DISTRIBUTION AGREEMENT
THIS AGREEMENT, dated as of February 26, 2009, by and between SECURITY EQUITY
FUND, a Kansas corporation (hereinafter referred to as the "Fund"), and RYDEX
DISTRIBUTORS, INC., a Maryland corporation (hereinafter referred to as the
"Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end, management investment
company registered under the federal Investment Company Act of 1940 (the "1940
Act"); and
WHERAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, as amended; and
WHEREAS, the Distributor is willing to act as principal underwriter for the Fund
to offer for sale, sell and deliver after sale, shares of the Fund (hereinafter
referred to as the "Shares") on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
set forth, the parties hereto agree as follows:
1. Employment of Distributor. The Fund hereby employs the Distributor
to act as a principal underwriter for the Fund with respect to its shares and
hereby agrees that during the term of this Agreement, and any renewal or
extension hereof, or until any prior termination hereof, the Distributor shall
have the right to offer for sale and to distribute any and all of the Fund's
shares issued or to be issued by the Fund, in such classes as may be offered
from time to time, at the net asset value per Share, plus any applicable sales
charges in accordance with the current prospectus. The Distributor hereby
accepts such employment and agrees to act as the distributor of the Shares
issued or to be issued by the Fund during the period this Agreement is in effect
and agrees during such period to offer for sale such Shares as long as such
Shares remain available for sale, unless the Distributor is unable legally to
make such offer for sale as the result of any law or governmental regulation.
2. Offering Price and Commissions. Prior to the issuance of any Shares
by the Fund pursuant to any subscription tendered by or through the Distributor
and confirmed for sale to or through the Distributor, the Distributor shall pay
or cause to be paid to the custodian of the Fund in cash, an amount equal to the
net asset value of such Shares at the time of acceptance of each such
subscription and confirmation by the Fund of the sale of such Shares. All Shares
shall be sold to the public only at their public offering price at the time of
such sale, and the Fund shall receive not less than the full net asset value
thereof.
3. Allocation of Expenses and Charges. During the period this Agreement
is in effect, the Fund shall pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933 (the "1933 Act"),
including all expenses in connection with the preparation and printing of any
registration statements and prospectuses necessary for registration
thereunder but excluding any additional costs and expenses incurred in
furnishing the Distributor with prospectuses.
The Fund shall also pay all costs, expenses and fees incurred in connection with
the qualification of the Shares under the applicable Blue Sky laws of the states
in which the Shares are offered.
During the period this Agreement is in effect, the Distributor will pay or
reimburse the Fund for:
(a) All costs and expenses of printing and mailing prospectuses
(other than to existing shareholders) and confirmations, and
all costs and expenses of preparing, printing and mailing
advertising material, sales literature, circulars,
applications, and other materials used or to be used in
connection with the offering for sale and the sale of Shares;
and
(b) All clerical and administrative costs in processing the
applications for and in connection with the sale of Shares.
The Distributor agrees to submit to the Fund for its prior approval all
advertising material, sales literature, circulars and any other material which
the Distributor proposes to use in connection with the offering for sale of
Shares.
4. Redemption of Shares. The Distributor, as agent of and for the
account of the Fund, may redeem Shares of the Fund offered for resale to it at
the net asset value of such Shares (determined as provided in the Articles of
Incorporation or Bylaws) and not in excess of such maximum amounts as may be
fixed from time to time by an officer of the Fund. Whenever the officers of the
Fund deem it advisable for the protection of the shareholders of the Fund, they
may suspend or cancel such authority.
5. Sales Commissions. The Distributor shall be entitled to charge a
commission on each sale of Shares in the amount set forth in the prospectus of
the Fund, such commission to be an amount equal to the difference between the
net asset value and the offering price of the shares, as such offering price may
from time to time be determined by the board of directors of the Fund. All
shares of the Fund shall be sold to the public only at their public offering
price at the time of such sale, and the Fund shall receive not less than the
full net asset value thereof.
