SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 24th day of April, 2000 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 ALLIANCE CAPITAL MANAGEMENT, L.P (the
"Subadviser"), a Delaware limited partnership registered under the Investment
Advisers Act.
WITNESSETH:
WHEREAS, SBL Fund, a Kansas corporation, is registered with the Securities and
Exchange Commission (the "Commission") as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, SBL Fund has, pursuant to an Advisory Agreement with the Adviser (the
"Advisory Agreement"), retained the Adviser to act as investment adviser for and
to manage its assets;
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain of its
duties under the Advisory Agreement to other investment advisers, subject to the
requirements of the Investment Company Act; and
WHEREAS, the Adviser desires to retain the Subadviser as subadviser for Series L
(Capital Growth Series) (the "Fund") of SBL Fund to act as investment adviser
for and to manage the Fund's Investments (as defined below) and the Subadviser
desires to render such services.
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 the assets of the Fund subject to
the supervision of the Adviser and the Board of Directors of SBL 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
the 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 Fund as set forth in its 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 SBL
Fund's Board to purchase, hold and sell investments for the account of
the Fund (hereinafter "Investments") and to monitor on a continuous
basis the performance of such Investments. The Subadviser shall give
the Fund the benefit of its best efforts in rendering its services as
Subadviser. The Subadviser may contract with or consult with such
banks, other securities firms, brokers or other parties, without
additional expense to the Fund, as it may deem appropriate regarding
investment advice, research and statistical data, clerical assistance
or otherwise.
(b) BROKERAGE. The Subadviser is authorized, subject to the supervision of
the Adviser and SBL Fund's Board to establish and maintain accounts on
behalf of the 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 which may include, to the extent
permitted by the Adviser and SBL Fund, brokers or dealers affiliated
with the Subadviser, 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 the 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. In reaching such
determination, the Subadviser will not be required to place or attempt
to place a specific dollar value on the brokerage and/or research
services provided or being provided by such broker. 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 the 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 Fund and to such other clients. The Subadviser will report on
such allocations at the request of the Adviser, SBL Fund or SBL 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.
Subject to the foregoing provisions of this subsection 2(b) and at the
direction of the Adviser or the Fund, the Subadviser may also consider
sales of fund shares as a factor in the selection of brokers or
dealers for the Fund's portfolio transactions.
(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 the Fund ("Principal
Transactions"); PROVIDED, HOWEVER, the Subadviser may enter into a
Principal Transaction with the 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 or category of transactions 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 SBL Fund 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 solely with respect
to transactions made by it on behalf of the Fund 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 Fund 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
part (e) of Rule 31a-2 under the Investment Company Act, and agrees
that such books and records shall remain the sole property of the Fund
and shall be immediately surrendered to the Fund upon request. The
Subadviser further agrees that all books and records maintained
hereunder shall be made available to the Fund or the Adviser at any
time upon reasonable request and notice, including telecopy, during
any business day.
(e) INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to time
as the Adviser or the Fund may request, the Subadviser will furnish
the requesting party reports on portfolio transactions and reports on
Investments held in the portfolios, all in such detail as the Adviser
or SBL Fund may reasonably request. The Subadviser will make available
its officers and employees to meet with SBL Fund's Board of Directors
at SBL Fund's principal place of business on due notice to review the
Investments of the Fund.
The Subadviser will also provide such information as is customarily
provided by a subadviser and may be required for the Fund 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.
During the term of this Agreement, the Adviser agrees to furnish the
Subadviser at its principal office all registration statements, proxy
statements, reports to stockholders, sales literature or other
materials prepared for distribution to stockholders of the Fund, the
SBL Fund or the public that refer to the Subadviser for Subadviser's
review and approval. The Subadviser shall be deemed to have approved
all such materials unless the Subadviser reasonably objects by giving
notice to the Adviser in writing within five business days (or such
other period as may be mutually agreed) after receipt thereof. The
Subadviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Subadviser,
its services and its clients. The Adviser agrees to use its reasonable
best efforts to ensure that materials prepared by its employees or
agents or its affiliates that refer to the Subadviser or its clients
in any way are consistent with those materials previously approved by
the Subadviser as referenced in this paragraph. Sales literature may
be furnished to the Sub-Adviser by first class or overnight mail,
facsimile transmission equipment or hand delivery.
(f) CUSTODY ARRANGEMENTS. The Subadviser shall provide the Fund's
custodian, on each business day with information relating to all
transactions concerning the 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 SBL Fund's Articles of
Incorporation, By-Laws, and currently effective registration statement
and with the written instructions and directions of SBL 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 rules thereunder, and all other applicable federal
and state laws and regulations.
