INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made this 23rd day of June, 1980, between SECURITY CASH FUND,
INC. a Kansas corporation (hereinafter referred to as the "Fund"), and SECURITY
MANAGEMENT COMPANY, INC. a Kansas corporation (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. The Management Company shall regularly
provide each Series of the Fund with investment research, advice and
supervision, continuously furnish an investment program and recommend
that 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 each 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.
3. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) Transactions in portfolio securities shall be effected by the
Management Company, through brokers or otherwise, 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 in 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.
(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 portfolio transactions for
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 term or similar term 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 in 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 non-recurring 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 herein, for each of the years this agreement
is in effect, the Fund shall pay the Management Company an annual
fee equal to .5 of 1% of the average daily closing value of the
net assets of the Fund computed on a daily basis. 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 the Fund shall be computed in the same manner on each
business day as of the normal close of the New York Stock Exchange
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 during the term of this
agreement, the Management Company guarantees that the aggregate
annual expenses of every character, exclusive of interest and
taxes and extraordinary expenses (such as litigation) (but
inclusive of the Management Company's compensation) incurred by
the Fund shall not exceed an amount equal to 1% of the average net
assets of the Fund, such net assets to be calculated on a daily
basis, and the Management
Company agrees, on a monthly basis, to contribute to the Fund such
funds or to waive such portion of its fee as may be necessary to
insure that such aggregate annual expenses will not exceed said
amount. If this agreement shall be effective for only a portion of
one of the Fund's 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 the Fund shall not be deemed to be expenses within the meaning
of this paragraph (b).
6. MANAGEMENT COMPANY NOT TO RECEIVE COMMISSIONS. In connection with the
purchase or sale of portfolio securities for the account of the Fund,
neither the Management Company nor any officer or director of the
Management Company shall act as principal or receive any compensation
from the Fund other than its compensation as provided for in Section 5
above. If the Management Company, or any "affiliated person" (as defined
in the Investment Company Act of 1940) receives any cash credits,
commissions or tender fees from any person in connection with
transactions in portfolio securities of the Fund (including but not
limited to the tender or delivery of any securities held in such
portfolio), the Management Company shall immediately pay such amount to
the Fund in cash or as a credit against any then earned but unpaid
management fees due by the Fund to the Management Company.
7. 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 contract owners 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 agreement. As used in this Section 7, "Management
Company" shall include directors, officers and employees of the
Management Company, as well as that corporation itself.
8. 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, and 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.
9. DURATION AND TERMINATION OF AGREEMENT. This agreement shall become
effective on the date hereof, provided that on or before that date it has
been approved by a majority of the holders of the outstanding voting
securities of the Fund, and shall remain in force until the first regular
or special meeting of the Fund stockholders following the date shares of
capital stock of the Fund are first sold to Security Benefit Life
Insurance Company. This agreement shall be presented to the Fund's
stockholders at such meeting for their approval and, if so approved,
shall continue in force from year to year thereafter, but only if such
continuance is specifically approved at least annually by the vote of a
majority of the board of directors of the Fund (including approval by the
vote of a majority of the directors who are not parties to this agreement
or interested persons of any such party) cast in person at a regular or
special meeting of the board of directors called for the purpose of
voting upon such approval, or by the vote of the holders of a majority of
the outstanding voting securities of
the Fund and by such a vote of the board of directors. The words
"interested persons" as used herein shall have the meaning set forth in
Section 2(a)(19) of the Investment Company Act of 1940.
This agreement may be terminated at any time, without the 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 the Fund,
or by the Management Company, upon sixty (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.
SECURITY INCOME FUND
(Corporate Seal) By: Xxxxxxx X. Xxxxxxxx
----------------------------------------
President
ATTEST:
Xxxxx X. Xxxxx
---------------------------
Secretary
SECURITY MANAGEMENT COMPANY, LLC
(Corporate Seal) By: Xxxxxxx X. Xxxxxxxx
--------------------------------------
President
ATTEST:
Xxxxx X. Xxxxx
---------------------------
Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Cash Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Investment Advisory Contract, dated June
23, 1980, as amended (the "Agreement"), under which the Management Company
agrees to provide investment research and advice to the Fund in return for the
compensation specified in the Agreement;
WHEREAS, on October 31, 1996, the operations of the Management Company, a Kansas
corporation, will be transferred to Security Management Company, LLC ("SMC,
LLC"), a Kansas limited liability company; and
WHEREAS, SMC, LLC desires to assume all rights, duties and obligations of the
Management Company under the Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties hereto agree as follows:
1. The Agreement is hereby amended to substitute SMC, LLC for Security
Management Company, with the same effect as though SMC, LLC were the
originally named management company, effective November 1, 1996;
2. SMC, LLC agrees to assume the rights, duties and obligations of Security
Management Company pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 1st day of November 1996.
SECURITY CASH FUND SECURITY MANAGEMENT COMPANY, LLC
By: Xxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxx
--------------------------------- -----------------------------------
Xxxx X. Xxxxxxx, President Xxxxx X. Xxxxxxx, President
ATTEST: ATTEST:
Xxx X. Xxx Xxx X. Xxx
-------------------------------- ------------------------------------
Xxx X. Xxx, Secretary Xxx X. Xxx, Secretary
