CONSULTING AND ANALYTICAL RESEARCH AGREEMENT
AGREEMENT, made as of the 1st day of May, 1995, between Xxxxxxxxx
Quantitative Advisors, Inc. ("Investment Analytics Provider" or "IPA") and
(Security Management Company)("Adviser").
WHEREAS, Xxxxxxxxx Quantitative Advisors, Inc., is a wholly owned
subsidiary of Xxxxxxxxx Worldwide, Inc., which in turn is a wholly owned
subsidiary of Franklin Resources, Inc.;
WHEREAS, The Investment Analytics Provider is a technology based investment
advisory firm which specializes in structured investment strategies;
WHEREAS, the Adviser 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;
WHEREAS, the Adviser is the investment adviser for the Security Equity Fund
(the "Fund") and provides investment advisory services to the Fund on the terms
and conditions set forth in an investment advisory contract;
WHEREAS, the Fund is authorized to issue shares in separate series, with
each series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Adviser's responsibilities with respect to the Asset
Allocation Series of the Fund (the "Series") includes determining the sectors of
the domestic and international economy in which to invest the Series' assets;
WHEREAS, the Adviser desires to retain the services of Investment Analytics
Provider to provide certain consulting and analytical research services to the
Adviser with respect to its responsibilities to the Series.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
Investment Analytics Provider and the Adviser agree as follows:
1. The Investment Analytics Provider, agrees to provide the Adviser with
research and data on domestic and international equity securities
("Turn-Key Portfolio Plan") consistent with the investment policies
set forth in the prospectus and statement of additional information of
the Fund. The Adviser, or its designee, will identify for IPA (i) the
Sectors of the domestic equity market for which it seeks research and
(ii) the countries in the international equity market for which it
seeks research.
With respect to each particular sector or country identified by the
Adviser or its designee, IPA will (i) determine which equity
securities shall be represented in the Series' portfolio and regularly
report thereon to the Fund's Board of Directors and the Adviser;
(ii)
formulate and implement continuing programs for the purchase and sale
of such equity securities; (iii) continuously review the Series'
equity security holdings and the investment program and the investment
policies of the Series; and (iv) take, on behalf of the Series, all
actions which appear necessary to carry into effect such purchase and
sale programs, including the placement of orders for the purchase and
sale of equity securities for the Series. IPA shall send the Adviser a
daily list of all recommended purchases and sales for the Series
2. With respect to the recommendations made by IPA, IPA is hereby
authorized to select broker/dealers for execution of the trades and to
negotiate brokerage commissions in connection therewith. IPA's primary
consideration in effecting a security transaction will be execution at
the most favorable price. In selecting a broker/dealer to execute each
particular transaction, IPA will take the following into
consideration; the best net price available; the reliability,
integrity and financial condition of the broker/dealer; the size of
and difficulty in executing the order; and the value of the expected
contribution of the broker/dealer to the investment performance of the
Series on a continuing basis. Accordingly, the price to the Series in
any transaction may be less favorable than that available from another
broker/dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors may determine, IPA
shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement, or otherwise, solely by reason of its
having caused the Series to pay a broker for effective portfolio
investment transactions in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if
IPA determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either
that particular transaction or IPA's overall responsibilities with
respect to the Series and to its other clients as to which it
exercises investment discretion. IPA is further authorized to place
and/or to effect orders with such brokers and dealers who may provide
research or statistical material or other services to the Series or to
IPA. Such allocation shall be in such amounts and proportions as IPA
shall determine and IPA will report on said allocations regularly to
the Board of Directors of the Fund and the Adviser indicating the
broker to whom such allocations have been made and the basis therefor.
Notwithstanding the foregoing, IPA will execute all portfolio
transactions on behalf of the Series in accordance with the Series'
brokerage policies as set forth in its registrations statement, as
amended from time to time (a copy of which shall be provided by the
Adviser to IPA, including any amendments thereto).
3. As compensation for the services rendered to the Adviser, the Adviser
agrees to pay IPA a Turn-Key portfolio research fee of .30%, on an
annual basis of the first $50 million of the Series average daily net
equity securities assets, and .25%, on an annual basis of the Series
average daily net equity securities assets in excess of $50 million.
Such fee shall be calculated daily and payable monthly.
4. It is understood that the services provided by the Investment
Analytics Provider are not to be deemed exclusive and nothing in this
Agreement shall preclude the Investment Analytics Provider from
providing similar services to banking institutions, investment
companies, insurance companies and other clients, including clients
which may invest in the same type of securities as the Fund, so long
as its services under this Agreement are not impaired thereby.
Nothing in this Agreement shall be deemed to impose upon IPA any
obligation to purchase or sell for the Series' account any security or
related instrument which IPA may purchase for itself for its own
accounts or the account of any other client, if in the sole discretion
of IPA such transaction or investment appears unsuitable,
unpracticable or undesirable, or is inconsistent with the policies
referred to in Section 2 above.
