INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made this 1st day of November, 1999, between SECURITY CASH 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 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.
(b) Subject to the provisions of the Investment Company Act of 1940 (the
"1940 Act") 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 sub-advisers (each a "Sub-adviser") to provide investment advisory
services to any Series of the Fund. Each Sub-adviser shall have
investment discretion with respect to the assets of the Series assigned
to that Sub-adviser by the Management Company. The Management Company
shall not be responsible or liable with respect to any investment
decision made by a Sub-adviser, whether such decision be to purchase,
sell or hold such investment. Consistent with the provisions of the
1940 Act and any applicable exemption thereto, the Investment Manager
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, 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 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 no 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 the Management Company
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 November 1, 1999, 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. This agreement shall continue in force until November 1, 2001
and for successive 12-month periods thereafter, unless terminated, provided
that each 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 CASH 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
