INVESTMENT SUBADVISORY AGREEMENT
By and Among
Aid Association for Lutherans
and
LB Series Fund, Inc.
and
Massachusetts Financial Services Company
INVESTMENT SUBADVISORY AGREEMENT, made as of the ___ day of _______, 2002, (the "Effective
Date") by and among Aid Association for Lutherans, a fraternal benefit society organized and
existing under the laws of the State of Wisconsin ("Adviser"), LB Series Fund, Inc., a
corporation organized and existing under the laws of the State of Minnesota ("Fund"), and
Massachusetts Financial Services Company, a corporation organized and existing under the
laws of the State of Delaware ("Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated as of the 1st day
of January, 2002 ("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 MFS Mid Cap Growth Portfolio and the
MFS Investors Growth Portfolio (each a "Portfolio", and collectively, the "Portfolios"), as
separate series of the Fund; and
WHEREAS, Subadviser is engaged principally in the business of rendering investment
supervisory management 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 desire to retain Subadviser as Subadviser to furnish certain
investment advisory services to Adviser and the Portfolios and 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:
I. Appointment. (A) Adviser hereby appoints Subadviser as its investment Subadviser
with respect to the Portfolios for the period and on the terms set forth in this
Agreement, and (B) Subadviser 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 Portfolios with respect to which Adviser desires to retain
Subadviser to render investment advisory services hereunder, Adviser shall so notify
Subadviser in writing, indicating the advisory fee to be payable with respect to the
additional series of shares. If Subadviser is willing to render such services on the
terms provided for herein, it shall so notify Adviser in writing, whereupon such
series shall become a Portfolio hereunder.
III. Duties of Subadviser.
A. Subadviser 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. Subadviser
shall perform these duties subject always to (1) the overall supervision of
Adviser and the Board of Directors of the Fund (the "Board"), (2) the Fund's
Articles and By-laws (as defined below), 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 (as defined
below), (4) any additional policies or guidelines established by Adviser or
Board that have been furnished in writing to Subadviser, (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, Subadviser 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.
B. Subadviser shall have no responsibility with respect to maintaining custody of
the Portfolios assets. Subadviser shall affirm security transactions with
central depositories and advise the custodian of the Portfolios ("Custodian")
or such depositories or agents as may be designated by Custodian and Adviser
promptly of each purchase and sale of a portfolio 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. Subadviser shall from time to time provide Custodian and Adviser with
evidence of authority of its personnel who are authorized to give instructions
to Custodian.
C. Unless Adviser advises Subadviser in writing that the right to vote proxies
has been expressly reserved to Adviser or the Fund or otherwise delegated to
another party, Subadviser shall exercise voting rights incident to any
securities held in the Portfolios without consultation with Adviser or Fund,
provided that Subadviser will follow any written instructions received from
Adviser or Fund with respect to voting as to particular issues. Subadviser
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. Subadviser shall consult with Adviser to develop strategic marketing plans for
the Fund on or before November 30 in each year for the following calendar year
with respect to the Portfolios and the variable contract for which it provides
an underlying investment choice. Subadviser shall coordinate all marketing
support efforts with Adviser, including, without limitation, the promotion of
products, training of Adviser's field force, seminars promoting the Portfolios
and preparation of presentations for clients (collectively referred to as the
activities of "Wholesalers"). Wholesalers' participation in on-site
presentations, sales desk training, conferences, and portfolio manager
conference calls shall first be approved by Adviser. Subadviser shall not
include Adviser's field force in any sales contest and other incentive
promotions sponsored by Subadviser without Adviser's prior written approval.
Subadviser shall also, from time-to-time, provide such additional marketing
support such as Adviser may reasonably request, including, without limitation,
assistance in product roll-outs, on-going product training and sales support,
and development of sales strategies.
E. Upon request of Custodian and/or Fund, Subadviser shall provide assistance in
connection with the determination of the fair value of securities in the
Portfolios for which market quotations are not readily available.
F. In the performance of its duties hereunder, Subadviser 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, the Fund or of Adviser.