6. Compensation. For providing the services described in this
Agreement, the Distributor shall receive:
(a) distribution and service fees, if any, at the rate and
under the terms and conditions set forth in each distribution and/or shareholder
services plan applicable to the appropriate class of shares of each Fund, as
such plan may be amended from time to time, and subject to any further
limitations on such fees as the Board of Directors of the Fund may impose;
(b) front-end sales charges, if any, on purchases of Shares
of the Fund sold subject to such charges as described in the Fund's Registration
Statement and current prospectuses, as amended from time to time. The
Distributor, or brokers, dealers and other
financial institutions and intermediaries that have entered into
sub-distribution agreements with the Distributor, may collect the gross proceeds
derived from the sale of such Shares, remit the net asset value thereof to the
Fund upon receipt of the proceeds and retain the applicable sales charge; and
(c) contingent deferred sales charges ("CDSCs"), if any,
applied on redemptions of Shares subject to such charges on the terms and
subject to such waivers as are described in the Fund's Registration Statement
and current prospectuses, as amended from time to time, or as otherwise required
pursuant to applicable law.
The Distributor may reallow any or all of the distribution or service
fees, front-end sales charges and contingent deferred sales charges that it is
paid by the Fund to such brokers, dealers and other financial institutions and
intermediaries as the Distributor may from time to time determine.
7. Shareholder Service Fees. The Shareholder Service Fees paid by the
Distributor to securities dealers and other entities that have executed an
Agreement with the Distributor shall permit such payments only in accordance
with the provisions of this paragraph and shall have the approval of the
majority of the Board of Directors of the Fund including a majority of the
directors who are not interested persons of the Fund as required by the Rule.
The Distributor may pay to the other party to an Agreement a fee (a "Shareholder
Service Fee") for Shareholder Services provided by such other party. Such
quarterly fee shall be payable in arrears in an amount equal to such percentage
of the aggregate net asset value of the Series' Shares held by such other
party's customers or clients at the close of business each day as determined
from time to time by the Distributor. The Shareholder Services contemplated
hereby shall include fees for account maintenance and personal service to
shareholders, including, but not limited to, answering routine customer
inquiries regarding the Fund, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several special
investment plans offered in connection with the purchase of the Shares if the
Fund, assisting in the establishment and maintenance of customer accounts and
records and in the processing of purchase and redemption transactions, investing
dividends and capital gains distributions automatically in shares, providing
sub-administration and/or sub-transfer agency services for the benefit of the
Fund and providing such other services as the Fund or the customer may
reasonably request.
8. Distributor May Act as Broker and Receive Commissions.
Notwithstanding any other provisions of this Agreement, it is understood and
agreed that the Distributor may act as a broker, on behalf of the Fund, in the
purchase and sale of securities not effected on a securities exchange, provided
that any such transactions and any commission paid in connection therewith shall
comply in every respect with the requirements of the 1940 Act and in particular
with Section 17(e) of that Act and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
9. Agreements Subject to Applicable Law and Regulations. The parties
hereto agree that all provisions of this Agreement will be performed in strict
accordance with the requirements of: the 1940 Act, the 1933 Act, the Securities
Exchange Act of 1934, the rules and regulations of
the Securities and Exchange Commission under said statutes, all applicable state
Blue Sky laws and the rules and regulations thereunder, the rules of the
National Association of Securities Dealers, Inc., and, in strict accordance
with, the provisions of the Articles of Incorporation and Bylaws of the Fund.
11. Duration and Termination of Agreement. This Agreement shall become
effective at the date and time that the Fund's prospectus, has been amended to
reflect the underwriting arrangements provided by this Agreement, and shall,
unless terminated as provided herein, continue in force for two years from that
date, and from year to year thereafter, provided that such continuance for each
successive year is specifically approved in advance at least annually by either
the Board of Directors or by the vote of a majority (as defined in the 0000 Xxx)
of the outstanding voting securities of the Fund and, in either event, by the
vote of a majority of the directors of the Fund who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting upon such approval. As used in the preceding
sentence, the words "interested persons" shall have the meaning set forth in
Section 2(a)(19) of the 1940 Act.
This Agreement may be terminated at any time without the payment of any penalty
by the Fund by giving the Distributor at least sixty (60) days' previous written
notice of such intention to terminate. This Agreement may be terminated by the
Distributor at any time by giving the Fund at least sixty (60) days' previous
written notice of such intention to terminate.
