INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made and entered into this 27th day of January, 2000, and
amended and restated effective August [18,] 2008, by and between SBL FUND, a
Kansas corporation (hereinafter referred to as the "Fund"), and SECURITY
INVESTORS, LLC (formerly, Security Management Company, LLC), a Kansas limited
liability company (hereinafter referred to as the "Management Company").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end, management investment
company registered under the Federal Investment Company Act of 1940; and
WHEREAS, on May 9, 2008, the Board of Directors of the Fund authorized changes
to the Management Company's compensation in connection with Series O and Series
Z;
WHEREAS, the parties hereto wish to amend the Agreement to reflect the changes
authorized by the Board of Directors of the Fund;
WHEREAS, the Management Company 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 hereto agree as follows:
1. EMPLOYMENT OF MANAGEMENT COMPANY. The Fund hereby employs the
Management Company to act as investment adviser to the Fund with
respect to the investment of its assets and to supervise and arrange
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
herein set forth. The Management Company hereby accepts such employment
and agrees to perform the services required by this Agreement for the
compensation herein provided.
2. INVESTMENT ADVISORY DUTIES.
(a) The Management Company shall regularly provide the Fund with
investment research, advice and supervision, continuously
furnish an investment program and recommend what securities
shall be purchased and sold and what portion of the assets of
the Fund shall be held uninvested and shall 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 the
Management Company to the Fund under this Section 2 shall at
all times conform to any requirements imposed by the
provisions of the Fund's Articles of Incorporation and Bylaws,
the Investment Company Act of 1940, the Investment Advisors
Act of 1940 and the rules and regulations promulgated
thereunder, any other applicable provisions of law, and the
terms of the registration statements of
the Fund under the Securities Act of 1933 and the Investment
Company Act of 1940, all as from time to time amended. The
Management Company 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) in regard to the foregoing matters and the general
conduct of the Fund's business.
(b) Subject to the provisions of the Investment Company Act of
1940 and any applicable exemptions thereto, the Management
Company 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 any series of the Fund. Each
Subadviser shall have investment discretion with respect to
the assets of the series assigned to that Subadviser by the
Management Company. Consistent with the provisions of the
Investment Company Act of 1940 and any applicable exemption
thereto, the Management Company may enter into Sub-Advisory
Agreements or amend Sub-Advisory Agreements without the
approval of the shareholders of the effected series.
3. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) Transactions in portfolio securities shall be effected by the
Management Company, through brokers or otherwise (including
affiliated brokers), in the manner permitted in this Section 3
and in such manner as the Management Company shall deem to be
in the best interests of the Fund after consideration is given
to all relevant factors.
(b) In reaching a judgment relative to the qualification of a
broker to obtain the best execution of a particular
transaction, the Management Company 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 to be 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.
(c) Subject to any statements concerning the allocation of
brokerage contained in the Fund's prospectus, the Management
Company is authorized to direct the execution of the portfolio
transactions of the Fund to brokers who furnish investment
information or research services to the Management Company.
Such allocation shall be in such amounts and proportions as
the Management Company may determine. If a transaction is
directed to a broker supplying brokerage and research services
to the Management Company, the commission paid for such
transaction may be in excess of the commission another broker
would have charged for effecting that transaction, provided
that the Management Company shall have
determined in good faith that the commission is reasonable in
relation to the value of the brokerage and research services
provided, viewed in terms of either that particular
transaction or the overall responsibilities of the Management
Company 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.
(d) In the selection of a broker for the execution of any
transaction not subject to fixed commission rates, the
Management Company 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.
(e) 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 the Management Company, better price or
execution can be obtained by utilizing the services of a
broker.
4. ALLOCATION OF EXPENSES AND CHARGES. The Management Company shall
provide investment advisory, statistical and research facilities and
all clerical services relating to research, statistical and investment
work, and shall provide for the compilation and maintenance of such
records relating to these functions as shall be required under
applicable law and the rules and regulations of the Securities and
Exchange Commission. Other than as specifically indicated in the
preceding sentence, the Management Company shall not be required to pay
any expenses of the Fund, and in particular, but without limiting the
generality of the foregoing, the Management Company shall not be
required to pay office rental or general administrative expenses; board
of directors' fees; legal, auditing and accounting expenses; broker's
commissions; taxes and governmental fees; membership dues; fees of
custodian, transfer agent, registrar and dividend disbursing agent (if
any); expenses (including clerical expenses) of issue, sale or
redemption of shares of the Fund's capital stock; costs and expenses in
connection with the registration of such capital stock under the
Securities Act of 1933 and qualification of the Fund's capital stock
under the "Blue Sky" laws of the states where such stock is offered;
costs and expenses in connection with the registration of the Fund
under the Investment Company Act of 1940 and all periodic and other
reports required thereunder; expenses of preparing and distributing
reports, proxy statements, notices and distributions to stockholders;
costs of stationery; expenses of printing prospectuses; costs of
stockholder and other meetings; and such nonrecurring expenses as may
arise including litigation affecting the Fund and the legal obligations
the Fund may have to indemnify its officers and the members of its
board of directors.
