Draft 8/17/01
INVESTMENT SUBADVISORY AGREEMENT
By and Among
Lutheran Brotherhood
and
LB Series Fund, Inc.
and
Franklin Advisers, Inc.
INVESTMENT SUBADVISORY AGREEMENT, made as of the ___ day of ________, 200_,
(the "Effective Date") by and among Lutheran Brotherhood, a fraternal
benefit society organized and existing under the laws of the State of
Minnesota ("Adviser"), LB Series Fund, Inc., a corporation organized and
existing under the laws of the State of Minnesota ("Fund"), and Franklin
Advisers, Inc., a corporation organized and existing under the laws of the
State of California ("Sub-adviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement dated as
of the ____ day of _________, 200_ ("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 FTI Small Cap
Portfolio ("Portfolio"), a separate series of the Fund; and
WHEREAS, Sub-adviser 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 Sub-adviser as sub-adviser to
furnish certain investment advisory services to Adviser and the Portfolio
and 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:
I. Appointment. (A) Adviser hereby appoints Sub-adviser as its
investment sub-adviser with respect to the Portfolio for the period
and on the terms set forth in this Agreement, and (B) Sub-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 Portfolio with respect to which
Adviser desires to retain Sub-adviser to render investment advisory
services hereunder, Adviser shall so notify Sub-adviser in writing,
indicating the advisory fee to be payable with respect to the
additional series of shares. If Sub-adviser 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 Sub-adviser.
A. Sub-adviser is hereby authorized and directed and hereby agrees to
(i) furnish continuously an investment program for the Portfolio,
and (ii) determine from time to time what investments shall be
purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held uninvested. As the Fund's agent and
attorney-in-fact, the Sub-adviser may (a) buy, sell, exchange,
convert and otherwise trade in any stocks, bonds or other
securities including money market instruments, whether the issuer
is organized in the United States of outside the United States and
(b) place orders for the execution of such securities transactions
with or through such brokers, dealers or issuers as Sub-adviser
may select. Sub-adviser 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
Portfolio 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 Sub-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, Sub-Adviser shall arrange for the
execution of all orders for the purchase and sale of securities
and other investments for the Portfolio's account 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 Portfolio.
B. Sub-adviser shall have no responsibility with respect to
maintaining custody of the Portfolio's assets. Sub-adviser shall
affirm security transactions with central depositories and advise
the custodian of the Portfolio ("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. Sub-adviser shall
from time to time provide Custodian and Adviser with evidence of
authority of its personnel who are authorized to give instructions
to Custodian. The Fund shall instruct the Custodian to provide
the Sub-adviser with such information as the Sub-adviser may
reasonably request relating to daily cash levels held by the
Portfolio.
C. Unless Adviser advises Sub-adviser in writing that the right to
vote proxies has been expressly reserved to Adviser or the Fund or
otherwise delegated to another party, Sub-adviser shall exercise
voting rights incident to any securities held in the Portfolio
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.
Sub-adviser shall further respond to all corporate action matters
incident to the securities held in the Portfolio including,
without limitation, proofs of claim in bankruptcy and class action
cases and shelf registrations. Should Sub-adviser undertake
litigation against an issuer on behalf of accounts which it
manages that are shareholders of such issuer, Fund agrees, that in
the event the Portfolio is also a shareholder of such issuer, to
pay its proportionate share of any applicable legal fees
associated with the action or to forfeit any claim to any assets
Sub-adviser may recover and, in such case, agrees to hold Sub-
adviser harmless for excluding the Portfolio from such action. In
the case of class action suits involving issuers held by the
Portfolio, Sub-adviser may include information about the Fund for
purposes of participating in any settlements.
D. Sub-adviser 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 Portfolio and
the variable contract for which it provides an underlying
investment choice. Sub-adviser shall coordinate all marketing
support efforts with Adviser, including, without limitation, the
promotion of products, training of Adviser's field force, seminars
promoting the Portfolio 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. Sub-
adviser shall not include Adviser's field force in any sales
contest and other incentive promotions sponsored by Sub-adviser
without Adviser's prior written approval. Sub-adviser 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, Sub-adviser shall provide
assistance in connection with the determination of the fair value
of securities in the Portfolio for which market quotations are not
readily available.
F. In the performance of its duties hereunder, Sub-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 Portfolio or
the Fund in any way or otherwise be deemed to be an agent of the
Portfolio, 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 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.
V. Expenses. During the term of this Agreement, Sub-adviser 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 bear its own expenses, including 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 Sub-adviser with copies of
each of the following documents and will furnish to 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 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 Sub-adviser 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"); and
(7) Copies of reports made by the Fund to its shareholders.
