INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made this 7th day of October, 1983, between SECURITY TAX-EXEMPT
FUND, a Kansas corporation (hereinafter referred to as the "Fund"), and SECURITY
MANAGEMENT COMPANY, 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 (the "1940
Act"); and
WHEREAS, the Company is authorized to issue shares of capital stock in separate
Series, with each such Series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Company intends initially to offer shares in one series to be
designated Security Tax-Exempt Fund (the "Initial Series"), such series together
with all other series subsequently established by the Company with respect to
which the Company desires to retain the Management Company to render investment
advisory services hereunder and with respect to which the Management Company is
willing so to do, being herein collectively referred to as the "Series", 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 Initial Series with respect to
the investment of its assets, and to supervise and arrange the purchase of
securities for the Initial Series and the sale of securities held in the
portfolio of the Initial Series, 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.
In the event the Company establishes one or more series other than the
Initial Series with respect to which it desires to retain the Management
Company to render investment advisory services hereunder, it shall notify
the Management Company in writing. If the Management Company is willing to
render such services it shall notify the Company in writing, whereupon such
series shall become a Series subject to the terms and conditions hereunder,
and to such amended or additional provisions as shall be specifically agreed
to by the Company and the Management Company in accordance with applicable
law.
2. INVESTMENT ADVISORY DUTIES. The Management Company shall regularly provide
each Series with investment research, advice and supervision, continuously
furnish an investment program and recommend which securities shall be
purchased and sold and what portion of the assets of each series shall be
held uninvested and arrange for the purchase of securities and other
investments held in the portfolio of each Series. All investment advice
furnished by the Management Company to each Series 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 1940 Act, 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 ("1933
Act") and the 1940 Act, 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) with 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 providing 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, if 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 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 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;
insurance premiums; broker's commissions; taxes and governmental fees;
membership dues; fees of custodian, transfer agent, registrar and dividend
disbursing agent (if any); expenses of obtaining quotations on the Series'
portfolio securities and pricing of the Series' shares; 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 1933 Act 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 1940 Act and all periodic and other reports required thereunder;
expenses of preparing reports, proxy statements, prospectuses and notices to
stockholders and of printing and distributing reports, proxies, prospectuses
and notices to existing stockholders; costs of stationery; costs of
stockholder and other meetings; expenses of maintaining the Fund's corporate
existence; 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 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 0.5 of 1%
of the average daily closing value of the net assets of the Initial
Series 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 Initial Series 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 shares
of the Initial Series 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 Series shall not
exceed an amount equal to one percent of the average net assets of the
Series for the year, such net assets to be calculated on a daily basis.
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 the 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 in the opinion of the
Management Company, particular securities are consistent with the investment
objectives of, and desirable purchases or sales for the portfolios of, one
or more Series and one or more of such other investment companies or series
of such 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, unless sooner terminated as provided
herein, until the first regular or special meeting of the Fund stockholders
following the date shares of capital stock of the Fund are first offered to
the public. This Agreement shall be presented to each Series of the Fund's
stockholders at such meeting for their approval and shall continue in effect
for successive 12-month periods, unless terminated, provided that each such
continuance is specifically approved at such meeting and at least annually
thereafter by (a) the vote of a majority of the entire board of directors of
the Fund, or, with respect to each Series, by the vote of a majority of the
outstanding voting securities of such Series (as defined in the 1940 Act,
and (b) the vote of a majority of those directors who are not parties to
this Agreement or interested persons (as such term is defined in the 0000
Xxx) of any such party cast in person at a meeting
called for the purpose of voting on such approval. In the event that this
