INVESTMENT SUB-ADVISORY AGREEMENT
By and Among
Lutheran Brotherhood Research Corp.,
and
The Lutheran Brotherhood Family of Funds,
and
X. XXXX PRICE ASSOCIATES, INC.
INVESTMENT SUB-ADVISORY AGREEMENT, made as of the _____ day of May,
1998, between Lutheran Brotherhood Research Corp. ("Adviser"), a corporation
organized and existing under the laws of the State of Minnesota, the
Lutheran Brotherhood Family of Funds, a business trust organized and
existing under the laws of the State of Delaware ("Company"), and X. Xxxx
Price Associates, Inc. ("Sub-Adviser"), a corporation organized and existing
under the laws of the State of Maryland.
WHEREAS, the Adviser has entered into a Master Advisory Contract dated
as of the 1st day of November, 1993 ("Advisory Agreement") with the Company,
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 Company is authorized to issue shares of the Lutheran
Brotherhood Opportunity Growth Fund ("Fund"), a separate series of the
Company;
WHEREAS, the Sub-Adviser 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 Company and Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Adviser
and the Fund and the Sub-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:
1. Appointment. Adviser hereby appoints the Sub-Adviser as its
investment sub-adviser with respect to the Fund for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment
and agrees to render the services herein set forth, for the compensation
herein provided.
2. Duties of the Sub-Adviser.
A. Investment Sub-Advisory Services. Subject to the supervision of
the Company's Board of Trustees ("Board") and the Adviser, the Sub-Adviser
shall act as the investment sub-adviser and shall supervise and direct the
investments of the Fund in accordance with the Fund'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 Sub-Adviser. The Sub-Adviser 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 Fund in a
manner consistent with the Fund's investment objective(s), policies, and
restrictions. In furtherance of this duty, the Sub-Adviser, 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) directly or through the trading desks of affiliates of Xxxxxx
Xxxxxxx Holdings Limited ("Xxxxxx Xxxxxxx") and Jardine Xxxxxxx Group
Limited ("JFG") 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.
B. Further Duties of Sub-Adviser. In all matters relating to the
performance of this Agreement, the Sub-Adviser shall act in conformity with
the Company's Master Trust Agreement, 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. Without
limiting the foregoing, the Sub-Adviser shall have primary responsibility
for compliance with Rules 10f-3 and 17e-1 under the 1940 Act in each case in
which affiliates of Xxxxxx Xxxxxxx or JFG are used for the execution of
portfolio securities transactions.
3. Compensation. For the services provided and the expenses assumed
by the Sub-Adviser pursuant to this Agreement, the Sub-Adviser 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 Sub-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.
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 except those
services to be performed by the sub-adviser hereunder and shall oversee and
review the Sub-Adviser's performance of its duties under this Agreement.
B. The Adviser has furnished the Sub-Adviser with copies of each of
the following documents and will furnish to the Sub-Adviser 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 Master Trust Agreement of the Company, as filed with
the State of Delaware, as in effect on the date hereof and as amended from
time to time ("Declaration of Trust");
(2) The By-Laws of the Company as in effect on the date
hereof and as amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Company
authorizing the appointment of the Adviser and the Sub-Adviser and approving
the form of the Advisory Agreement and this Agreement;
(4) The Company's 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 ("SEC") relating to the Fund and its
shares and all amendments thereto ("Registration Statement");
(5) The Notification of Registration of the Company under
the 1940 Act on Form N-8A as filed with the SEC and any amendments thereto;
(6) The Fund'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 Sub-Adviser with any further documents,
materials or information that the Sub-Adviser 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
Sub-Adviser 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
Sub-Adviser or its clients in any way, prior to the use thereof, and the
adviser shall not use any such materials if the Sub-Adviser reasonably
objects in writing fifteen 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 Sub-Adviser or its clients in any way are consistent with
those materials previously approved by the Sub-Adviser as referenced in the
preceding sentence.
5. Brokerage.
A. The Sub-Adviser 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 Sub-Adviser 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
Sub-Adviser 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 Sub-Adviser 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 Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder;
B. 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 of
the Sub-Adviser, the Sub-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 the Sub-Adviser in the
manner the Sub-Adviser considers to be the most equitable and consistent
with its fiduciary obligation's to the Fund and to its other clients.
