SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 4th day of June, 1999 between
SECURITY MANAGEMENT COMPANY, LLC (the "Adviser"), a Kansas limited liability
company, registered under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"), and BANKERS TRUST COMPANY (the "Subadviser"), a New
York corporation and a wholly-owned indirect subsidiary of Deutsche Bank AG.
WITNESSETH:
WHEREAS, SBL Fund and Security Equity Fund, Kansas corporations, are
registered with the Securities and Exchange Commission (the "Commission") as
open-end management investment companies under the Investment Company Act of
1940, as amended (the "Investment Company Act");
WHEREAS, the Subadviser is a bank within the meaning of Section 2(a)(5) of
the Investment Company Act and Section 202(a)(2) of the Investment Advisers Act;
WHEREAS, SBL Fund is authorized to issue shares of Series I and Series H,
each a separate series of SBL Fund and Security Equity Fund is authorized to
issue shares of the International Series and the Enhanced Index Series, each a
separate series of Security Equity Fund (each series referred to herein
individually as a "Fund" and collectively as the "Funds");
WHEREAS, each of SBL Fund and Security Equity Fund has, pursuant to an
Advisory Agreement with the Adviser (the "Advisory Agreements"), retained the
Adviser to act as investment adviser for and to manage each Fund's assets;
WHEREAS, the Advisory Agreements permit the Adviser to delegate certain of
its duties under the Advisory Agreements to other investment advisers, subject
to the requirements of the Investment Company Act;
WHEREAS, the Adviser desires to retain the Subadviser as subadviser for the
Funds to act as investment adviser for and to manage each Fund's Investments (as
defined below) and the Subadviser desires to render such services; and
WHEREAS, the Adviser and Subadviser desire this Agreement to supersede each
of the Subadvisory Agreements between the Adviser and Subadviser, dated January
26, 1999 and April 30, 1999.
NOW, THEREFORE, the Adviser and Subadviser do mutually agree and promise as
follows:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby retains the Subadviser to
act as investment adviser for and to manage certain assets of the Funds subject
to the supervision of the Adviser and the respective Boards of Directors of SBL
Fund and Security Equity Fund and subject to the terms of this Agreement; and
the Subadviser hereby accepts such employment. In such capacity, the Subadviser
shall be responsible for each Fund's Investments.
2. DUTIES OF SUBADVISER.
(a) INVESTMENTS. The Subadviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions
of the Funds as set forth in each Fund's current prospectus and statement
of additional information as currently in effect and as supplemented or
amended from time to time (collectively referred to hereinafter as the
"Prospectus") and subject to the directions of the Adviser and the
respective Fund's Board to purchase, hold and sell investments for the
account of the Funds (hereinafter "Investments") and to monitor on a
continuous basis the performance of such Investments. The Subadviser
shall give the Funds the benefit of its best efforts in rendering its
services as Subadviser.
(b) BROKERAGE. The Subadviser is authorized, subject to the
supervision of the Adviser and the respective Fund's Board to establish
and maintain accounts on behalf of each Fund with, and place orders for
the purchase and sale of the Fund's Investments with or through, such
persons, brokers or dealers as Subadviser may select and negotiate
commissions to be paid on such transactions. The Subadviser agrees that
in placing such orders it shall attempt to obtain best execution,
provided that, the Subadviser may, on behalf of a Fund, pay brokerage
commissions to a broker which provides brokerage and research services to
the Subadviser in excess of the amount another broker would have charged
for effecting the transaction, provided (i) the Subadviser determines in
good faith that the amount is reasonable in relation to the value of the
brokerage and research services provided by the executing broker in terms
of the particular transaction or in terms of the Subadviser's overall
responsibilities with respect to the Fund and the accounts as to which
the Subadviser exercises investment discretion, (ii) such payment is made
in compliance with Section 28(e) of the Securities Exchange Act of 1934,
as amended, and any other applicable laws and regulations, and (iii) in
the opinion of the Subadviser, the total commissions paid by the Fund
will be reasonable in relation to the benefits to the Fund over the long
term. It is recognized that the services provided by such brokers may be
useful to the Subadviser in connection with the Subadviser's services to
other clients. On occasions when the Subadviser deems the purchase or
sale of a security to be in the best interests of a Fund as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of securities so sold or purchased,
as well as the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Funds and
to such other clients. The Subadviser will report on such allocations at
the request of the Adviser, the Funds or the respective Fund's Board
providing such information as the number of aggregated trades to which
the Fund was a party, the broker(s) to whom such trades were directed and
the basis of the allocation for the aggregated trades.
