall supervision of the Board of Directors of the Fund
(the "Board"), (2) the Fund's Articles of Incorporation ("Articles") and by-laws
("By-Laws"), as amended from time to time, (3) the stated investment objectives,
policies and restrictions of the Portfolios as set forth in the Fund's then current
Registration Statement under the 1940 Act and the Securities Act of 1933, as amended,
on Form N-1A, as filed with the Securities and Exchange Commission relating to the
Portfolios and their shares and all amendments thereto ("Registration Statement"), (4)
any additional policies or guidelines established by the Board that have been
furnished in writing to Adviser, (5) applicable provisions of law, including, without
limitation, all applicable provisions of the 1940 Act and the rules and regulations
thereunder, and (6) the provisions of the Internal Revenue Code of 1986, as amended
(the "Code") applicable to "regulated investment companies" (as defined in Section 851
of the Code), as amended from time to time. In accordance with Section VII, Adviser
shall arrange for the execution of all orders for the purchase and sale of securities
and other investments for the Portfolios' accounts and will exercise full discretion
and act for the Fund in the same manner and with the same force and effect as the Fund
might or could do with respect to such purchases, sales, or other transactions, as
well as with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales, or other transactions, including without limitation,
management of cash balances in the Portfolios.
B. Adviser shall have no responsibility with respect to maintaining custody of the
Portfolios' assets. Adviser shall affirm security transactions with central
depositories and advise the custodian of the Portfolios ("Custodian") or any
subcustodian or depository promptly of each purchase and sale of a Portfolio's
security, specifying the name of the issuer, the description and amount or number of
shares of the security purchased, the market price, the commission and gross or net
price, the trade date and settlement date and the identity of the effecting broker or
dealer. Adviser shall from time to time provide Custodian and the Fund with evidence
of authority of its personnel who are authorized to give instructions to Custodian.
C. Adviser shall exercise proxy and other voting rights incident to any securities held
in the Portfolios without consultation with the Fund, provided that Adviser will
follow any written instructions received from the Fund with respect to voting as to
particular issues. Adviser shall further respond to all corporate action matters
incident to the securities held in the Portfolios including, without limitation,
proofs of claim in bankruptcy and class action cases and shelf registrations.
D. In the performance of its duties hereunder, Adviser is and shall be an independent
contractor and except as expressly provided for herein or otherwise expressly provided
or authorized shall have no authority to act for or represent the Portfolios or the
Fund in any way or otherwise be deemed to be an agent of the Portfolios or the Fund.
IV. Compensation. For the services provided pursuant to this Agreement, Adviser shall receive an
investment management fee as set forth in Schedule 1, attached hereto and incorporated herein
by reference. The management fee shall be payable monthly in arrears to Adviser 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.
V. Allocation of Charges and Expenses. Adviser shall furnish at its own expense investment
advisory and portfolio administrative and management services necessary for servicing the
investments of the Portfolios, and investment advisory facilities and executive and
supervisory personnel for managing the investments and effecting the portfolio transactions of
the Fund with respect to the Portfolios. Adviser shall arrange, if desired by the Fund, for
officers and employees of Adviser to serve as Directors, Officers or agents of the Fund if
duly elected or appointed to such positions and subject to their individual consent and to any
limitations imposed by law. It is understood that the Fund will with respect to the
Portfolios pay, or provide for the payment of, all of its own expenses including, without
limitation, compensation of Directors not affiliated with Adviser or Lutheran Brotherhood
Variable Insurance Products Company, governmental fees, interest charges, taxes, membership
dues in the Investment Company Institute allocable to the Fund with respect to the Portfolios,
fees and expenses of independent auditors, of legal counsel and of any transfer agent,
registrar and dividend disbursing agent of the Fund with respect to the Portfolios, expenses
of preparing, printing and mailing prospectuses, shareholders' reports, notices, proxy
statements and reports to governmental officers and commissions, expenses connected with the
execution, recording and settlement of portfolio security transactions, insurance premiums,
fees and expenses of the Custodian for all services to the Fund with respect to the
Portfolios, including safekeeping of funds and securities and keeping of books and calculating
the net asset value of shares of the Portfolios, expenses of shareholders' meetings, and
expenses relating to the issuance, registration and qualification of shares of the Portfolio.
VI. Subadvisers. Adviser may enter into a subinvestment advisory agreement or agreements with one
or more subadvisers providing that such subadviser shall furnish certain advisory and other
services to the Fund and Adviser with respect to the Portfolio and also providing that on the
terms and conditions of such subinvestment advisory agreement such subadviser may determine
from time to time what securities shall be purchased, sold or exchanged by the Fund and what
portion of the assets of the Portfolio shall be held uninvested. Adviser will establish the
overall investment strategy for a subadvised Portfolio and will evaluate, select, and
recommend any such subadviser, subject to the approval of the Board and, unless such approval
by such holders is not required under the rules and regulations promulgated under the 1940 Act
or an exemptive order granted thereunder, the holders of a majority of the outstanding voting
securities of the subadvised Portfolio. Adviser will allocate assets to such subadviser,
monitor the performance, security holdings, and investment strategies of the subadviser and,
when appropriate, research any potential new subadviser for the subadvised Portfolio.
