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EXHIBIT (9)(b)
SUB-ADMINISTRATIVE AGREEMENT
THIS AGREEMENT is made this 10th day of September 1993, by and between SECURITY
MANAGEMENT COMPANY, a Kansas corporation, (the "Administrator") and LEXINGTON
MANAGEMENT CORPORATION, a Delaware corporation, (the "Sub-Administrator").
WITNESSETH:
WHEREAS, the Administrator and Sub-Administrator are parties to a
Sub-Administrative Agreement dated April 26, 1991, whereby the
Sub-Administrator provides administrative services on behalf of the
Administrator to Series D of SBL Fund;
WHEREAS, the Administrator desires to retain Sub-Administrator as its agent to
provide administrative services to certain other accounts of the Administrator
in addition to Series D of SBL Fund;
WHEREAS, the parties hereto agree that the Sub-Administrative Agreement dated
April 26, 1991, shall be terminated and superseded by the execution of this
Agreement;
WHEREAS, the Administrator is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser to the Security Equity Fund and SBL Fund and
also provides administrative services to the Security Equity Fund, SBL Fund and
the Parkstone Advantage Fund (collectively referred to as the "Funds");
WHEREAS, the Administrator provides general administrative, fund accounting,
transfer agency and dividend disbursing services to the Funds;
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WHEREAS, the Funds are registered as diversified, open-end management
investment companies under the Investment Company Act of 1940 (the "1940 Act"),
and the rules and regulations promulgated thereunder;
WHEREAS, each Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Sub-Administrator is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser and provider of administrative services; and
WHEREAS, the Administrator desires to retain the Sub-Administrator as the
Administrator's agent to furnish certain administrative services to the Global
Series (both Class A and Class B Shares) of the Security Equity Fund, Series D
of SBL Fund and the International Discovery Series of the Parkstone Advantage
Fund (collectively referred to as the "Series") on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Administrator hereby appoints Sub-Administrator to
provide certain sub-administrative services to the Series under the
terms set forth in this Agreement. Sub-Administrator accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Administrative Services. The Sub-Administrator shall furnish the
Series administrative services as set forth below, subject at all
times to the policies and control of each of the
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Fund's Board of Directors and the supervision of the Administrator. The
Sub-Administrator shall give the Series the benefit of its best judgment,
efforts and facilities in rendering its services as Sub-Administrator and
agrees to maintain sufficient trained personnel, equipment and supplies
to perform such services in conformity with the current prospectus of the
Funds and in an accurate and timely manner. The Sub-Administrator shall,
for all purposes herein, be deemed an independent contractor and shall
have, unless otherwise expressly provided or authorized, no authority to
act for or represent the Series in any way or otherwise be deemed an
agent of the Series.
The Sub-Administrator agrees to provide to each of the Series the following
administrative facilities and services:
a. Maintenance of Series' General Ledgers and Journals.
b. Preparing and recording disbursements for custodian related
expenses.
c. Preparing daily money transfers from the custodian account.
d. Reconciliation of Series' custodian account.
e. Assisting the Fund's independent auditors as appropriate.
f. Recording trading activity for purposes of determining net
asset value.
g. Preparing daily portfolio evaluation report to value portfolio
securities and determine daily accrued income.
h. Determining the daily net asset value per share and providing
daily price to Administrator no later than 4:15 p.m. Central
time each day on a best efforts basis, provided that if the
Sub-Administrator is not able to provide the price by 4:15
p.m. it will so notify the Administrator in a timely manner.
i. Assisting in the determination of the annual dividend per
share.
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j. Preparing monthly financial statements.
k. Providing financial information for inclusion in reports to
the Securities and Exchange Commission in compliance with the
provisions of the 1940 Act, the Securities Act of 1933 and any
other regulatory agencies as required.
l. Providing financial information to Administrator to assure
compliance with all pertinent provisions of the Internal
Revenue Code and regulations thereunder as they apply to
regulated investment companies.
m. Providing financial, yield, net asset value, etc. information
to the Administrator to be provided to the NASD and other
survey and statistical agencies as instructed by the Funds.
n. Reporting by telephone to the audit committee of the Funds'
Boards of Directors.