IV. Compensation. For the services provided pursuant to this Agreement, Subadviser 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 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.
V. Expenses. During the term of this Agreement, Subadviser will bear all expenses
incurred by it in the performance of its duties hereunder, other than those expenses
specifically assumed by the Fund hereunder. The Fund shall assume and shall pay all
brokers' and underwriting commissions chargeable to the Fund in connection with the
securities transactions to which the Portfolio is a party.
VI. Duties of Adviser. Adviser has furnished Subadviser with copies of each of the
following documents and will furnish to 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 authorizing the appointment of
Adviser and 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 (the "1933 Act") on Form N-1A, 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 most recent prospectus (the "Prospectus");
(7) A list of affiliated brokers and underwriters for reporting
transactions under applicable provisions of the 1940 Act; and
(8) Copies of reports made by the Fund to its shareholders.
Adviser shall furnish Subadviser with any further documents, materials or
information that Subadviser may reasonably request to enable it to perform its
duties pursuant to this Agreement. Subadviser's obligations with respect to
compliance with any document or information contained in this Article VI shall
not be deemed effective until three (3) business days after Subadviser's
receipt thereof.
VII. Portfolio Transactions.
A. Subadviser 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, Subadviser 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, Subadviser 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
Subadviser with respect to the Portfolios and/or other accounts over which
Subadviser exercises investment discretion. Subadviser 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 Subadviser
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
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).
Subadviser shall, upon request from Adviser, 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
Subadviser, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder.
C. Subadviser may buy securities for the Portfolios at the same time it is
selling such securities for another client account and may sell securities for
the Portfolios 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, Subadviser may effectuate cross transactions between
a Portfolio and such other account if it deems this to be advantageous.
D. On occasions when Subadviser deems the purchase or sale of a security to be in
the best interest of a Portfolio as well as other clients of Subadviser,
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 Subadviser in the manner Subadviser considers to
be the most equitable and consistent with its fiduciary obligations to the
Portfolio and to its other clients.
VIII. Ownership of Records. Subadviser shall maintain all books and records required to be
maintained by Subadviser pursuant to the 1940 Act and the rules and regulations
promulgated thereunder with respect to transactions on behalf of the Portfolios. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Subadviser hereby
agrees (A) that all records that it maintains for the Portfolios are the property of
the Fund, (B) 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 (C) to surrender promptly to the Fund any records
that it maintains for the Fund upon request by the Fund; provided, however,
Subadviser may retain copies of such records.
IX. Reports and Meetings.
A. Subadviser shall furnish to the Board or Adviser, or both, as appropriate,
such information, reports, evaluations, analyses and opinions as are required
by law or that the Board or Adviser, as appropriate, and Subadviser may
mutually agree upon, including, without limitation: certain compliance
reporting and certification with respect to:
1. Affiliated Brokerage Transactions
2. Affiliated Underwritings
3. Cross Transactions
4. Prospectus Compliance
5. Code of Ethics
6. Soft Dollar Usage
7. Price Overrides/Fair Valuation Determinations
B. Subadviser shall make available in person to the Board and to Adviser
personnel of Subadviser as the Board or Adviser may reasonably request to
review the investments and the investment program of the Portfolios and the
services provided by Subadviser hereunder.
X. Services to Other Clients. Nothing contained in this Agreement shall limit or
restrict (i) the freedom of 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 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.
XI. Subadviser's Use of the Services of Others. Subadviser 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 Subadviser 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 Subadviser
may deem necessary, appropriate, or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Portfolios, or in the discharge of Subadviser's
overall responsibilities with respect to the other accounts that it serves as
investment manager or counselor.