Subject to the overall supervision of the Board, Adviser has responsibility to oversee any
such subadvisers and recommend their hiring, termination and replacement.
VII. Portfolio Transactions.
A. Adviser agrees that, in executing Portfolio transactions and selecting brokers or
dealers, if any, it shall use its best efforts to seek on behalf of the Portfolios the
best overall terms available. In assessing the best overall terms available for any
transaction, Adviser shall consider all factors it deems relevant, including the
breadth of the market in and the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, with respect to the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting the broker or
dealer, if any, to execute a particular transaction, Adviser may also consider the
brokerage and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended ("1934 Act")) provided to Adviser and/or
its affiliates with respect to the Portfolios and/or other accounts over which Adviser
or an affiliate exercises investment discretion. Adviser may, in its discretion,
agree to pay a broker or dealer that furnishes such brokerage or research services a
higher commission than that which might have been charged by another broker-dealer for
effecting the same transactions, if Adviser determines in good faith that such
commission is reasonable in relation to the brokerage and research services provided
by the broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities of Adviser and its affiliates with respect to the accounts as
to which they exercise investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). Adviser shall, upon request from the Fund, provide such
periodic and special reports describing any such brokerage and research services
received and the incremental commissions, net price or other consideration to which
they relate.
B. In no instance will Portfolio securities be purchased from or sold to Adviser, or any
affiliated person thereof, except in accordance with the federal securities laws and
the rules and regulations thereunder.
C. Adviser may buy securities for a Portfolio at the same time it is selling such
securities for another client account and may sell securities for a Portfolio at the
time it is buying such securities for another client account. In such cases, subject
to applicable legal and regulatory requirements, and in compliance with such
procedures of the Fund as may be in effect from time to time, Adviser may effectuate
cross transactions between a Portfolio and such other account if it deems this to be
advantageous to the Portfolio and such other account.
D. On occasions when Adviser deems the purchase or sale of a security to be in the best
interest of the Fund as well as other clients of Adviser, Adviser, 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 Adviser in the manner Adviser considers
to be the most equitable and consistent with its fiduciary obligations to the Fund and
to its other clients.
VIII. Records. Adviser shall maintain all books and records required to be maintained by the Fund
pursuant to the 1940 Act and the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Portfolios.
IX. Reports and Meetings.
A. Adviser shall furnish to the Board such information, reports, evaluations, analyses
and opinions as are required by law or that the Board may reasonably require
B. Adviser shall make available in person to the Board and personnel of Adviser as the
Board may reasonably request to review the investments and the investment program of
the Portfolios and the services provided by Adviser hereunder.
X. Services to Other Clients. Nothing contained in this Agreement shall limit or restrict (i)
the freedom of Adviser, 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 Adviser, 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.
XI. Adviser's Use of the Services of Others. Adviser may, at its cost, employ, retain, or
otherwise avail itself of the services or facilities of other persons or organizations for the
purpose of providing Adviser or the Fund or the Portfolios, 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 Adviser may deem necessary, appropriate, or convenient for the
discharge of its obligations hereunder or otherwise helpful to the Fund or the Portfolios, as
appropriate, or in the discharge of Adviser's overall responsibilities with respect to the
other accounts that it serves as investment manager or counselor.
XII. Limitation of Liability of Adviser. Neither Adviser nor any of its officers, directors, or
employees (collectively, "Related Persons"), shall be liable for (i) any error of judgment or
mistake of law or for any loss suffered by the Fund or Portfolios or (ii) any error of fact or
mistake of law contained in any report or data provided by Adviser, except in each case for
any error, mistake or loss resulting from willful misfeasance, bad faith, or gross negligence
in the performance by Adviser or such Related Person of Adviser's duties on behalf of the Fund
or Portfolios or from reckless disregard by Adviser or any such Related Person of the duties
of Adviser pursuant to this Agreement.
Notwithstanding the foregoing, any stated limitations on liability shall not relieve Adviser
from any responsibility or liability Adviser may have under state or federal statutes or from
responsibility or liability for errors in connection with the execution of trade orders.
XIII. Representations of Adviser. Adviser represents, warrants, and agrees as follows:
A. Adviser (i) is registered as an investment adviser under 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 Board of
the occurrence of any event that would disqualify Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act
or otherwise.
B. Adviser has adopted a written code of ethics (the "Adviser Code") complying with the
requirements of Rule 17j-1 under the 1940 Act, as may be amended from time to time,
and, has provided the Fund with a copy of the Adviser Code, together with evidence of
its adoption. Adviser certifies that it has adopted procedures reasonably necessary
to prevent access persons" as defined in Rule 17j-1 ("Access Persons") from violating
the Adviser Code. Adviser will furnish at least annually to the Board a written
report that (a) describes any issues arising under the Adviser Code since the last
report to the Board, including, but not limited to, information about material
violations of the Adviser Code with respect to the Portfolios and sanctions imposed in
response to the material violations and (b) certifies that the Adviser has adopted
procedures reasonably necessary to prevent Access Persons from violating the Adviser
Code.