(c) SECURITIES TRANSACTIONS. The Subadviser and any affiliated person
of the Subadviser will not purchase securities or other instruments from
or sell securities or other instruments to a Fund ("Principal
Transactions"); PROVIDED, HOWEVER, the Subadviser may enter into a
Principal Transaction with a Fund if (i) the transaction is permissible
under applicable laws and regulations, including, without limitation, the
Investment Company Act and the Investment Advisers Act and the rules and
regulations promulgated thereunder, and (ii) the transaction receives the
express written approval of the Adviser.
The Subadviser agrees to observe and comply with Rule 17j-1 under the
Investment Company Act and its Code of Ethics, as the same may be amended
from time to time. The Subadviser agrees to provide the Adviser and the
Funds with a copy of such Code of Ethics.
(d) BOOKS AND RECORDS. The Subadviser will maintain all books and
records required to be maintained pursuant to the Investment Company Act
and the rules and regulations promulgated thereunder with respect to
transactions made by it on behalf of the Funds including, without
limitation, the books and records required by Subsections (b)(1), (5),
(6), (7), (9), (10) and (11) and Subsection (f) of Rule 31a-1 under the
Investment Company Act and shall timely furnish to the Adviser all
information relating to the Subadviser's services hereunder needed by the
Adviser to keep such other books and records of the Funds required by
Rule 31a-1 under the Investment Company Act. The Subadviser will also
preserve all such books and records for the periods prescribed in Rule
31a-2 under the Investment Company Act, and agrees that such books and
records shall remain the sole property of the respective Fund and shall
be immediately surrendered to a Fund upon request. The Subadviser further
agrees that all books and records maintained hereunder shall be made
available to the Funds or the Adviser at any time upon reasonable
request, including telecopy, during any business day.
(e) INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to
time as the Adviser or the Funds may request, the Subadviser will furnish
the requesting party reports on portfolio transactions and reports on
Investments held in the portfolio, all in such detail as the Adviser or
the Funds may reasonably request. The Subadviser will make available its
officers and employees to meet with the respective Fund's Board of
Directors at the Funds' principal place of business on due notice to
review the Investments of the Funds.
The Subadviser will also provide such information or perform such
additional acts as are customarily performed by a subadviser and may be
required for the Funds or the Adviser to comply with their respective
obligations under applicable laws, including, without limitation, the
Internal Revenue Code of 1986, as amended (the "Code"), the Investment
Company Act, the Investment Advisers Act, the Securities Act of 1933, as
amended (the "Securities Act") and any state securities laws, and any
rule or regulation thereunder.
(f) CUSTODY ARRANGEMENTS. The Subadviser shall provide the Funds'
custodian, on each business day with information relating to all
transactions concerning each Fund's assets.
(g) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS. In all
matters relating to the performance of this Agreement, the Subadviser and
its directors, officers, partners, employees and interested persons shall
act in conformity with each Fund's Articles of Incorporation, By-Laws,
and currently effective registration statement and with the written
instructions and directions of the respective Fund's Board and the
Adviser, and shall comply with the requirements of the Investment Company
Act, the Investment Advisers Act, the Commodity Exchange Act (the "CEA"),
the rules thereunder, and all other applicable federal and state laws and
regulations.
In carrying out its obligations under this Agreement, the Subadviser
shall, solely with regard to those matters within its control, ensure
that each Fund complies with all applicable statutes and regulations
necessary to qualify the Fund as a Regulated Investment Company under
Subchapter M of the Code (or any successor provision), and shall notify
the Adviser immediately upon having a reasonable basis for believing that
a Fund has ceased to so qualify or that it might not so qualify in the
future.
In carrying out its obligations under this Agreement, the Subadviser
shall invest the assets of Series H and Series I in such a manner as to
ensure that each such Fund complies with the diversification provisions
of Section 817(h) of the Code (or any successor provision) and the
regulations issued thereunder relating to the diversification
requirements for variable insurance contracts and any prospective
amendments or other modifications to Section 817 or regulations
thereunder. Subadviser shall notify the Adviser immediately upon having a
reasonable basis for believing that either Fund has ceased to comply and
will take all reasonable steps to adequately diversify such Fund so as to
achieve compliance within the grace period afforded by Regulation
1.817-5.