XII. Liability and Indemnification
A. Except as may otherwise be provided by the Investment Company Act or any other
federal securities law, neither the Subadviser nor any of its officers, members
or employees (its "Affiliates") shall be liable for any losses, claims,
damages, liabilities or litigation (including legal and other expenses)
incurred or suffered by the Adviser or the Fund as a result of any error of
judgment or mistake of law by the Subadviser or its Affiliates with respect to
a Portfolio, except that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive or limit the liability of the Subadviser
or its Affiliates for, and the Subadviser shall indemnify and hold harmless the
Portfolio, the Adviser, all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the Investment Company Act) and all controlling persons (as
described in Section 15 of the 1933 Act) (collectively "Adviser Indemnitees")
against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) to which any of the Adviser
Indemnitees may become subject under the 1933 Act, the Investment Company Act,
the Advisers Act, or under any other statute, at common law or otherwise
arising out of or based on any willful misconduct, bad faith, reckless
disregard or gross negligence of the Subadviser in the performance of any of
its duties or obligations hereunder.
B. Except as may otherwise be provided by the Investment Company Act or any other
federal securities law, neither the Adviser, the Fund nor any of their
respective Affiliates shall be liable for any losses, claims, damages,
liabilities or litigation (including legal and other expenses) incurred or
suffered by the Subadviser as a result of any error of judgment or mistake of
law by the Adviser or its Affiliates with respect to the Portfolios, except
that nothing in this Agreement shall operate or purport to operate in any way
to exculpate, waive or limit the liability of the Adviser or its Affiliates
for, and the Adviser shall indemnify and hold harmless the Subadviser, all
affiliated persons thereof (within the meaning of Section 2(a)(3) of the
Investment Company Act) and all controlling persons (as described in Section
15 of the 1933 Act) (collectively "Subadviser Indemnitees") against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses) to which any of the Subadviser Indemnitees may
become subject under the 1933 Act, the Investment Company Act, the Advisers
Act, or under any other statute, at common law or otherwise arising out of or
based on any willful misconduct, bad faith, reckless disregard or gross
negligence of the Adviser in the performance of any of its duties or
obligations hereunder.
C. Promptly after receipt by an indemnified party under this Section XII of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section XII, notify the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
liability which it may have to any indemnified party otherwise than under this
Section XII. In case any such action is brought against any indemnified party
and it notified the indemnifying party of the commencement thereof, the
indemnifying part will be entitled to participate therein and, to the extend
that it may wish and unless the indemnified party releases the indemnifying
party from any further obligations under this Section XII in connection with
that action, assume the defense thereof, with counsel satisfactory to such
indemnified party. After notice from the indemnifying part of its intention
to assume the defense of any action, the indemnified party shall bear the
expenses of any additional counsel obtained by it, and the indemnifying part
shall not be liable to such indemnified party under this Section XII for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
XIII. Representations of Subadviser. Subadviser represents, warrants, and agrees as
follows:
A. Subadviser (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 Adviser of the occurrence of any
event that would disqualify Subadviser from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
B. Subadviser has adopted a written code of ethics (the "Subadviser 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 Adviser and the Fund with a
copy of the Subadviser Code, together with evidence of its adoption. The
Subadviser certifies that it has adopted procedures reasonably necessary to
prevent access persons as defined in Rule 17j-1 ("Access Persons") from
violating the Subadviser Code. On a quarterly basis, Subadviser will either;
(i) certify to Adviser that Subadviser and its Access Persons have complied
with Subadviser Code with respect to the Portfolios, or (ii) identify any
material violations of the Subadviser Code which have occurred with respect to
the Portfolios. In addition, Subadviser will furnish at least annually to
Adviser and the Board a written report that (a) describes any issues arising
under the Subadviser Code since the last report to the Board, including, but
not limited to, information about material violations of the Subadviser Code
with respect to the Portfolios and sanctions imposed in response to the
material violations and (b) certifies that the Subadviser has adopted
procedures reasonably necessary to prevent Access Persons from violating the
Subadviser Code.
C. Subadviser has provided Adviser and 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 2 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 2 of its Form ADV,
furnish a copy of such amendment to Adviser.
XIV. 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 its management agreement with the Fund; (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 promptly notify Adviser of the occurrence of any
event that would disqualify Subadviser from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
B. Adviser and the Fund have adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act, as may be amended from time to
time.
C. Adviser has provided Subadviser with a copy of its Form ADV as most recently
filed with the SEC and, if not so filed, the most recent Part 2 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 2 of its Form ADV, furnish a copy of
such amendment to Subadviser.
