SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of July,
2007 between 6th Avenue Investment 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 Security Global
Investors, LLC (the "Subadviser"), a Kansas limited liability company registered
under the Investment Advisers Act.
WITNESSETH:
WHEREAS, SBL Fund and Security Equity Fund, Kansas corporations, are
each 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, SBL Fund is authorized to issue shares of Series D ("Series
D"), a separate series of SBL Fund and Security Equity Fund is authorized to
issue shares of the Global Series ("Global Series"), a separate series of
Security Equity Fund (Series D and the Global Series are referred to herein
individually as a "Fund" and collectively as the "Funds");
WHEREAS, each of the Funds 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 Agreements permit 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 to
act as investment adviser for and to manage the Funds' respective 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 Global Series
and a portion of the assets of Series D, in each case subject to the supervision
of the Adviser and the Board of Directors of such Fund and subject to the terms
of this Agreement. The Subadviser hereby accepts such employment. In such
capacity, the Subadviser shall be responsible for each Fund's Investments (as
defined below).
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 each Fund as set forth in such Fund's 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 Fund's Board of Directors to purchase, hold and
sell investments for the account of the Global Series and the portion
of the assets of Series D that the Adviser allocates to the Subadviser
for management from time to time (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. The Subadviser may contract with
or consult with such banks, other securities firms, brokers or other
parties, without additional expense to the Funds, 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 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 each 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 the respective Fund's Board,
brokers or dealers affiliated with the Subadviser or Adviser, and
negotiate commissions to be paid on such transactions. The Subadviser
agrees that in placing such orders for a Fund it shall attempt to
obtain best execution, provided that, the Subadviser may, on behalf of
such 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 such 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 such 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 or Funds involved and to
such other clients. The Subadviser will report on such allocations at
the request of the Adviser, or the respective Fund's Board, providing
such information as the number of aggregated trades to which a Fund was
a party, the broker(s) to whom such trades were directed and the basis
of the allocation for the aggregated trades.
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(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 or an
affiliated person of 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 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 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 solely
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 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 respective Fund and shall be
immediately surrendered to the appropriate Fund upon request. The
Subadviser further agrees that all books and records maintained
hereunder shall be made available to the respective 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 a 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 the applicable Fund may reasonably request. The
Subadviser will make available its officers and employees to meet with
the Board of Directors of a Fund at the 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 each 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.
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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 each
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 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 each
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 each Fund's Articles of
Incorporation, By-Laws, and currently effective registration statement
and with the written instructions and directions of each Fund's Board
and the Adviser, after receipt of such documents, from the relevant
Fund, 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 ensure that the Global Series and the portion of
Series D allocated to it by the Adviser complies with all applicable
statutes and regulations necessary to qualify each Fund (or portion
thereof in the case of Series D) 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 (or portion thereof in the case of Series D) 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 portion of the assets of Series D allocated
to it by the Adviser in such a manner as to ensure that such portion
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 enacted modifications
to Section 817 or regulations thereunder. Subadviser shall notify the
Adviser immediately upon having a reasonable basis for believing that
the portion of Series D allocated to the Subadvser has ceased to comply
and will take all reasonable steps to adequately diversify the assets
of
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Series D allocated to, 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, (iii) each 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
respective Fund's 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
Investments held by a 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 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 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
the appropriate 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 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 under all applicable law
to serve as Subadviser to the Funds and to perform the services
described under this Agreement;
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(e) The Subadviser 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;
(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 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 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;
(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;
7. Non-Exclusivity. The services of the Subadviser with respect to the
Funds 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
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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;
(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 gross 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, to either Fund, or any of either Fund's shareholders,
and, in the absence of willful misfeasance, bad faith or gross
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
and the Funds, and their respective officers and directors, for any
liability and expenses, including attorneys' fees, which may be
sustained by the Adviser, or the Funds, as a result of the Subadviser's
willful misfeasance, bad faith, or gross 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, or the Funds' willful
misfeasance, bad faith, or gross negligence, breach of its duties
hereunder or violation of applicable law, including, without
limitation, the federal and state securities laws or the CEA.
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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 a Fund unless it has first been approved by a
vote of a majority of those directors of SBL Fund and Security Equity
Fund, as applicable, 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. 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
the Board of Directors of the applicable Fund. In addition to the
foregoing, each renewal of this Agreement with respect to each Fund
must be approved by the vote of a majority of the applicable 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 applicable 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 the
applicable Fund, or by vote of a majority of the outstanding
voting securities of the applicable 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 within twenty (20) days of the
Subadviser's receipt of written notice of such breach;
(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 applicable 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 Funds pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
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13. 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 applicable Fund or by a vote
of a majority of the outstanding voting securities of the applicable 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:
Security Global Investors, LLC
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx, Chief Investment Officer
Facsimile: (000) 000-0000
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (000) 000-0000
(b) If to the Adviser:
6th Avenue Investment Management Company, LLC
0000 XX 0xx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, President
Facsimile: (000) 000-0000
(d) If to SBL Fund:
SBL Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Attention: Xxx X. Xxx, Secretary
Facsimile: (000) 000-0000
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(d) If to Security Equity Fund:
Security Equity Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
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 laws of the State of Kansas, without regard to its conflicts
of law provisions.
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. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
6th Avenue Investment Management Company, LLC
By: /s/ XXXXXXX X. XXXXX
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Attest: /s/ XXX X. XXX
----------------------------
Name: Xxx X. Xxx
Title: Secretary
Security Global Investors, LLC
By: /s/ XXXXXXX X. XXXXXXX
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Attest: /s/ XXX X. XXX
----------------------------
Name: Xxx X. Xxx
Title: Secretary
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EXHIBIT A
Compensation
For all services rendered by the Subadviser hereunder, Adviser shall
pay to Subadviser a fee (the "Subadvisory Fee") as follows:
An annual rate of 0.32% of the combined average daily net assets of the
Funds of $300 million or less;
and
An annual rate of 0.27% of the combined average daily net assets of the
Funds of more than $300 million but less than $750 million; and
An annual rate of 0.22% of the combined average daily net assets of the
Funds of more than $750 million.
For purposes of calculating the compensation to be paid hereunder, (1)
the value of the net assets of a Fund shall be computed in the same manner at
the end of the business day as the value of such net assets is computed in
connection with the determination of the net asset value of the Fund's shares as
described in the then current prospectus for the applicable Fund and (2) the
value of the net assets of Series D taken into account in determining the fee to
be paid to the Subadviser shall only include the assets allocated to the
Subadviser by the Adviser to manage.
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.
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