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 and advice to the Fund in return for the
compensation specified in the Advisory Contract; and
WHEREAS, the Board of Directors of the Fund desires to amend the Advisory
Contract to more precisely describe calculation of compensation paid by Series Z
to the Management Company; and
WHEREAS, on November 18, 2005, the Board of Directors of the Fund approved
amendment of the Advisory Contract to reflect a change in the description of
compensation to the Management Company for providing investment advisory
services to the Fund's Series Z (Alpha Opportunity);
NOW, THEREFORE, the Advisory Contract is hereby amended, as follows, effective
November 18, 2005:
Paragraph 5(c) shall be deleted in its entirety and replaced with the following
new paragraphs 5(c) and 5(d):
5. (c) TOTAL FEE. (1) During the first 12 months of operations of
Series Z, Series Z shall pay the Management Company an investment
advisory fee equal to 2.00% of average daily net assets, accrued
daily and paid monthly (without any adjustment of the type discussed
below).
(2) Thereafter, as compensation for the investment advisory services
to be rendered by the Management Company to Series Z, Series Z shall
pay the Management Company at the end of each calendar month, an
advisory fee (the "Total Fee") composed of: (i) a base fee equal to
2.00% (on an annual basis), of the Series Z's average daily net
assets over the month (the "Base Fee"); and (ii) a performance
adjustment to the Base Fee as further explained in (d) below (the
"Performance Adjustment"). The Total Fee shall be accrued daily and
paid monthly, with such periodic adjustments as deemed appropriate
in accordance with applicable law and accounting standards.
(3) If the Management Company shall serve for less than the whole of
any calendar month, the Total Fee mentioned above shall be
calculated on a pro rata basis for the portion of the month for
which the Management Company has served as adviser.
(d) CALCULATION OF THE PERFORMANCE ADJUSTMENT. Each month, the
rate of any positive Performance Adjustment shall be equal to 0.75%
multiplied by the ratio of the number of percentage points by which
the investment performance of Series Z (the "Investment
Performance") exceeds the investment record (the "Investment
Record") of the Standard & Poor's 500 Composite Stock Price Index
(the "Index") over the twelve-month period ending on the last day of
that month (the "Measuring Period") as compared to 15 percentage
points. For example, if the Investment Performance of Series Z was
6.6% and the Investment Record of the Index was 0%, the ratio would
be 6.6 to 15, or 0.44, times 0.75%, for an upward Performance
Adjustment rate of 0.33%.
Similarly, the rate of any negative Performance Adjustment shall be
equal to 0.75% multiplied by the ratio of the number of percentage
points by which the Investment Performance of the Series is less
than the Investment Record of the Index over the Measuring Period as
compared to 15 percentage points. For example, if the Investment
Performance of the Series was -10.0% and the Investment Record of
the Index was 0%, the ratio would be 10 to 15, or 0.667, times
0.75%, for a downward Performance Adjustment rate of 0.50%.
After the rate of the Performance Adjustment has been determined as
described above, the Management Company will determine the dollar
amount of such Performance Adjustment by multiplying the Performance
Adjustment rate by the average daily net assets of the Series during
the Measuring Period and dividing that number by the number of days
in the Measuring Period and then multiplying that amount by the
number of days in the current month. The dollar amount of the Total
Fee then equals the dollar amount of the Base Fee as adjusted by the
dollar amount of the Performance Adjustment.
Each month, the maximum or minimum Performance Adjustment shall be
equal to 1/12th of 0.75% of the average daily net assets of Series Z
during the Measuring Period (subject to minor accounting adjustments
to account for the specific number of days in the month) when the
Investment Performance of Series Z is superior or inferior to the
Investment Record of the Index by 15 percentage points or more over
the Measuring Period. The maximum Total Fee payable to the
Management Company in any month is then equal to 1/12th of 2.00% of
Series Z's average daily net assets over that month (i.e., the Base
Fee), plus 1/12th of 0.75% of Series Z's average daily net assets
over the Measuring Period (i.e., the maximum positive Performance
Adjustment); and the minimum Total Fee payable to the Management
Company is equal to 1/12th of 2.00% of Series Z's average daily net
assets over that month (i.e., the Base Fee), less 1/12th of 0.75% of
Series Z's average daily net assets over the Measuring Period (i.e.,
the maximum negative Performance Adjustment) (subject to accounting
adjustments to account for the specific number of days in the
month).
