AMENDED AND RESTATED
INVESTMENT MANAGEMENT AGREEMENT
This Agreement, made and entered into as of May 1, 2002, and amended and
restated effective as of February 1, 2004, by and between SECURITY LARGE CAP
VALUE FUND, a Kansas corporation (hereinafter referred to as the "Fund"), and
SECURITY MANAGEMENT COMPANY, LLC, a limited liability company (hereinafter
referred to as "SMC") is hereby amended and restated effective as of June 30,
2005.
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, SMC is willing to provide investment research and advice to the Fund on
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties agree as follows:
1. Employment of SMC. The Fund hereby employs SMC to act as investment adviser
to the Fund with respect to the investment of its assets and to supervise
and arrange for the purchase of securities for the Fund and the sale of
securities held in the portfolio of the Fund, subject always to the
supervision of the Board of Directors of the Fund (or a duly appointed
committee thereof), during the period and upon and subject to the terms and
conditions described herein. SMC agrees to maintain sufficient trained
personnel and equipment and supplies to perform its responsibilities under
this Agreement and in conformity with the current Prospectus of the Fund
and such other reasonable standards of performance as the Fund may from
time to time specify.
SMC hereby accepts such employment and agrees to perform the services
required by this Agreement for the compensation herein provided.
2. Allocation of Expenses and Charges.
(a) Expenses of SMC. SMC shall pay all expenses in connection with the
performance of its services under this Agreement, except as provided
otherwise herein.
(b) Expenses of the Fund. Anything in this Agreement to the contrary
notwithstanding, the Fund shall pay or reimburse SMC for the payment
of the following described expenses of the Fund whether or not billed
to the Fund, SMC or any related entity;
(i) brokerage fees and commissions;
(ii) taxes;
(iii)interest expenses;
(iv) any extraordinary expenses approved by the Board of Directors of
the Fund; and
(v) distribution fees paid under the Fund's Class A, Class B and
Class C Distribution Plans;
and, in addition to those expenses set forth above, the Fund shall pay
all of its expenses whether or not billed to the Fund, SMC or any
related entity.
3. Compensation of SMC.
(a) As compensation for the investment advisory services to be rendered by
SMC to the Fund for each of the years this Agreement is in effect, the
Fund shall pay SMC an annual fee equal to 0.65% of the Fund's average
daily net assets. Such fee shall be calculated daily and payable
monthly. If this Agreement shall be effective for only a portion of a
year, then SMC's compensation for said year shall be prorated for such
portion. For purposes of this Section 3, the value of the net assets
of the 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 Fund's prospectus.
(b) For each of the Fund's fiscal years that this Agreement remains in
force, SMC agrees that if total annual expenses of the Fund, exclusive
of interest and taxes, extraordinary expenses (such as litigation),
distribution fees paid under the Fund's Class A, Class B and Class C
Distribution Plans, but inclusive of SMC's compensation, exceed any
expense limitation imposed by state securities law or regulation in
any state in which shares of the Fund are then qualified for sale, as
such regulations may be amended from time to time, SMC will contribute
to the Fund such funds or waive such portion of its fee, adjusted
monthly, as may be requisite to insure that such annual expenses will
not exceed any such limitation. If this Agreement shall be effective
for only a portion of any fiscal year, then the maximum annual
expenses shall be prorated for such portion. Brokerage fees and
commissions incurred in connection with the purchase or sale of any
securities by the Fund shall not be deemed to be expenses within the
meaning of this paragraph (b).
4. Investment Advisory Duties.
(a) Investment Advice. SMC shall regularly provide the Fund with
investment research, advice and supervision, continuously furnish an
investment program, recommend which securities shall be purchased and
sold and what portion of the assets of the Fund shall be held
uninvested and arrange for the purchase of securities and other
investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund. All investment advice
furnished by SMC to the Fund under this Section 4 shall at all times
conform to any requirements
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imposed by the provisions of the Fund's Articles of Incorporation and
Bylaws, the 1940 Act, the Investment Advisors Act of 1940 and the
rules and regulations promulgated thereunder, and other applicable
provisions of law, and the terms of the registration statement of the
Fund under the Securities Act of 1933 ("1933 Act") and/or the 1940
Act, as may be applicable at the time, all as from time to time
amended. SMC shall advise and assist the officers or other agents of
the Fund in taking such steps as are necessary or appropriate to carry
out the decisions of the Board of Directors of the Fund (and any duly
appointed committee thereof) with regard to the foregoing matters and
the general account of the Fund's business.
(b) Subadvisers. Subject to the provisions of the 1940 Act and any
applicable exemptions thereto, SMC is authorized, but is under no
obligation, to enter into sub-advisory agreements (the "Sub-Advisory
Agreements") with one or more subadvisers (each a "Subadviser") to
provide investment advisory services to the Fund, or any series
thereof. Each Subadviser shall have investment discretion with respect
to the assets assigned to that Subadviser by SMC. Consistent with the
provisions of the 1940 Act and any applicable exemption thereto, SMC
may enter into Sub-Advisory Agreements or amend Sub-Advisory
Agreements without the approval of the shareholders of the Fund, or
series thereof as applicable.
(c) Portfolio Transactions and Brokerage.
(i) Transactions in portfolio securities shall be effected by SMC,
through brokers or otherwise (including affiliated brokers), in
the manner permitted in this Section 4 and in such manner as SMC
shall deem to be in the best interests of the Fund after
consideration is given to all relevant factors.