The facilities and services outlined above shall be provided separately for
Class A and Class B Shares of the Global Series of Security Equity Fund where
appropriate, including but not limited to items c, h, i, and j as set forth
above.
3. Administrator's Duties. In order that Sub-Administrator may fulfill
its obligations hereunder, the Administrator shall furnish to
Sub-Administrator, on a daily basis, certain accounting entries and
information, including Series expense information and daily
shareholder transaction data. Administrator shall furnish this
information in a timely and accurate manner.
4. Compliance With Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Administrator shall at all
times conform to: a) all applicable requirements of the 1940 Act, as
amended; b) the provisions of the current Registration Statement of
the Funds under the Securities Act of 1933 and the 1940 Act; c) the
provisions of the Funds' Articles of Incorporation and Bylaws or
Declaration of Trust as applicable, all as amended; and d) any other
applicable provisions of state and federal law.
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5. Records. The Sub-Administrator hereby agrees to maintain all records
relating to its activities and obligations under this Agreement which
are required to be maintained by Rule 31a-1 under the 1940 Act and
agrees to preserve such records for the periods prescribed by
Rule 31a-2 under the Act. The Sub-Administrator further agrees that
all such records are the property of the Fund and agrees to surrender
promptly to the Fund any such records upon the Fund's request.
6. Expenses. The expenses connected with the Series shall be borne by
the Sub-Administrator as follows:
a. Sub-Administrator shall pay the Series' expenses for office
rent, utilities, telephone, furniture, equipment and supplies
utilized at the Sub-Administrator's office.
b. Sub-Administrator shall pay the salaries and payroll expenses
of persons providing administrative services to the Series who
are employees of the Sub-Administrator or any of its
affiliates.
c. Sub-Administrator shall pay the expenses of any pricing
service or any other source utilized in the daily pricing of
the Series portfolio which the Sub-Administrator engages.
Sub-Administrator will not be liable; however, for the expense
of any pricing service which it is specifically directed by
the Administrator to utilize in pricing the Series portfolios.
d. Sub-Administrator shall pay any expenses that it may incur in
communicating with the Administrator in connection with its
obligations under this Agreement, including the expenses of
telephone calls, special mail services and telecopier charges.
7. Delegation of Responsibilities. Upon request of the Administrator and
with the approval of the Funds' Board of Directors, the
Sub-Administrator may perform services on behalf of the Series which
are not required by this Agreement. Such services will be performed
on behalf of the Series and the Sub-Administrator's cost in rendering
such services may be billed monthly to the Administrator subject to
examination by the Funds' independent accountants.
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Payment or assumption by the Sub-Administrator of any Series' expense
that the Sub-Administrator is not required to pay or assume under this
Agreement shall not relieve the Sub-Administrator of any of its
obligations to the Series or obligate the Sub-Administrator to pay
or assume any similar Series expense on any subsequent occasion.
8. Compensation. For the services to be rendered to the Series and the
facilities furnished hereunder, the Administrator shall pay the
Sub-Administrator annual compensation at the following rates:
Average Daily Net Assets of the Series Compensation
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Less than $100 million .17%, plus
$100 million but less than $200 million .10%, plus
$200 million but less than $300 million .08%, plus
$300 million but less than $400 million .05%, plus
$400 million or more .025%
The schedule above is subject, however, to the following minimums:
(i) $125,000 in the first contract year,
(ii) $145,000 in the second contract year,
(iii) $165,000 in the third contract year and each year thereafter.
A contract year shall be deemed to be that 12-month period starting from the
date of this Agreement.
Such compensation shall be computed daily and payable monthly. If this
Agreement shall be effective for only a portion of a year, then the
Sub-Administrator's compensation for said year shall be prorated for such
portion, including any minimum fees. Payment of the
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Sub-Administrator's compensation for the preceding month shall
be made as promptly as possible after the end of each month.
9. Non-Exclusivity. The services of the Sub-Administrator to
the Series are not to be deemed to be exclusive, and the
Sub-Administrator shall be free to render similar services to others
(including other investment companies) and to engage in other
activities, so long as its services under this Agreement are not
impaired thereby.