Adviser shall furnish Sub-adviser with any further documents,
materials or information that Sub-adviser may reasonably request to
enable it to perform its duties pursuant to this Agreement.
VII. Portfolio Transactions.
A. Sub-adviser agrees that, in executing portfolio transactions and
selecting brokers or dealers, if any, it shall use its best
efforts to seek best execution on behalf of the Portfolio. In
assessing the best execution for any transaction, Sub-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 best execution and in selecting the broker or dealer,
if any, to execute a particular transaction, Sub-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 Sub-adviser with respect to
the Portfolio and/or other accounts over which Sub-adviser
exercises investment discretion. Sub-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 Sub-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 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). Sub-adviser 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. Sub-adviser may buy securities for the Portfolio at the same time
it is selling such securities for another client account and may
sell securities for the 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, Sub-adviser may effectuate cross transactions between the
Portfolio and such other account if it deems this to be
advantageous.
D. On occasions when 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 Sub-adviser, 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 Sub-adviser in the
manner Sub-adviser considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to its
other clients.
VIII. Ownership of Records. Sub-adviser shall maintain all books and
records required to be maintained by Sub-adviser 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, Sub-adviser hereby
agrees *[(A) that all records that it maintains for the Portfolio 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]* *[(A) to preserve for
the periods prescribed by Rule 31a-3 under the 1940 Act any records
that it maintains for the Fund that are required to be maintained by
Rule 31a-1 under the 1940 Act and (B) to provide the Fund with access
to or copies of any records that it maintains for the fund upon
reasonable request by the Fund.]*
*[Determining the requirements of Rule 31a as it pertains to sub-
adviser]*
IX. Reports and Meetings.
A. Sub-adviser 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, may reasonably require, including, without
limitation: 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. Sub-adviser shall make available in person to the Board and to
Adviser personnel of Sub-adviser as the Board or Adviser may
reasonably request to review the investments and the investment
program of the Portfolio and the services provided by Sub-adviser
hereunder.
X. Services to Other Clients. Nothing contained in this Agreement shall
limit or restrict (i) the freedom of 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 Sub-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. Nothing in this Agreement
shall impose upon Sub-adviser any obligation to purchase or sell or to
recommend for purchase or sale, with respect to the Portfolio, any
securities which the Sub-adviser, or its officers, directors,
employees or affiliates may purchase or sell for its or their own
account(s) or for the account of any other client. Sub-adviser may
give advice and take action with respect to any of its other accounts
or for its own account which my differ from the timing or nature of
action taken by the Sub-adviser with respect to the Portfolio.
XI. Sub-adviser's Use of the Services of Others. Sub-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 Sub-adviser 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 Sub-adviser 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 Sub-adviser's overall responsibilities with respect to
the other accounts that it serves as investment manager or counselor.
XII. Use of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Sub-adviser hereby gives the Fund, for the
term of this Agreement, a royalty free, nonexclusive, nontransferable
right to use the name "Franklin" or "FTI" (hereinafter referred to as
the "Marks") in the United States as part of the name of the
Portfolio, provided such name is approved by Sub-adviser in writing.
Such right doesn not include the right to allow third parties to use
the Marks except as specifically provided in this Agreement. Neither
the Fund nor the Adviser shall retain any right to use of the Marks
after the termination of this Agreement. Upon termination of this
Agreement, the Fund will immediately terminate all use of the Marks
and destroy any remaining unused sales documentation, promotional,
marketing, advertising or other written printed or electronic material
or performance information that contains the Marks. The Fund agrees
to use its best efforts to ensure that the nature and quality of the
services rendered in connection with the Marks shall conform to the
terms of this Agreement and any amendments thereto.
All sales documentation, promotional, marketing, advertising and other
written, printed or electronic material or performance information or
data which includes the Marks which is prepared, controlled and/or
issued by or on behalf of the Fund and/or the Adviser and/or their
agents or affiliates shall require the written approval of Sub-adviser
prior to distribution.
XIII. Liability of Sub-adviser; Indemnification. Neither Sub-adviser 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 Sub-adviser)
or Sub-adviser in connection with Su-adviser's discharge of its
obligations undertaken or reasonably assumed with respect to this
Agreement (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 Portfolio or (ii) any error of fact or mistake of law
contained in any report or data provided by Sub-adviser, except for
any error, mistake or loss resulting from willful misfeasance, bad
faith, or gross negligence in the performance by Sub-adviser or such
Related Person of Sub-adviser's duties on behalf of the Fund or
Portfolio or from reckless disregard by Sub-adviser or any such
Related Person of the duties of Sub-adviser pursuant to this Agreement
(each of which is referred to as a "Culpable Act").