In carrying out its obligations under this Agreement, the Subadviser
shall ensure that, based on the information available to the
Subadviser, the 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 the 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 the Fund in such a manner as to ensure that
the 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 the Fund has ceased to comply and will take all
reasonable steps to adequately diversify the 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 SBL Fund, (ii) the By-Laws of SBL
Fund, (iii) SBL Fund's registration statement under the Investment
Company Act and the Securities Act of 1933, as amended, as filed with
the Commission, and (iv) any written instructions of the SBL Fund
Board and the Adviser.
(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 Fund.
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 SBL Fund or the Adviser in any way or
otherwise be deemed an agent of SBL Fund or the Adviser.
4. COMPENSATION. The Adviser shall pay to the Subadviser, for the services
rendered hereunder, the fees set forth in Exhibit A to this Agreement.
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 investment management duties under this Agreement without the
approval of the Adviser and SBL Fund's Board.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser represents and
warrants to the Adviser and the Fund as follows:
(a) The Subadviser is registered as an investment adviser under 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 has filed a notice of exemption pursuant to Rule 4.14
under the CEA with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association;
(d) The Subadviser is fully authorized to serve as Subadviser to the Fund
and to perform the services described under this Agreement;
(e) The Subadviser is a limited partnership duly organized and validly
existing under the laws of the state of Delaware with the power to own
and possess its assets and carry on its business as it is now being
conducted;
(f) 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;
(g) This Agreement is a valid and binding agreement of the Subadviser; and
(h) The Form ADV of the Subadviser previously provided to the Adviser 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 as of its filing date, 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; and
(i) The Subadviser agrees to notify the Adviser of any changes in the
membership of the general partners of the Subadviser within a
reasonable time after such change.
7. NON-EXCLUSIVITY. The services of the Subadviser with respect to the Fund
are not deemed to be exclusive, and the Subadviser and its officers shall
be free to render investment advisory and administrative or other services
to others (including other investment companies) and to engage in other
activities so long as its duties hereunder are not impaired thereby.
8. 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 Commodity Futures Trading Commission (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 and the Advisory 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 and the Advisory Agreement are valid and binding
agreements 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 as of its filing date 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; and
(g) The Adviser acknowledges that it received a copy of the Subadviser's
Form ADV at least 48 hours prior to the execution of this Agreement.
9. 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 8 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.
10. 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, SBL Fund, or the Fund or any of the Fund's 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
respective obligations under applicable law, including, without
limitation, the federal and state securities laws and the CEA.
(b) INDEMNIFICATION. The Subadviser shall indemnify the Adviser, SBL Fund
and the Fund, and their respective officers and directors, for any
liability and expenses, including attorneys' fees, which may be
sustained by the Adviser, SBL Fund or the Fund, 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 partners,
for any liability and expenses, including attorneys' fees, which may
be sustained as a result of the Adviser's, SBL Fund's or the Fund'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.
11. 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 SBL Fund unless it has first been approved (i) by a vote of
a majority of those directors of SBL 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 SBL 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 the Fund if specifically approved each
year by either (i) the Board of Directors of SBL 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 the Fund must be approved by the vote of a
majority of SBL 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 the 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 SBL 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 120 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.
12. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Fund pursuant to the Advisory
Agreement and shall oversee and review the Subadviser's performance of its
duties under this Agreement.
13. AMENDMENT. This Agreement may be amended by mutual consent of the parties,
provided that the terms of each such amendment with respect to the 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.
14. NOTICE. Any notice that is required to be given by the parties to each
other (or to the Fund) 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:
Alliance Capital Management, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
(b) Copy to:
Alliance Capital Management, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
(c) If to the Adviser:
Security Management Company, LLC
000 XX Xxxxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, President
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. GOVERNING LAW; JURISDICTION. Except as indicated in Section 19(b) of this
Agreement, this Agreement shall be governed by and construed in accordance
with the internal laws of the State of Kansas.
16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall together constitute one and the same instrument.
17. CAPTIONS. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
18. 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.
19. 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 on 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
ALLIANCE CAPITAL MANAGEMENT, L.P.
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, GENERAL PARTNER
XXXX X. XXXXXX
------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Secretary
Attest: XXXXXXX ZANALA
------------------------------
Name:
Title:
EXHIBIT A
Compensation
For all services rendered by the Subadviser hereunder, Adviser shall pay to
Subadviser an annual fee (the "Subadvisory Fee") equal to an annual rate of .50%
of the average daily net assets of the Fund.
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 ten (10) 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.