C. Adviser has provided the Fund with a copy of its Form ADV as most recently filed with
the SEC and, if not so filed, its most recent Part II of Form ADV, and will, promptly
after filing any amendment to its Form ADV with the SEC, and, if not so filed, any
amendment to Part II of its Form ADV, furnish a copy of such amendment to the Fund.
XIV. Compliance with Applicable Regulations. In performing its duties hereunder, Adviser shall
establish compliance procedures reasonably calculated to ensure compliance at all times with
all applicable provisions of the 1940 Act and the Advisers Act, and any rules and regulations
adopted thereunder; Subchapter M of the Code; the provisions of the Registration Statement;
the provisions of the Articles and the By-Laws of the Fund, as the same may be amended from
time to time; and any other applicable provisions of state, federal or foreign law.
XV. Term of Agreement. This Agreement shall become effective with respect to the Initial
Portfolios on the Effective Date and, with respect to any additional Portfolio, on the date of
receipt by the Board of notice from Adviser in accordance with Section II hereof that Adviser
is willing to serve as investment adviser with respect to such Portfolio. Unless sooner
terminated as provided herein, this Agreement shall continue in effect for two years from the
Effective Date with respect to the Initial Portfolios and, with respect to each additional
Portfolio, for two years from the date on which this Agreement becomes effective with respect
to such Portfolio. Thereafter, this Agreement shall continue in effect from year to year,
with respect to the Portfolios, subject to the termination provisions and all other terms and
conditions hereof, so long as (a) such continuation shall be specifically approved at least
annually (i) by either the Board, or by vote of a majority of the outstanding voting
securities of the Portfolios; and (ii) 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 interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval; and (b) Adviser shall not have
notified the Fund, in writing, at least 60 days prior to such approval that it does not desire
such continuation. Adviser 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.
XVI. Termination of Agreement. Notwithstanding the foregoing, this Agreement may be terminated at
any time with respect to a Portfolio, without the payment of any penalty, by vote of the Board
or by a vote of a majority of the outstanding voting securities of such Portfolio on at least
60 days' prior written notice to Adviser. This Agreement may also be terminated by the Fund
(i) upon material breach by Adviser of any of the representations and warranties set forth in
Section XIII of this Agreement, if such breach shall not have been cured within a 20-day
period after notice of such breach; or (ii) if Adviser becomes unable to discharge its duties
and obligations under this Agreement. Adviser may terminate this Agreement at any time,
without the payment of any penalty, on at least 60 days' prior notice to the Board. This
Agreement shall terminate automatically in the event of its "assignment", as such term is
defined in the 1940 Act.
Any approval, amendment, or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of any Portfolio shall be effective
to continue, amend or terminate this Agreement with respect to such Portfolio notwithstanding
(i) that such action has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolios affected thereby, and/or (ii) that such action has
not been approved by the vote of a majority of the outstanding voting securities of the Fund,
unless such action shall be required by any applicable law or otherwise.
XVII. Amendments, Waivers, etc. Provisions of this Agreement may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought. This Agreement (including any
exhibits and schedules hereto) may be amended at any time by written mutual consent of the
parties, subject to the requirements of the 1940 Act and rules and regulations promulgated and
orders granted thereunder.
XVIII. Miscellaneous.
A. Governing Law. This Agreement shall be construed in accordance with the laws of the
State of Minnesota 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 Minnesota
conflict with the applicable provisions of the 1940 Act, the latter shall control.
B. Insurance. Adviser agrees to maintain errors and omissions or professional liability
insurance coverage in an amount that is reasonable in light of the nature and scope of
Adviser's business activities.
C. 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.
D. 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.
E. Interpretation. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to its Articles 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 Portfolios.
F. 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 1940 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.
AID ASSOCIATION FOR LUTHERANS
Attest:________________________ By:________________________________
Name:__________________________ Name:______________________________
Title:_____________________________
LB SERIES FUND, INC.
Attest:________________________ By:________________________________
Name:__________________________ Name:______________________________
Title:_____________________________
SCHEDULE I
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World Growth Portfolio
0.85%
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Growth Portfolio
0.40%
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Opportunity Growth Portfolio
0.40%
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High Yield Portfolio
0.40%
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Income Portfolio
0.40%
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Mid Cap Growth Portfolio
0.40%
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Money Market Portfolio
0.40%
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FTI Small Cap Growth Portfolio
$0-$500 million 1.00%
More than $500 million .90%
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MFS Mid Cap Growth Portfolio
$0-$500 million .90%
More than $500 million .80%
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FI All Cap Portfolio
$0-$500 million .95%
More than $500 million .90%
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MFS Investors Growth Portfolio
$0-$500 million .80%
More than $500 million .70%
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TRP Growth Stock Portfolio
$0-$500 million .80%
More than $500 million .70%
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Value Portfolio
.60%
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Limited Maturity Bond Portfolio
.40%
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