This Agreement shall terminate automatically in the event of its assignment. As
used in the preceding sentence, the word "assignment" shall have the meaning set
forth in Section 2(a)(4) of the 1940 Act.
12. Indemnification of Distributor. The Fund agrees to indemnify and
hold harmless the Distributor and each of its directors and officers and each
person, if any, who controls the Distributor within the meaning of Section 15 of
the 1933 Act against any loss, liability, claim, damages or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees and disbursements
incurred in connection therewith), arising by reason of any person acquiring any
Shares, based upon the ground that the registration statement, prospectus,
shareholder reports or other information filed or made public by the Fund (as
from time to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements made not misleading. However, the Fund does not agree to
indemnify the Distributor or hold it harmless to the extent that the statements
or omission was made in reliance upon, and in conformity with, information
furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Fund to be deemed to protect the
Distributor against any liability to the Fund or its shareholders to which the
Distributor or such person otherwise would be subject 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, or (ii) is the Fund to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified
unless the Distributor or other person shall have notified the Fund in writing
of the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or such other person (or after the Distributor or
the person shall have received notice of service on any designated agent).
However, failure to notify the Fund of any claim shall not relieve the Fund from
any liability which it may have to the Distributor or any person against whom
such action is brought otherwise than on account of its indemnity agreement
contained in this paragraph.
The Fund shall be entitled to participate at its own expense in the defense or,
if it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the indemnified defendants in the suit whose approval shall not
be unreasonably withheld. In the event that the Fund elects to assume the
defense of any suit and retain counsel, the indemnified defendants shall bear
the fees and expenses of any additional counsel retained by them. If the Fund
does not elect to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants.
The Fund agrees to notify the Distributor promptly of the commencement of any
litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of its shares.
13. Indemnification of Trust. The Distributor covenants and agrees that
it will indemnify and hold harmless the Fund and each of its directors and
officers and each person, if any, who controls the Fund within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) based upon the 1933 Act or any other statute or common
law and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, shareholder reports or other information
filed or made public by the Fund (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Fund or any
other person indemnified to be deemed to protect the Fund or any other person
against any liability to which the Fund or such other person would otherwise be
subject 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, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Fund or any person indemnified unless the Fund or
person, as the case may he, shall have notified the Distributor in writing of
the claim within a reasonable time after the summons or other fist written
notification giving information of the nature of the claim shall have been
served upon the Fund or upon any person (or after the Fund or such person shall
have received notice of
service on any designated agent). However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may have
to the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement of any
litigation or proceedings against it or any of its officers in connection with
the issue and sale of any of the Fund's' Shares.
14. Consequential Damages. In no event and under no circumstances shall
either party to this Agreement be liable to anyone, including, without
limitation, the other party, for consequential damages for any act or failure to
act under any provision of this Agreement.
15. Distributor an Independent Contractor. The Distributor shall be
deemed to be an independent contractor and, except as expressly provided or
authorized by the Fund, shall have no authority to act for or represent the
Fund.
16. Notice. Any notice required or permitted to be given hereunder to
either of the parties hereto shall be deemed to have been given if mailed by
certified mail in a postage-prepaid envelope addressed to the respective party
as follows, unless any such party has notified the other party hereto that
notices thereafter intended for such party shall be mailed to some other
address, in which event notices thereafter shall be addressed to such party at
the address designated in such request:
Security Equity Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Rydex Distributors, Inc.
Attn: Law Department
One Security Benefit Place
Topeka, Kansas 66636-0001
17. Amendment of Agreement. No amendment to this Agreement shall be
effective until approved by (a) a majority of the Board of Directors of the Fund
and a majority of the directors
of the Fund who are not parties to this Agreement or affiliated persons of any
such party, or (b) a vote of the holders of a majority of the outstanding voting
securities of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective corporate officers thereto duly authorized on the day, month
and year first above written.
SECURITY EQUITY FUND
By:
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Xxxxxxx X. Xxxxxxx, President
ATTEST:
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Xxx X. Xxx, Secretary
RYDEX DISTRIBUTORS, INC.
By:
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Xxxxxxx X. Xxxxxxx, President
ATTEST:
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Xxx X. Xxx, Secretary