The Investment Performance of Series Z will be determined in
accordance with Rule 205-1(a) under the Investment Advisers Act of
1940 ("Advisers Act"). As such, it shall be equal to the sum of: (i)
the change in the net asset value of Series Z shares during the
Measuring Period, (ii) the value of all cash distributions made by
Series Z to holders of its shares accumulated to the end of the
Measuring Period, and (iii) the value of capital gains taxes per
share, if any, paid or payable on undistributed
2
realized long-term gains accumulated to the end of the Measuring
Period, and will be expressed as a percentage of the net asset value
per share of the Series Z shares at the beginning of the Measuring
Period (for this purpose, the value of distributions per share of
realized capital gains, of dividends per share paid from investment
income and of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains are treated as
reinvested in Series Z shares at the net asset value per share in
effect at the close of business on the record date for the payment
of such distributions and dividends and the date on which provision
is made for such taxes, after giving effect to such distributions,
dividends and taxes).
The Investment Record of the Index will be determined in accordance
with Rule 205-1(b) under the Advisers Act. As such, it shall be
equal to the sum of: (i) the change in the level of the Index during
the Measuring Period, and (ii) the value, computed consistently with
the Index, of cash distributions made by companies whose securities
comprise the Index accumulated to the end of the Measuring Period,
and will be expressed as a percentage of the Index at the beginning
of the Measuring Period.
It is the intent of the parties to this Agreement that the Total Fee
arrangement comply with Section 205 of the Advisers Act, Rules 205-1
and 205-2 thereunder, as each may be amended from time to time (the
"Fulcrum Fee Provisions"). Any question in interpreting and
implementing the Total Fee arrangement shall be answered in
accordance with the Fulcrum Fee Provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 18th day of November, 2005.
SBL FUND
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
3
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
Januay 27, 2000 (the "Advisory Contract"), under which the Management Company
agrees to provide investment research and advice to the Fund in return for the
compensation specified in the Advisory Contract; and
WHEREAS, on April 15, 2005, the Board of Directors of the Fund approved
amendment of the Advisory Contract to reflect a change in compensation to the
Management Company for providing investment advisory services to the Fund's
Series B (Large Cap Value);
NOW, THEREFORE, the Advisory Contract is hereby amended, as follows, effective
June 30,2005:
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 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, 0.75 percent of the average daily closing
value of the net assets of Series A, Series E, Series H, Series J,
Series P, Series S, Series V, and Series Y of the Fund, and 1.00
percent of the average daily closing value of the net assets of
Series D, Series G, Series N, Series O, Series Q, Series W and
Series X of the Fund. Such fee shall be adjusted and payable
monthly. As compensation for the investment advisory services to be
rendered to Series Z, Series Z shall pay the Management Company a
fee as described in paragraphs 5(b) and 5(c) below. 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 28th day of June, 2005.
SBL FUND
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
2
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 and advice to the Fund in return for the
compensation specified in the Advisory Contract;
WHEREAS, on November 8, 2002, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as Series Z, Alpha
Opportunity Series; and
WHEREAS, on May 2, 2003, 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 Z, Alpha
Opportunity Series, of the Fund under the terms and conditions of the Advisory
Contract.