The Adviser has furnished the Subadviser with copies of each of the
following documents and will furnish the Subadviser at its principal
office all future amendments and supplements to such documents, if any,
as soon as practicable after such documents become available: (i) the
Articles of Incorporation of each Fund, (ii) the By-Laws of each Fund
and (iii) each Fund's registration statement under the Investment
Company Act and the Securities Act of 1933, as amended, as filed with
the Commission.
(h) VOTING OF PROXIES. The Subadviser shall direct the custodian as to
how to vote such proxies as may be necessary or advisable in connection
with any matters submitted to a vote of shareholders of securities held
by the Funds.
3. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Funds or the Adviser in any way or
otherwise be deemed an agent of the Funds or the Adviser.
4. COMPENSATION. The Adviser shall pay to the Subadviser, for the services
rendered hereunder, the fees set forth in Exhibit A attached hereto.
5. EXPENSES. The Subadviser shall bear all expenses incurred by it in
connection with its services under this Agreement and will, from time to time,
at its sole expense employ or associate itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However, the Subadviser shall not assign or delegate any of its duties under
this Agreement without the approval of the Adviser and the respective Fund's
Board.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser represents
and warrants to the Adviser and the Funds as follows:
(a) The Subadviser is a bank within the meaning of Section 2(a)(5) of
the Investment Company Act and Section 202(a)(2) of the Investment
Advisers Act;
(b) The Subadviser will immediately notify the Adviser of the
occurrence of any event that would disqualify the Subadviser from serving
as an investment adviser of an investment company pursuant to Section
9(a) of the Investment Company Act;
(c) The Subadviser is not required to register with the Commodity
Futures Trading Commission (the "CFTC") as a commodity trading advisor
pursuant to Section 1a(5)(B) or 4m of the CEA;
(d) The Subadviser is a corporation duly organized and validly
existing under the laws of the State of New York with the power to own
and possess its assets and carry on its business as it is now being
conducted;
(e) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action on the part of its shareholders, and
no action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Subadviser for the
execution, delivery and performance by the Subadviser of this Agreement,
and the execution, delivery and performance by the Subadviser of this
Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Subadviser's
governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Subadviser;
(f) This Agreement is a valid and binding agreement of the Subadviser;
7. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser represents and
warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule 4.14
under the CEA with the CFTC and the National Futures Association;
(c) The Adviser is a limited liability company duly organized and
validly existing under the laws of the State of Kansas with the power to
own and possess its assets and carry on its business as it is now being
conducted;
(d) The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized
by all necessary action on the part of its members, and no action by or
in respect of, or filing with, any governmental body, agency or official
is required on the part of the Adviser for the execution, delivery and
performance by the Adviser of this Agreement, and the execution, delivery
and performance by the Adviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule or
regulation, (ii) the Adviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Adviser;
(e) This Agreement is a valid and binding agreement of the Adviser;
(f) The Form ADV of the Adviser previously provided to the Subadviser
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in order
to make the statements made, in light of the circumstances under which
they were made, not misleading;
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION.
All representations and warranties made by the Subadviser and the Adviser
pursuant to Sections 6 and 7 hereof shall survive for the duration of this
Agreement and the parties hereto shall promptly notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.
9. LIABILITY AND INDEMNIFICATION.
(a) LIABILITY. In the absence of willful misfeasance, bad faith or
negligence on the part of the Subadviser or a breach of its duties
hereunder, the Subadviser shall not be subject to any liability to the
Adviser or the Funds or any of the Funds' shareholders, and, in the
absence of willful misfeasance, bad faith or negligence on the part of
the Adviser or a breach of its duties hereunder, the Adviser shall not be
subject to any liability to the Subadviser, for any act or omission in
the case of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of
Investments; PROVIDED, HOWEVER, that nothing herein shall relieve the
Adviser and the Subadviser from any of their obligations under applicable
law, including, without limitation, the federal and state securities laws
and the CEA.
(b) INDEMNIFICATION. The Subadviser shall indemnify the Adviser and
the Funds, and their respective officers and directors, for any liability
and expenses, including reasonable attorneys' fees, which may be
sustained as a result of the Subadviser's willful misfeasance, bad faith,
negligence, breach of its duties hereunder or violation of applicable
law, including, without limitation, the federal and state securities laws
or the CEA. The Adviser shall indemnify the Subadviser and its officers
and directors, for any liability and expenses, including reasonable
attorneys' fees, which may be sustained as a result of the Adviser's
willful misfeasance, bad faith, negligence, breach of its duties
hereunder or violation of applicable law, including, without limitation,
the federal and state securities laws or the CEA.