10. Amendment. This Agreement may be amended at any time by a
writing signed by each of the parties hereto.
11. Termination. This Agreement may be terminated at any time
by the Administrator or the Sub-Administrator on ninety (90) days'
written notice to the other party. However, if the Administrator
terminates this Agreement within fifteen (15) months of the date of
this Agreement, the Sub-Administrator shall be entitled to a
cancellation fee as set forth in Exhibit 1 to this Agreement.
Notwithstanding the foregoing provision, this Agreement shall
automatically terminate without the payment of any cancellation fee,
in the event of its assignment as that term is defined in Section
2(a)(4) of the 1940 Act, in the event of formal proceedings being
instituted against the Sub-Administrator by the SEC or any state
Securities Department or any other regulatory body that materially
relate to or are likely to materially affect the Sub-Administrator's
duties under this Agreement, in the event of the commencement of
bankruptcy, liquidation or similar proceedings respecting the
Sub-Administrator, or in the event of a material breach in performing
the duties specified under this Agreement (such termination to be at
the option of the non-breaching party).
12. Liability of the Sub-Administrator. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Sub-Administrator or its officers, directors or employees, or
reckless disregard by the Sub-Administrator of its duties under this
Agreement, the
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Sub-Administrator, its officers, directors or employees shall not be
liable to the Administrator, the Funds or to any shareholder of
the Funds for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security, provided that the
Sub-Administrator has acted in good faith.
13. Indemnification. The Administrator and the Sub-Administrator each
agree to indemnify the other against any claim against loss, or
liability to, such other party (including reasonable attorneys' fees)
arising out of any action on the part of the indemnifying party which
constitutes willful misfeasance, bad faith or gross negligence.
14. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage-paid to the other
party at such address as such other party may designate for the
receipt of such notice. Until further notice to the other party, it
is agreed that the address of the Sub-Administrator for this purpose
shall be Park 00 Xxxx, Xxxxx Xxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, and
the address of the Administrator for this purpose shall be 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000-0000.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
ATTEST: SECURITY MANAGEMENT COMPANY
Xxxxxx X. Xxxxx By: Xxxxx X. Xxxxxxx
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Title: Assistant Treasurer Senior Vice President
ATTEST: LEXINGTON MANAGEMENT CORPORATION
Xxxxxxx Xxxxxxxxx Xxxxxxx X. Xxxxx
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Title: Assistant Treasurer Managing Director/Chief Financial Officer
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EXHIBIT 1
CANCELLATION FEE
The parties hereto agree that the Sub-Administrator shall be entitled to
$161,250, over a fifteen (15) month period, as the minimum compensation under
the terms of this Agreement. Therefore, if the Administrator terminates this
Agreement before the expiration of such fifteen month period (except for
termination under any one of the automatic termination provisions set forth in
Section 11 of the Agreement), the Sub-Administrator shall be entitled to a
cancellation fee which equals the difference between the amount previously paid
by the Administrator under this Agreement (as of the effective date of the
termination) and the minimum compensation of $161,250.
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AMENDMENT TO SUB-ADMINISTRATIVE AGREEMENT
WHEREAS, Security Management Company (hereafter "SMC" or the "Administrator")
and Lexington Management Corporation (hereafter "LMC" or the
"Sub-Administrator") are parties to a Sub-Administrative Agreement dated
September 10, 1993 (the "Agreement") under which LMC, as Sub-Administrator,
agrees to provide certain administrative services, as specified in section 2 of
the Agreement, to certain identified mutual funds or series of mutual funds for
which SMC serves as Administrator; and
WHEREAS, SMC desires to retain the services of LMC to provide the same
administrative services as outlined in the Agreement to certain other mutual
funds;
NOW THEREFORE, SMC and LMC hereby amend the Sub-Administrative Agreement dated
September 10, 1993, effective May 1, 1995, as follows:
Notwithstanding any other provision of the Agreement to the contrary, LMC
agrees to provide the services identified in section 2 of the Agreement to the
following mutual funds, or series thereof: the Global Series (both Class A and
Class B shares) of Security Equity Fund, the Global Aggressive Bond Series
(both Class A and Class B shares) of Security Income Fund, Series D and K of
the SBL Fund and the International Discovery Series of the Parkstone Advantage
Fund (collectively referred to as the "Series").