NOW, THEREFORE, IT IS BY THE PARTIES HERETO AGREED that the Advisory Contract is
hereby amended, as follows, effective June 1, 2003:
Paragraph 5(a) shall be deleted in its entirety and replaced with the following
new paragraphs 5(a), 5(b) and 5(c) and current paragraphs 5(b) and (c) shall be
redesignated as paragraphs 5(d) and 5(e):
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, 0.75
percent of the average daily closing value of the net assets of
Series A, Series B, Series E, Series H, Series J, 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
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. As compensation for the investment advisory
services to be rendered to Series Z, Series Z shall pay the
Management Company a fee as described in paragraphs 5(b) and 5(c)
below. 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) BASE FEE. As compensation for the investment advisory services to be
rendered by the Management Company to Series Z, Series Z shall pay
the Management Company at the end of each calendar month, an
advisory fee (the "Base Fee") equal to 2.00%, on an annual basis, of
Series Z's average daily net assets. The Base Fee shall be computed
daily and paid monthly. If the Management Company shall serve for
less than the whole of any calendar month, the Base Fee shall be
calculated on a pro rata basis for the portion of the month for
which it has served as adviser. During the first 12 months of
operations, the fee will be charged at the Base Fee of 2.00% without
any adjustment as discussed in paragraph (c) below.
(c) BASE FEE ADJUSTMENT. Beginning in the 13th month of operations, the
Base Fee of 2.00% will be adjusted upward or downward on a monthly
basis based upon the performance of Series Z relative to the
performance of the S&P 500 Index (the "Index"). The maximum or
minimum adjustment is 0.75% annually. Therefore, the maximum annual
fee payable to the Management Company shall be 2.75% of Series Z's
average daily net assets, and the minimum annual fee shall be 1.25%
of Series Z's average daily net assets. The pro rata adjustment
upward or downward will be determined based upon the performance of
the shares of Series Z in excess of; or below, that of the Index.
The amount of any upward adjustment in the Base Fee shall be equal
to 0.75% multiplied by the ratio of the number of percentage points
by which the performance of Series Z exceeds the performance of the
Index as compared to 15 percentage points. For example, if the
performance of Series Z was 6.6% and that of the Index was 0%, the
ratio would be 6.6 to 15, or 44%, times 0.75%, for an upward
adjustment of 0.33%. The amount of any downward adjustment in the
Base Fee will be equal to 0.75% multiplied by the ratio of the
number of percentage points by which the performance of Series Z is
less than the performance of the Index as compared to 15 percentage
points. For example, if the performance of Series Z was -10.0% and
that of the Index 0%, the ratio would be 10 to 15, or 66.66%, times
0.75%, for a downward adjustment of 0.50%.
In determining the Base Fee adjustment, if any, applicable during
any month, the Management Company will compare the investment
performance of the shares of Series Z for the twelve-month period
ending on the last day of the prior month (the "Performance Period")
to the investment record of the Index during the Performance Period.
The investment performance of Series Z will be determined by adding
together (i) the change in the net asset value of Series Z shares
during the Performance Period, (ii) the value of cash distributions
made by Series Z to holders of its shares to the end of the
Performance Period, and (iii) the value of capital gains per share,
if any, paid on undistributed realized long-term gains accumulated
to the end of the Performance Period, and will be expressed as a
percentage of the net asset value per share of Series Z shares at
the beginning of the Performance Period. The investment performance
of the Index will be determined by adding together (i) the change in
the level of the Index during the Performance Period, and (ii) the
value, computed consistently with the Index, of cash distributions
made by companies whose securities comprise the Index accumulated to
the end of the Performance
Period, and will be expressed as a percentage of the Index at the
beginning of the Performance Period.
After it determines any Base Fee adjustment, the Management Company
will determine the dollar amount of additional fees or fee
reductions to be accrued for each day of a month by multiplying the
Base Fee adjustment by the average daily net assets of the shares of
Series Z during the Performance Period and dividing that number by
the number of days in the Performance Period and then multiplying
that amount by the number of days in the current month. The Base
Fee, as adjusted, is accrued daily and paid monthly and shall be
prorated in any month for which this Agreement is not in effect for
the entire month.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 30th day of May, 2003.
SBL FUND
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
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 I, 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.
SBL FUND
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
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 Section2
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.
1
(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
2
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
3
Series D, Series M, Series N, Series 0 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).
(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 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
4
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
5
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)
SBL FUND
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Title: President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: President
ATTEST:
/s/ Xxx X. Xxx
------------------------------------
Xxx X. Xxx, Secretary
6