10. DURATION AND TERMINATION.
(a) DURATION. This Agreement shall become effective upon the date
first above written, provided that this Agreement shall not take effect
with respect to a Fund unless it has first been approved (i) by a vote of
a majority of those directors of the Fund who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by
vote of a majority of the Fund's outstanding voting securities. This
Agreement shall continue in effect for a period of two years from the
date hereof, subject thereafter to being continued in force and effect
from year to year with respect to each Fund if specifically approved each
year by either (i) the Board of Directors of the Fund, or (ii) by the
affirmative vote of a majority of the Fund's outstanding voting
securities. In addition to the foregoing, each renewal of this Agreement
with respect to a Fund must be approved by the vote of a majority of the
Fund's directors 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. Prior to voting on the renewal of
this Agreement, the Board of Directors of each Fund may request and
evaluate, and the Subadviser shall furnish, such information as may
reasonably be necessary to enable the Fund's Board of Directors to
evaluate the terms of this Agreement.
(b) TERMINATION. Notwithstanding whatever may be provided herein to
the contrary, this Agreement may be terminated at any time, without
payment of any penalty:
(i) By vote of a majority of the Board of Directors of a
Fund with respect to that Fund, or by vote of a majority of the
outstanding voting securities of the Fund, or by the Adviser, in
each case, upon sixty (60) days' written notice to the
Subadviser;
(ii) By the Adviser upon breach by the Subadviser of any
representation or warranty contained in Section 6 hereof, which
shall not have been cured during the notice period, upon twenty
(20) days written notice;
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its
duties and obligations under this Agreement; or
(iv) By the Subadviser upon 180 days written notice to the
Adviser and the Fund.
This Agreement shall not be assigned (as such term is defined in the
Investment Company Act) without the prior written consent of the parties
hereto. This Agreement shall terminate automatically in the event of its
assignment without such consent or upon the termination of the Advisory
Agreement.
11. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory Agreements
and shall oversee and review the Subadviser's performance of its duties under
this Agreement.
12. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment with respect to a Fund
shall be approved by the Board of Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund.
13. CONFIDENTIALITY. Subject to the duties of the Adviser, the Funds and the
Subadviser to comply with applicable law, including any demand of any regulatory
or taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Funds and the actions of the
Subadviser, the Adviser and the Funds in respect thereof.
14. NOTICE. Any notice that is required to be given by the parties to each
other (or to the Funds) under the terms of this Agreement shall be in writing,
delivered, or mailed postpaid to the other party, or transmitted by facsimile
with acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Bankers Trust Company
One Bankers Trust Xxxxx
Xxxx Xxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Director
Facsimile: (000) 000-0000
(b) If to the Adviser:
Security Management Company, LLC
000 XX Xxxxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, President
Facsimile: (000) 000-0000
(c) If to Security Equity Fund:
Security Equity Fund
000 XX Xxxxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attention: Xxx X. Xxx, Secretary
Facsimile: (000) 000-0000
(d) If to SBL Fund:
SBL Fund
000 XX Xxxxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attention: Xxx X. Xxx, Secretary
Facsimile: (000) 000-0000
15. INSTRUCTIONS. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Adviser in writing signed or
sent by one of the persons whose names, addresses and specimen signatures will
be provided by the Adviser from time to time.
16. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Kansas.
17. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall together constitute one and the same instrument.
18. CAPTIONS. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
20. CERTAIN DEFINITIONS.
(a) "BUSINESS DAY." As used herein, business day means any customary
business day in the United States on which the New York Stock Exchange is
open.
(b) MISCELLANEOUS. 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 Investment Company Act shall be resolved
by reference to such term or provision of the Investment Company Act and
to interpretations thereof, if any, by the U.S. courts or, in the absence
of any controlling decisions of any such court, by rules, regulation or
order of the Commission validly issued pursuant to the Investment Company
Act. Specifically, as used herein, "investment company," "affiliated
person," "interested person," "assignment," "broker," "dealer" and
"affirmative vote of the majority of the Fund's outstanding voting
securities" shall all have such meaning as such terms have in the
Investment Company Act. The term "investment adviser" shall have such
meaning as such term has in the Investment Advisers Act and the
Investment Company Act, and in the event of a conflict between such Acts,
the most expansive definition shall control. In addition, where the
effect of a requirement of the Investment Company Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or order of
the Commission, 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 executed this Agreement as of the
day and year first written above.