Notwithstanding the foregoing, any stated limitations on liability
shall not relieve Sub-adviser from any responsibility or liability
Sub-adviser may have under state or federal statutes or from
responsibility or liability for errors in connection with the
execution of trade orders.
Sub-adviser shall indemnify Adviser and its Related Persons and hold
them harmless from and against any and all actions, suits or claims
whether groundless or meritorious and from and against any and all
losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liabilities (collectively, "Damages") arising directly or
indirectly out of or in connection with the performance of services by
Sub-adviser or its Related Persons hereunder to the extent such
Damages result from willful misfeasance, bad faith, gross negligence
or the reckless disregard of Sub-adviser's obligations and duties
under this Agreement.
Adviser shall indemnify Sub-adviser and its Related Persons and hold
them harmless from and against any Damages arising directly or
indirectly out of or in connection with the performance of services by
Adviser or its Related Persons under this Agreement or the Advisory
Agreement, in each case, to the extent such Damages result from any
Culpable Act of Adviser or any of its Related Persons.
XIV. Representations of Sub-adviser. Sub-adviser represents, warrants, and
agrees as follows:
A. Sub-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 Adviser of the occurrence of any event that
would disqualify Sub-adviser from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940 Act
or otherwise.
B. Sub-adviser has adopted a written code of ethics (the "Sub-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 Adviser and the Fund with a copy of the Sub-adviser Code,
together with evidence of its adoption. The Sub-adviser certifies
that it has adopted procedures reasonably necessary to prevent
access persons" as defined in Rule 17j-1 ("Access Persons") from
violating the Sub-adviser Code. On a periodic basis, Sub-adviser
will either; (i) certify to Adviser that Sub-adviser and its
Access Persons have complied with Sub-adviser Code with respect to
the Portfolio, or (ii) identify any material violations of the
Sub-adviser Code which have occurred with respect to the
Portfolio. In addition, Sub-adviser will furnish at least
annually to Adviser and the Board a written report that (a)
describes any issues arising under the Sub-adviser Code since the
last report to the Board, including, but not limited to,
information about material violations of the Sub-adviser Code with
respect to the Portfolio and sanctions imposed in response to the
material violations and (b) certifies that the Sub-adviser has
adopted procedures reasonably necessary to prevent Access Persons
from violating the Sub-adviser Code.
C. Sub-adviser 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 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 Adviser.
XV. Compliance with Applicable Regulations. In performing its duties
hereunder, Sub-adviser shall establish compliance procedures (copies
of which shall be provided to Adviser, and shall be subject to review
and approval by Adviser) 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.
XVI. Term of Agreement. This Agreement shall become effective with respect
to the FTI Small Cap Portfolio on the Effective Date and, with respect
to any additional Portfolio, on the date of receipt by the Adviser of
notice from the Sub-adviser in accordance with Section II hereof that
the Subscriber is willing to serve as Sub-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 FTI Small Cap 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 Portfolio, 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)
Sub-adviser shall not have notified the Fund, in writing, at least 60
days prior to such approval that it does not desire such continuation.
Sub-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.
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 Sub-adviser. This Agreement may also be
terminated by Adviser: (i) on at least 60 days' prior written notice
to Sub-adviser, without the payment of any penalty; (ii) upon material
breach by 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 Sub-adviser becomes unable to discharge its duties and
obligations under this Agreement. Sub-adviser 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
▇▇▇▇ ▇▇▇) 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. Sub-adviser will notify Adviser promptly of any change
in the personnel of Sub-adviser with responsibility for making
investment decisions in relation to the Portfolio or who have been
authorized to give instructions to Custodian.
XX. Miscellaneous.
A. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of *[Minnesota]* [California]* 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]* *[California]* conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. Insurance. Sub-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 Sub-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 Portfolio.
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.
LUTHERAN BROTHERHOOD
Attest: __________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: ___________________________
LB SERIES FUND, INC.
Attest: __________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: ___________________________
FRANKLIN ADVISERS, INC.
Attest: __________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: ___________________________
Schedule I
Dated ____________, 2001
Sub-advisory Fees
FTI Small Cap Portfolio
Average Net Daily Assets Annual Rate
$0 - 200 million 0.60%
$200 - 500 million 0.52%
Above $500 million 0.50%
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