Agreement is approved by such vote of the outstanding voting securities of
one or more Series but not of one or more others, this Agreement shall
continue in effect with respect to the former Series and, with respect to
the latter may continue in effect until such approval by the latter Series
of this Agreement or of a new agreement with the Management Company or with
another party is obtained, provided that compensation paid with respect to
such Series pending such approval is no greater than the lesser of the
Management Company's actual costs incurred hereunder or the amount due
pursuant to Section 5 hereof. This Agreement may be terminated at any time
without payment of any penalty, by the Fund upon the vote of a majority of
the Fund's board of directors or, with respect to any Series, by a majority
of the outstanding voting securities of such Series, or by the Management
Company, .in each case on sixty (60) days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto 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 TAX-EXEMPT FUND
(Corporate Seal)
By: XXXXXXX X. XXXXX
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ATTEST: Xxxxxxx X. Xxxxx, President
XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Secretary
SECURITY MANAGEMENT COMPANY
(Corporate Seal)
By: XXXXXXX X. XXXXX
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ATTEST: Xxxxxxx X. Xxxxx, President
XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company
(the "Management Company") are parties to an Investment Advisory Contract dated
October 7, 1983 (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, effective October 19, 1993, the Fund will offer its shares in two
Classes, Class A shares, which are currently being offered, and a new class,
Class B shares;
WHEREAS, the Fund has adopted a Distribution Plan with respect to its Class B
shares and, as a result, such shares are subject to distribution fees to which
Class A shares are not subject;
WHEREAS, the distribution fees associated with Class B shares require the
amendment of the Agreement relative to that class of shares;
WHEREAS, on October 1, 1993, the initial Class B shareholder of the Fund
approved such amendment to this Agreement; and
WHEREAS, the changes to the Agreement which are contemplated by this Amendment
do not affect the interests of Class A shareholders of the Fund;
NOW, THEREFORE, the Fund and the Management Company hereby amend the Investment
Advisory Contract, dated October 7, 1983, effective October 1, 1993, as follows:
A. The Management Company agrees to provide investment research and advice, to
the Fund pursuant to the terms and conditions set forth in the Agreement, as
amended in section B below.
B. Section 5(b) of the Agreement shall be amended by deleting it in its
entirety and replacing it with the following:
(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,
extraordinary expenses (such as litigation), and distribution fees paid
under the Fund's Class B Distribution Plan, but inclusive of the
Management Company's compensation, incurred by the Fund shall not
exceed an amount equal to one percent of the average net assets of the
Fund for the year, such net assets to be calculated on a daily basis.
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).
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Investment Advisory Contract this 1st day of October 1993.
ATTEST: SECURITY INCOME FUND
Xxx X. Xxx By: Xxxxxxx X. Xxxxxxxx
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Xxx X. Xxx, Secretary
ATTEST: SECURITY MANAGEMENT COMPANY
Xxx X. Xxx By: Xxxxxxx X. Xxxxxxxx
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Xxx X. Xxx, Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company
(the "Management Company") are parties to an Investment Advisory Contract, dated
October 7, 1983, 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 TAX-EXEMPT 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
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company,
LLC (the "Management Company") are parties to an Investment Advisory Contract,
dated October 7, 1983, 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; and
WHEREAS, on February 6, 1998, in connection with adopting a Class A Distribution
Plan for the Fund, the Board of Directors of the Fund approved amendment of the
Agreement to exclude the Class A distribution fee from aggregate annual expenses
for the purpose of calculating the one percent limit on of annual expenses.
NOW, THEREFORE BE IT RESOLVED, that the Fund and the Management Company hereby
amend the Agreement, effective May 1, 1998, by deleting Paragraph 5(b) in its
entirety and replacing it with the following:
(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,
extraordinary expenses (such as litigation), and distribution fees
paid under the Fund's Class A and Class B Distribution Plans, but
inclusive of the Management Company's compensation, incurred by the
Fund shall not exceed an amount equal to one percent of the average
net assets of the Fund for the year, such net assets to be calculated
on a daily basis. 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).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Investment Advisory Contract this ______ day of __________________, 1998.
SECURITY TAX-EXEMPT FUND SECURITY MANAGEMENT COMPANY, LLC
By: By:
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Xxxx X. Xxxxxxx, President Xxxxx X. Xxxxxxx, President
ATTEST: ATTEST:
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