SECURITY MANAGEMENT COMPANY, LLC
By: XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Attest: XXX X. XXX
--------------------------------
Name: Xxx X. Xxx
Title: Secretary
BANKERS TRUST COMPANY
By: XXXXX X. XXXXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
Attest: XXXXXX XXXXX
--------------------------------
Name: Xxxxxx Xxxxx
Title: Associate
EXHIBIT A
SUBADVISORY FEE
1. INTERNATIONAL FUNDS
The parties agree that the fee paid by the Adviser to the Subadviser for the
services rendered by the Subadviser to the International Series of Security
Equity Fund and Series I of SBL Fund (collectively referred to herein as the
"International Funds") shall be based on the combined average daily net assets
of the International Funds. For all services rendered to the International Funds
by the Subadviser hereunder, Adviser shall pay to Subadviser an annual fee (the
"Subadvisory Fee"), as follows:
An annual rate of .60% of the combined average daily net assets of the
International Funds of $200 million or less; and
An annual rate of .55% of the combined average daily net assets of the
International Funds of more than $200 million.
The Subadvisory Fee shall be accrued for each calendar day the Subadviser
renders subadvisory services hereunder and the sum of the daily fee accruals
shall be paid monthly to the Subadviser as soon as practicable following the
last day of each month, by wire transfer if so requested by the Subadviser, but
no later than fifteen (15) calendar days thereafter. If this Agreement shall be
effective for only a portion of a year, then the Subadviser's fee for said year
shall be prorated for such portion. For purposes of calculating the fee
hereunder, the value of the net assets of the International Funds shall be
computed in the same manner at the end of the business day as the value of such
net assets are computed in connection with the determination of the net asset
value of the International Funds' shares as described in the applicable current
Prospectus.
2. ENHANCED INDEX FUNDS
The parties agree that the fee paid by the Adviser to the Subadviser for the
services rendered by the Subadviser to the Enhanced Index Series of Security
Equity Fund and Series H of SBL Fund (collectively referred to herein as the
"Enhanced Index Funds"), shall be based on the combined average daily net assets
of the Enhanced Index Funds.
For all services rendered to the Enhanced Index Funds by the Subadviser
hereunder, Adviser shall pay to Subadviser an annual fee (the "Subadvisory
Fee"), as follows:
An annual rate of .20% of the combined average daily net assets of the
Enhanced Index Funds of $100 million or less; and
An annual rate of .15% of the combined average daily net assets of the
Enhanced Index Funds of more than $100 million but less than $300 million; and
An annual rate of .13% of the combined average daily net assets of the
Enhanced Index Funds of more than $300 million.
The Subadvisory Fee shall be accrued for each calendar day the Subadviser
renders subadvisory services hereunder and the sum of the daily fee accruals
shall be paid monthly to the Subadviser as soon as practicable following the
last day of each month, by wire transfer if so requested by the Subadviser, but
no later than fifteen (15) calendar days thereafter. If this Agreement shall be
effective for only a portion of a year, then the Subadviser's fee for said year
shall be prorated for such portion. For purposes of calculating the fee
hereunder, the value of the net assets of the Enhanced Index Funds shall be
computed in the same manner at the end of the business day as the value of such
net assets are computed in connection with the determination of the net asset
value of the Enhanced Index Funds' shares as described in the applicable current
Prospectus.
3. ENHANCED INDEX FUNDS' MINIMUM FEES
The schedule in 2 above is subject to the following minimum fees: (i) in the
first year from the date the Enhanced Index Series of Security Equity Fund is
seeded (the "Seeding Date"), no minimum fee; (ii) in the second year from the
Seeding Date, $100,000 minimum and (iii) in the third year from the Seeding Date
and each year thereafter, $200,000 minimum. If at the end of the second year
from the Seeding Date, the total amount of the fees paid by the Adviser to the
Subadviser for services to the Enhanced Index Funds is collectively less than
$100,000, then the Adviser will pay any such difference in a lump-sum to the
Subadviser. If at the end of the third year from the Seeding Date, and each year
thereafter that this Agreement is in effect, the total amount of the fees paid
by the Adviser to the Subadviser for services to the Enhanced Index Funds is
collectively less than $200,000, then the Adviser will pay any such difference
in a lump-sum to the Subadviser.