(ii) In reaching a judgment relative to the qualification of a broker
to obtain the best execution of a particular transaction, SMC may
take into account all relevant factors and circumstances,
including the size of any contemporaneous market in such
securities; the importance to the Fund of speed and efficiency of
execution; whether the particular transaction is part of a larger
intended change of portfolio position in the same securities; the
execution capabilities required by the circumstances of the
particular transaction; the capital required by the transaction;
the overall capital strength of the broker; the broker's apparent
knowledge of or familiarity with sources from or to whom such
securities may be purchased or sold; as well as the efficiency,
reliability and confidentiality with which the broker has handled
the execution of prior similar transactions.
(iii) Subject to any statements concerning the allocation of brokerage
contained in the Fund's Prospectus or Statement of Additional
Information, SMC is authorized to direct the execution of
portfolio transactions for the Fund to brokers who furnish
investment information or research service to SMC. Such
allocations shall be in such amounts and proportions as SMC may
determine. If the transaction is directed to a broker providing
brokerage and research services to SMC, the commission paid for
such transaction may be in excess of the commission another
broker would have charged for effecting that transaction, if SMC
shall have determined in good faith that the commission is
reasonable in relation to the value of the brokerage and
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research services provided, viewed in terms of either that
particular transaction or the overall responsibilities of SMC
with respect to all accounts as to which it now or hereafter
exercises investment discretion. For purposes of the immediately
preceding sentence, "providing brokerage and research services"
shall have the meaning generally given such terms or similar
terms under Section 28(e)(3) of the Securities Exchange Act of
1934, as amended.
(iv) In the selection of a broker for the execution of any transaction
not subject to fixed commission rates, SMC shall have no duty or
obligation to seek advance competitive bidding for the most
favorable negotiated commission rate to be applicable to such
transaction, or to select any broker solely on the basis of its
purported or "posted" commission rates.
(v) In connection with transactions on markets other than national or
regional securities exchanges, the Fund will deal directly with
the selling principal or market maker without incurring charges
for the services of a broker on its behalf unless, in the best
judgment of SMC, better price or execution can be obtained by
utilizing the services of a broker.
(d) Limitation of Liability of SMC with Respect to Rendering Investment
Advisory Services. So long as SMC shall give the Fund the benefit of
its best judgment and effort in rendering investment advisory services
hereunder, SMC shall not be liable for any errors of judgment or
mistake of law, or for any loss sustained by reason of the adoption of
any investment policy or the purchase, sale or retention of any
security on its recommendation, whether or not such recommendation
shall have been based upon its own investigation and research or upon
investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such
other individual, firm or corporation shall have been selected with
due care and in good faith. Nothing herein contained, however, shall
be construed to protect SMC against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Section 4.
As used in this Section 4, "SMC" shall include directors, officers and
employees of SMC, as well as SMC itself.
5. Other Activities Not Restricted. Nothing in this Agreement shall prevent
SMC or any officer thereof from acting as investment adviser for any other
person, firm or corporation, nor shall it in any way limit or restrict SMC
or any of its directors, officers, stockholders or employees from buying,
selling, or trading any securities for its own accounts or for the accounts
of others for whom it may be acting; provided, however, that SMC expressly
represents that it will undertake no activities which, in its judgment,
will conflict with the performance of its obligations to the Fund under
this Agreement. The
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Fund acknowledges that SMC acts as investment adviser to other investment
companies, and it expressly consents to SMC acting as such; provided,
however, that if in the opinion of SMC, particular securities are
consistent with the investment objectives of, and desirable purchases or
sales for the portfolios of one or more of such other investment companies
or series of such companies at approximately the same time, such purchases
or sales will be made on a proportionate basis if feasible, and if not
feasible, then on a rotating or other equitable basis.
6. Amendment. This Agreement may be amended at any time, without shareholder
approval to the extent permitted by applicable law, by a writing signed by
each of the parties hereto. Any change in the Fund's registration
statements or other documents of compliance or in the forms relating to any
plan, program or service offered by its current Prospectus which would
require a change in SMC's obligations hereunder shall be subject to SMC's
approval, which shall not be unreasonably withheld.
7. Duration and Termination of Agreement. This Agreement became effective on
May 1, 2002, and was amended and restated effective as of February 1, 2004
and again as of June 30, 2005. This Agreement shall continue in force until
January 1, 2006, and for successive 12-month periods thereafter, unless
terminated, provided that each such continuance is specifically approved at
least annually by (a) the vote of the majority of the entire Board of
Directors of the Fund, and the vote of the majority of those directors who
are not parties to this Agreement or interested persons (as such terms are
defined in the 0000 Xxx) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or (b) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in
the 1940 Act).
Upon this Agreement becoming effective, any previous Agreement between the
Fund and SMC providing for investment advisory services shall concurrently
terminate, except that such termination shall not affect any fees accrued
and guarantees of expenses with respect to any period prior to termination.
This Agreement may be terminated at any time without payment of any
penalty, by the Fund upon the vote of a majority of the Fund's Board of
Directors or, by a majority of the outstanding voting securities of the
Fund, or by SMC, in each case on sixty (60) days' written notice to the
other party. This Agreement shall automatically terminate in the event of
its assignment (as such term is defined in the 1940 Act).
8. Severability. If any clause or provision of this Agreement is determined to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, then such clause or provision shall be considered
severed herefrom and the remainder of this Agreement shall continue in full
force and effect.
9. Applicable Law. This Agreement shall be subject to and construed in
accordance with the laws of the State of Kansas.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereto duly authorized on this 28th day
of June, 2005.
SECURITY LARGE CAP VALUE FUND
By /s/ XXXXXXX X. XXXXX
-----------------------
Title: President
ATTEST:
/s/ XXX X. XXX
---------------------
Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ XXXXXXX X. XXXXX
------------------------
Title: President
ATTEST:
/s/ XXX X. XXX
---------------------
Secretary
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