Notwithstanding any other provision of the Agreement to the contrary, the
facilities and services outlined in section 2 of the Agreement shall be
provided separately, where appropriate, for Class A and Class B shares of the
Global Series of Security Equity Fund and for the Global Income Series of
Security Income Fund, including but not limited to items c, h, i, and j of
section 2.
Section 8 of the Agreement shall be deleted in its entirety and the following
section inserted in lieu thereof:
8. Compensation. For the services to be rendered to the Series and the
facilities furnished hereunder, the Administrator shall pay the
Sub-Administrator annual compensation which shall consist of an Annual Base Fee
of $9,000 per Series per contract year, plus the greater of (i) the Minimum
Fund Fee of $47,000 per Series per contract year or (ii) the Aggregate Asset
Fee below. However, if the Sub-Administrator is instructed by the
Administrator to discontinue providing services to the International Discovery
Series of the Parkstone Advantage Fund, there will be a corresponding reduction
in the Annual Base Fee and the Minimum Fund Fee. If such instruction relative
to the International Discovery Series is received by the Sub-Administrator
prior to the end of a contract year, the reduction in the Annual Base Fee and
the Minimum Fund Fee shall be prorated.
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Aggregate Asset Fee
Average Daily Net Assets of the Series Compensation
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Less than $500 million .07%, plus
$500 million but less than $1 billion .045%, plus
$1 billion or more .025%
The Annual Base Fee for each Series shall be paid monthly at 1/12th of the
annual rate stated. The greater of (i) or (ii) above will be paid monthly at
1/12th of the annual rate stated for the Minimum Fund Fee or at 1/12th of the
annual rate for the Aggregate Asset Fee based on annual average net assets, as
applicable.
A contract year shall be deemed to be that 12-month period starting from the
date of this Amendment. If this Agreement shall be effective for only a
portion of a year, then the Sub-Administrator's annual compensation for said
year shall be prorated for such portion. Payment of the Sub-Administrator's
compensation for the preceding month shall be made as promptly as possible
after the end of each month.
The compensation provided for in this Section 8 does not include out-of-pocket
expenses incurred by LMC on behalf of the Series. Example's of out-of-pocket
expenses include but are not limited to disaster recovery, pricing services
(except pricing services already provided as part of LMC's in-house quote
system or as part of the DST software services) and overnight mailing services.
Out-of-pocket expenses will be billed by LMC on a monthly basis and will be
billed separately from service fees. However, out-of-pocket expenses incurred
by LMC for converting Series D of SBL Fund to the DST system, will be borne by
LMC.
Section 11 of the Agreement (including Exhibit 1 to the Agreement) shall be
deleted in its entirety and the following section inserted in lieu thereof:
11. Termination. The term of this Agreement shall be two years and shall
begin on the date of this Amendment. Thereafter, the Agreement shall continue
at the will of the parties and may be canceled without the payment of any
penalty upon ninety (90) days written notice to the other party.
Notwithstanding any of the foregoing, this Agreement shall automatically
terminate without the payment of any penalty (i) in the event of its assignment
as that term is defined in Section 2(a)(4) of the 1940 Act, (ii) in the event
of formal proceedings being instituted against the Sub-Administrator by the SEC
or any state Securities Department or any other regulatory body that materially
relate to or are likely to materially affect the Sub-Administrator's duties
under this Agreement, (iii) in the event of the commencement of bankruptcy,
liquidation or similar proceedings respecting the Sub-Administrator, or (iv) in
the event of a material breach in performing the duties specified under this
Agreement (such termination to be at the option of the non-breaching party).
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IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Sub-Administrative Agreement this 1st day of May, 1995.
ATTEST: SECURITY MANAGEMENT COMPANY
Xxx X. Xxx By: Xxxxx X. Xxxxxxx
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Title: Secretary Senior Vice President
ATTEST: LEXINGTON MANAGEMENT CORPORATION
Xxxx Xxxxxx By: Xxxxxxx X. Xxxxx
----------------------------------------- --------------------------------
Title: Senior Vice President & Secretary Managing Director & CFO