5. COMPENSATION OF MANAGEMENT COMPANY.
(a) As compensation for the services to be rendered by the
Management Company as provided for herein, for each of the
years this Agreement is in effect, the Series shall pay the
Management Company an annual fee computed on a daily basis
equal to 0.50 percent of the average daily closing value of
the net assets of Series C of the Fund, 0.65 percent of the
average daily closing value of the net assets of Series B of
the Fund, 0.70 percent of the average daily closing value of
the net assets of Series O, 0.75 percent of the average daily
closing value of the net assets of Series A, Series E, Series
H, Series J, Series P, Series V, and Series Y of the Fund,
1.00 percent of the average daily closing value of the net
assets of Series D, Series N, Series Q, and Series X and 1.25
percent of the average daily closing value of the net assets
of Series Z of the Fund. Such fee shall be adjusted and
payable monthly. If this Agreement shall be effective for only
a portion of a year, then the Management Company's
compensation for said year shall be prorated for such portion.
For purposes of this Section 5, the value of the net assets of
each such Series 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 full fiscal years this Agreement
remains in force, the Management Company agrees that if total
annual expenses of each Series of the Fund, exclusive of
interest and taxes and extraordinary expenses (such as
litigation), but inclusive of the Management Company'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, the Management Company will
contribute to such Series such funds or to 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 contract shall be effective for only a portion of one
of the Series' fiscal years, 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 a Series shall not be deemed to be
expenses within the meaning of this paragraph (b).
(c) For each of the Fund's full fiscal years this Agreement
remains in force, the Management Company agrees that if total
annual expenses of each Series of the Fund identified below,
exclusive of interest, taxes, extraordinary expenses (such as
litigation), and brokerage fees and commissions, but inclusive
of the Management Company's compensation, exceeds the amount
set forth below (the "Expense Cap"), the Management Company
will contribute to such Series such funds or waive such
portion of its fee, adjusted monthly, as may be required to
insure that the total annual expenses of the Series will not
exceed the Expense Cap. If this Agreement shall be effective
for only a portion of a Series' fiscal year, then the maximum
annual expenses shall be prorated for such portion.
EXPENSE CAP
Series H - 1.75%
Series Y - 1.75%
6. LIMITATION OF LIABILITY OF MANAGEMENT COMPANY. So long as the
Management Company shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder, the Management Company
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 shall, however, be construed to protect the
Management Company 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 the Agreement.
As used in this Section 6, "Management Company" shall include
directors, officers and employees of the Management Company, as well as
the Management Company itself.
7. OTHER ACTIVITIES NOT RESTRICTED. Nothing in this Agreement shall
prevent the Management Company 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 the Management Company 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
the Management Company 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 Fund
acknowledges that the Management Company acts as investment adviser to
other investment companies, and it expressly consents to the Management
Company acting as such; provided, however, that if securities of one
issuer are purchased or sold, the purchase or sale of such securities
is consistent with the investment objectives of, and, in the opinion of
the Management Company, such securities are desirable purchases or
sales for the portfolios of the Fund and one or more of such other
investment 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.
8. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall continue in
force with respect to a Series for an initial term of up to two years,
and then for successive 12-month periods thereafter, unless terminated,
provided each such continuance is specifically approved at least
annually by (a) the vote of a majority of the entire Board of Directors
of the Fund, or by the vote of the holders of a majority of the
outstanding voting securities of each Series of the Fund (as defined in
the 0000 Xxx) and (b) the vote of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons (as
such terms are defined in the Investment Company Act of 1940) of any
such party cast in
person at a meeting of such directors called for the purpose of voting
upon such approval In the event a majority of the outstanding shares of
one series vote for continuance of the Agreement, it will be continued
for that series even though the Agreement is not approved by either a
majority of the outstanding shares of any other series or by a majority
of outstanding shares of the Fund. Upon this Agreement becoming
effective, any previous agreement between the Fund and the Management
Company providing for investment advisory and management services shall
concurrently terminate, except that such termination shall not affect
fees accrued and guarantees of expenses with respect to any period
prior to termination.
This Agreement may be terminated at any time as to any series of the Fund,
without payment of any penalty, by vote of the Board of Directors of the Fund or
by vote of the holders of a majority of the outstanding voting securities of
that series of the Fund, or by the Management Company, in each case upon 60
days' written notice to the other party.
This Agreement shall automatically terminate in the event of its "assignment"
(as defined in the Investment Company Act of 1940).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereto duly authorized on the day, month
and year first above written.
SBL FUND
By
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Title: President
ATTEST:
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Xxx X. Xxx, Secretary
SECURITY INVESTORS, LLC
By
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Title: President
ATTEST:
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Xxx X. Xxx, Secretary