6. Ownership of Records. The Sub-Adviser shall maintain all books and
records required to be maintained by the Sub-Adviser pursuant to the 1940
Act and the rules and regulations promulgated thereunder with respect to
transactions on behalf of the Fund. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees (i) that all
records that it maintains for the Fund are the property of the Company, (ii)
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
records that it maintains for the Company and that are required to be
maintained by Rule 31a-1 under the 1940 Act, and (iii) agrees to surrender
promptly to the Company any records that it maintains for the Company upon
request by the Company; provided, however, the Sub-Adviser may retain copies
of such records.
7. Reports. The Sub-Adviser shall furnish to the Board or the
Adviser, or both, as appropriate, such information, reports, evaluations,
analyses and opinions as the Sub-Adviser and the Board or the Adviser, as
appropriate, may mutually agree upon from time to time.
8. Services to Others Clients. Nothing contained in this Agreement
shall limit or restrict (i) the freedom of the Sub-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 the Sub-Adviser, who may also be a
trustee, officer, or employee of the Company, 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. Sub-Adviser's Use of the Services of Others. The Sub-Adviser 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 Sub-Adviser
or the Company or Fund, 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 Sub-Adviser may deem necessary,
appropriate, or convenient for the discharge of its obligations hereunder or
otherwise helpful to the Company or the Fund, as appropriate, or in the
discharge of Sub-Advisers overall responsibilities with respect to the other
accounts that it serves as investment manager or counselor.
10. Limitation of Liability of the Sub-Adviser. Neither the Sub-
Adviser nor any of its officers, directors, or employees, nor any person
performing executive, administrative, trading, or other functions for the
Company, the Fund (at the direction or request of the Sub-Adviser) or the
Sub-Adviser in connection with the Sub-Adviser'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 Company or Fund or (ii) any error of fact or mistake of
law contained in any report or data provided by the Sub-Adviser, 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
Company or Fund or from reckless disregard by the Sub-Adviser or any such
person of the duties of the Sub-Adviser pursuant to this Agreement.
11. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants, and agrees as follows:
A. The Sub-Adviser: (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 Sub-Adviser from
serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and, if it has not already
done so, will provide the Adviser and the Company with a copy of such code
of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Adviser and the Company 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 (i) by a vote of a majority of those
trustees of the Company 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, and (ii) by vote of a majority of the
Fund's outstanding voting securities. This Agreement shall continue in
effect unless terminated pursuant to Section 13 hereof subject to all 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 Fund; (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 trustees of the Company who are not
parties to this Agreement or interested persons of any such party; and (c)
the Sub-Adviser shall not have notified the Company, in writing, at least 60
days prior to such approval that it does not desire such continuation. The
Sub-Adviser shall furnish to the Company, 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 Fund on at least 60 days' prior written notice to the Sub-
Adviser. This Agreement may also be terminated by the Adviser: (i) on at
least 60 days' prior written notice to the Sub-Adviser, without the payment
of any penalty; (ii) upon material breach by the Sub-Adviser 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 Sub-Adviser becomes unable to discharge its
duties and obligations under this Agreement. The Sub-Adviser 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 Fund's outstanding voting securities.
15. 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 Company to take any action contrary to its Declaration of Trust
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
Fund.
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 RESEARCH
CORP.
Attest:
_________________________________________ By: ___________________________
THE LUTHERAN BROTHERHOOD FAMILY
OF FUNDS
Attest:
_________________________________________ By: ___________________________
X. XXXX PRICE ASSOCIATES, INC.
Attest:
_________________________________________ By: ___________________________
SCHEDULE 1
Rate of Annual
Sub-Advisory Fee as
a Percentage of
Average Daily Net Assets Average Daily Net Assets
On the portion of the Fund which is:
$500,000,000 or less . . . . . . . . . . . . . . . . .30%
Over $500,000,000 but not over $1,000,000,000. . . . .25%
Over $1,000,000,000. . . . . . . . . . . . . . . . . .20%