5. During the term of this Agreement, the Investment Analytics Provider
will pay all expenses incurred by it, its staff and their activities,
in connection with the services to be provided by it under this
Agreement.
6. Nothing herein shall be construed as constituting the Investment
Analytics Provider or the Adviser as agent of the other.
7. During the term of this Agreement, the Adviser (or any of its
subsidiaries or affiliates) shall be entitled to use the Xxxxxxxxx
Quantitative Advisors, Inc., name in all prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Fund.
8. IPA represents and warrants to the Adviser that (i) it is a validly
existing corporation under the laws of the State of Delaware; (ii) no
provision of any contract, agreement or understanding to which IPA, or
any of its subsidiaries or affiliates is a party, prevents it from
providing the services contemplated by this Agreement; (iii) it has
full power and authority to enter into and perform the services
contemplated by this Agreement; and (iv) it will meet (and will
continue to meet for the duration of this Agreement) all applicable
federal or state requirements, or the applicable requirements of any
self regulatory organization, necessary to be met in order to perform
the services contemplated by this Agreement.
The Adviser represents and warrants to IPA that (i) it is a validly
existing corporation under the laws of the State of Kansas; (ii) no
provision of any contract, agreement or understanding to which the
Adviser, or any of its subsidiaries or affiliates is a party, prevents
it from providing the services contemplated by this Agreement; (iii)
it has full power and authority (including authorization from the
Fund) to enter into and perform the services contemplated by this
Agreement; and (iv) it will meet (and will continue to meet for the
duration of this Agreement) all applicable federal or state
requirements, or the applicable requirements of any self regulatory
organization, necessary to be met in order to perform the services
contemplated by this Agreement.
9. IPA 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. IPA 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.
10. This Agreement shall become effective on May 1, 1995, and shall
continue in effect for one year from that date. If not sooner
terminated, this Agreement shall continue in effect for successive
periods of 12 months each thereafter, provided that each such renewal
shall be specifically approved annually by the vote of a majority of
the Fund's Board of Directors who are not parties to this Agreement or
"interested persons" as defined in the 1940 Act of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and either the vote of (a) a majority of the outstanding
voting securities of the Fund, as defined in the 1940 Act, or (b) a
majority of the Fund's Board of Directors as a whole.
11. Notwithstanding the foregoing, this Agreement may be terminated by
either party at any time, without the payment of any penalty, on sixty
(60) days' written notice to the other party. In addition, this
Agreement may be terminated by the Fund on sixty (60) days' written
notice to the Investment Analytics Provider, provided that such
termination by the Fund is approved by the vote of a majority of the
Fund's Board of Directors in office at the time or by vote of a
majority of the outstanding voting securities of the Fund, as defined
in the 1940 Act. This Agreement shall automatically terminate in the
event that the investment advisory contracts between the Advisers and
the Fund is terminated, assigned or not renewed.
12. This Agreement will terminate automatically in the event of its
assignment (as that term is defined in the 1940 Act).
13. This Agreement shall be construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws.
14. IPA may rely on information reasonably believed by it to be accurate
and reliable. The Investment Analytics Provider nor its officers,
directors, employees or agents shall be subject to any liability for
an error of judgment, mistake of law, or any loss arising out of any
investment or other act or omission in the performance by the
Investment Analytics Provider of its duties under this Agreement or
for any loss or damage resulting from the imposition by any government
or exchange control restrictions which might affect the liquidity of
the Fund's assets, or from acts or omissions of custodians or
securities depositories, or from any war or political act of any
foreign government to which such assets might be exposed, except for
any liability, loss or damage resulting from willful misfeasance, bad
faith or gross negligence on the part or by reason of IPA's reckless
disregard of its duties under this Agreement.
15. The Adviser and IPA each agree to indemnify the other against any
claim, against loss, or liability to, such other party (including
reasonable attorney's fees) arising out of any action on the part of
the indemnifying party which constitutes willful misfeasance, bad
faith, or gross negligence.
16. Notice required to be given under this Agreement by either party shall
be in writing by personal delivery or certified mail, return receipt
requested or by confirmed telecopy. Notice shall be to the addresses
set forth on the signature page hereto.
17. This Agreement sets forth the entire Agreement between the parties
with respect to the subject matter hereof and supersedes all prior
agreements between the parties concerning such subject matter. This
Agreement may not be amended except by a writing signed by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized corporate officers as
of the day and year first above written.
XXXXXXXXX QUANTITATIVE ADVISORS, INC.
By Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X Xxxxxx
President
Address: 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attest:
Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Secretary
SECURITY MANAGEMENT COMPANY
By Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
Address: 000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attest:
Xxx X. Xxx
------------------------------
Xxx X. Xxx
Secretary
