INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made and entered into this 27th day of January, 2000, by and
between SBL FUND, a Kansas corporation (hereinafter referred to as the "Fund"),
and 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, 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 Fund shall pay the Management Company an annual fee
computed on a daily basis equal to .75 percent of the average daily
closing value of the net assets of Series A, Series B, Series E, Series
H, Series J, Series K, Series P, Series S, Series V, and Series Y of
the Fund, .50 percent of the average daily closing value of the net
assets of Series C of the Fund, 1.00 percent of the average daily
closing value of the net assets of Series D, Series M, Series N, Series
O and Series X of the Fund, and 1.10 percent of the average daily
closing value of the net assets of Series I 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 I - 2.25%
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 become effective
on January 27, 2000, provided that on or before that date it has been
approved by the holders of a majority of the outstanding voting securities
of each series of the Fund. This Agreement shall continue in force until
January 27, 2002, and 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, and 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, or (b) by the vote of the holders of a majority of the
outstanding voting securities of each series of the Fund (as defined in the
Investment Company Act of 1940). 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.
(SEAL)
SECURITY EQUITY FUND
By XXXX X. XXXXXXX
---------------------------------
Title: President
ATTEST:
XXX X. XXX
----------------------------------
Secretary
SECURITY MANAGEMENT COMPANY, LLC
By XXXXX X. XXXXXXX
---------------------------------
Title: President
ATTEST:
XXX X. XXX
----------------------------------
Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, SBL Fund (the "Fund") and Security Management Company, LLC (the
"Management Company") are parties to an Investment Advisory Contract dated
January 27, 2000, (the "Advisory Contract"), under which the Management Company
agrees to provide investment research, advice and supervision and business
management services to the Fund in return for the compensation specified in the
Advisory Contract;
WHEREAS, on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its common stock in five new series designated as Series G, Series
L, Series Q, Series T and Series W;
WHEREAS, on February 4, 2000, the Board of Directors of the Fund approved the
amendment of the Advisory Contract to provide that the Management Company would
provide investment advisory and business management services to Series G, Series
L, Series Q, Series T and Series W of the Fund under the terms and conditions of
the Advisory Contract; and
WHEREAS, this amendment to the Advisory Contract is subject to the approval of
the initial shareholder of Series G, Series L, Series Q, Series T and Series W;
NOW, THEREFORE BE IT RESOLVED, that the Fund and the Management Company hereby
amend the Advisory Contract, dated January 27, 2000, as follows, effective May
1, 2000:
Paragraph 5(a) shall be deleted in its entirety and replaced with the following
new paragraph 5(a):
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 Fund shall pay the Management Company an annual fee computed on a
daily basis equal to .50 percent of the average daily closing value of the net
assets of Series C of the Fund, .75 percent of the average daily closing value
of the net assets of Series A, Series B, Series E, Series H, Series J, Series K,
Series P, Series S, 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 G, Series L,
Series M, Series N, Series O, Series Q, Series T, Series W and Series X of the
Fund, and 1.10 percent of the average daily closing value of the net assets of
Series I 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.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 1st day of May, 2000.
SECURITY EQUITY FUND
By XXXX X. XXXXXXX
---------------------------------
Xxxx X. Xxxxxxx, President
ATTEST:
XXX X. XXX
----------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By XXXXX X. XXXXXXX
---------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
XXX X. XXX
----------------------------------
Xxx X. Xxx, Secretary