XV. Compliance with Applicable Regulations. In performing its duties hereunder,
Subadviser shall perform such compliance testing as it deems reasonable based upon
its own books and records with respect to the Portfolios and shall certify compliance
to the Adviser accordingly.
XVI. Term of Agreement. This Agreement shall become effective with respect to the MFS Mid
Cap Growth Portfolio and the MFS Investors Growth Portfolio on the Effective Date
and, with respect to any additional Portfolio, on the date of receipt by the Adviser
of notice from the Subadviser in accordance with Section II hereof that the
Subscriber is willing to serve as Subadviser 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 MFS Mid Cap Growth Portfolio and
the MFS Investors Growth Portfolio 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 Portfolio; (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) Subadviser shall not have notified the Fund, in
writing, at least 60 days prior to such approval that it does not desire such
continuation. 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.
XVII. 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 Subadviser. This Agreement may also be
terminated by Adviser: (i) on at least 60 days' prior written notice to Subadviser,
without the payment of any penalty; (ii) upon material breach by Subadviser 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 (iii) if Subadviser becomes unable to discharge its duties and obligations
under this Agreement. Subadviser may terminate this Agreement at any time, without
the payment of any penalty, on at least 60 days' prior notice to Adviser. This
Agreement shall terminate automatically in the event of its assignment, as such term
is defined in the 1940 Act, or upon termination of the Advisory Agreement. 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 any 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 Portfolio 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.
XVIII. 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 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.
XIX. Notification. Subadviser will notify Adviser promptly of any change in the personnel
of Subadviser with responsibility for making investment decisions in relation to the
Portfolios or who have been authorized to give instructions to Custodian.
XX. Override Provisions. Notwithstanding any other provision of this Agreement:
A. Prior to this Agreement being approved by a vote of a majority of the respective
Portfolio's outstanding voting securities in accordance with the 1940 Act: (i) in
no event shall compensation paid to the Subadviser hereunder with respect to such
Portfolio exceed the amount permitted by Rule 15a-4 under the 1940 Act; (ii) the
portion of the compensation payable by the Fund to the Adviser under the terms of
the Advisory Agreement with respect to such Portfolio that is equal in amount to
the compensation payable to the Subadviser hereunder (the "Subadviser Escrow
Amount") 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. The Subadviser Escrow
Amount, including interest earned thereon, shall be paid 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 respective
Portfolio's outstanding voting securities within the time period stated above,
(i) this Agreement shall immediately terminate with respect to such Portfolio;
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 Subadviser Escrow Amount plus any interest
earned on that amount.
XXI. Miscellaneous.
A. Governing Law. This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts without giving effect to the conflicts of
laws principles thereof and the 1940 Act. To the extent that the applicable
laws of the Commonwealth of Massachusetts conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. Insurance. Subadviser 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 Subadviser'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.
G. Use of Name. Adviser shall not use the names "Massachusetts Financial Services
Company," "MFS Investment Management," "MFS", or any derivative or logo or
trade or service xxxx thereof, or disclose information related to the business
of Subadviser or any of its affiliates, in any prospectus, sales literature or
other material relating to the Portfolios in any manner not approved prior
thereto in writing by Subadviser; provided, however, that Subadviser shall
approve all uses of its name and that of its affiliates which merely refer in
accurate terms to its appointment hereunder or which are required by the SEC.
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:_____________________________
MASSACHUSETTS FINANCIAL SERVICES
COMPANY
Attest:_______________________ By:________________________________
Name:_________________________ Name:______________________________
Title:_____________________________
Schedule I
Dated as of January 1, 2002
Subadvisory Fees
MFS Mid Cap Growth Portfolio
Average Daily Assets Annual Rate
$0 - 100 million 0.475%
$100 to 500 million 0.42%
Above $500 million 0.35%
MFS Investors Growth Portfolio
Average Daily Assets Annual Rate
$0 - 100 million 0.425%
$100 to 500 million 0.40%
Above $500 million 0.35%
