<PAGE> 1
Registration No. 811-2120
Registration No. 2-38414
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Post-Effective Amendment No. 50 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Post-Effective Amendment No. 50 /X/
(Check appropriate box or boxes)
SECURITY INCOME FUND
(Exact Name of Registrant as Specified in Charter)
700 HARRISON STREET, TOPEKA, KANSAS 66636-0001
(Address of Principal Executive Offices/Zip Code)
Registrant's Telephone Number, including area code:
(913) 295-3127
Copies To:
John D. Cleland, President Amy J. Lee, Secretary
Security Income Fund Security Income Fund
700 Harrison Street 700 Harrison Street
Topeka, KS 66636-0001 Topeka, KS 66636-0001
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/X/ on May 1, 1995, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on May 1, 1995, pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on May 1, 1995, pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to regulation 270.24f-2 under the Investment Company Act of
1940, the Registrant has elected to register an indefinite number of its shares
of Common Stock. The Registrant filed the Notice required by 24f-2 on
February 24, 1995.
<PAGE> 2
SECURITY INCOME FUND
FORM N-1A
CROSS REFERENCE SHEET
Form N-1A
Item Number Caption
Part A PROSPECTUS
1. Cover Page
2. Not Applicable
2a. Transaction and Operating Expense Table
3. Financial Highlights; Performance
4. Investment Objectives and Policies of the
Funds
5. Management of the Funds; Portfolio
Management, Trading Practices and Brokerage
6. General Information; Capitalization;
Stockholder Inquiries; Dividends and Taxes
7. How to Purchase Shares; Alternative Purchase
Options; Class A Shares; Security Income
Fund's Class A Distribution Plan; Class B
Shares; Class B Distribution Plan;
Calculation and Waiver of Contingent
Deferred Sales Charge; Arrangements with
Broker/Dealers and Others; Determination of
Net Asset Value; Purchases at Net Asset
Value; Stockholder Services; Accumulation
Plan; Exchange Privilege; Exchange by
Telephone; Retirement Plans; Appendix C
8. How to Redeem Shares; Telephone Redemptions;
Systematic Withdrawal Plan
9. Not Applicable
Part B STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and Policies of the
Funds; Security Income Fund's Fundamental
Policies; Investment Policy Limitations
14. Officers and Directors
15. Remuneration of Directors and Others
16. Investment Management; Portfolio Management;
Distributor; Custodian, Transfer Agent and
Dividend-Paying Agent
17. Allocation of Portfolio Brokerage
18. Capital Stock
<PAGE> 3
Part B (Continued) STATEMENT OF ADDITIONAL INFORMATION
19. How to Purchase Shares; Alternative Purchase
Options; Class A Shares; Security Income
Fund's Class A Distribution Plan; Class B
Shares; Class B Distribution Plan;
Calculation and Waiver of Contingent
Deferred Sales Charge; Arrangements with
Broker/Dealers and Others; Determination of
Net Asset Value; How to Redeem Shares;
Telephone Redemptions; How to Exchange
Shares; Purchases at Net Asset Value;
Accumulation Plan; Systematic Withdrawal
Program; Exchange by Telephone; Retirement
Plans; Individual Retirement Accounts
(IRAs); Pension and Profit Sharing Plans;
403(b) Retirement Plans; Simplified Employee
Pension Plans (SEPPs); Appendix A
20. Dividends and Taxes
21. Distributor
22. Performance Information
23. Financial Statements; Independent Auditors
<PAGE> 4
Part A and Part B are incorporated herein by reference to the Registrant's
Post-Effective Amendment Number 49 to Registration Statement Number 2-38414
(May 1, 1995).
<PAGE> 5
SECURITY INCOME FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements(c)
b. Exhibits:
(1) Articles of Incorporation. (a)
(2) Corporate Bylaws of Registrant.
(3) Not applicable.
(4) Specimen copy of share certificate for Registrant's
shares of capital stock.
(5) (a) Investment Advisory Contract.
(b) Sub-Advisory Agreement-Lexington.
(c) Sub-Advisory Agreement-MFR.
(6) (a) Distribution Agreement.
(b) Class B Distribution Agreement.
(7) Not applicable.
(8) (a) Custodian Agreement-UMB.
(b) Custodian Agreement-Chase.
(9) (a) Administrative Services and Transfer Agency
Agreement.
(b) Sub-Administrative Agreement.
(10) Opinion of counsel as to the legality of the
securities offered.(b)
(11) Consent of Independent Public Accountants.(c)
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) (a) Distribution Plan.
(b) Class B Distribution Plan.
(16) Schedule of Computation of Performance.(c)
(a) Incorporated herein by reference to the Exhibits filed with the
Registrant's Post-Effective Amendment No. 46 to Registration Statement
No. 2-38414 (October 11, 1993).
(b) Incorporated herein by reference to the Exhibits filed with the
Registrant's Post-Effective Amendment No. 48 to Registration Statement No.
2-38414 (January 17, 1995)
(c) Incorporated herein by reference to the Exhibits filed with the
Registrant's Post-Effective Amendment No. 49 to Registration Statement No.
2-38414 (May 1, 1995).
<PAGE> 6
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities as of April 1, 1995.
<TABLE>
<CAPTION>
(1) (2)
Number of Record
Title of Class Shareholders
-------------- ------------------
<S> <C>
Corporate Bond - Shares of Common Stock, Class A 4,263
Corporate Bond - Shares of Common Stock, Class B 20
U.S. Government - Shares of Common Stock, Class A 697
U.S. Government - Shares of Common Stock, Class B 64
Limited Maturity Bond - Shares of Common Stock, Class A 47
Limited Maturity Bond - Shares of Common Stock, Class B 4
</TABLE>
Item 27. Indemnification.
A policy of insurance covering Security Management Company, its
subsidiary (Security Distributors, Inc.), and all of the registered
investment companies advised by Security Management Company insures
the Registrant's directors and officers against liability arising by
reason of an alleged breach of duty caused by any negligent act,
error or accidental omission in the scope of their duties.
Paragraph 23 of the Registrant's Bylaws, as amended March 23, 1979,
provides in relevant part as follows:
23-A. Indemnification. The corporation shall indemnify every
person who is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a
director or officer of another corporation, to the full extent
permitted or authorized by the laws of the State of Kansas, as
now in effect and as hereafter amended, against any liability,
judgment, fine, amount paid in settlement, cost or expense
(including attorneys' fees) asserted or threatened against and
incurred by such person in his capacity as or arising out of his
status as a director or officer of the corporation or, if
serving at the request of the corporation, as a director or
officer of another corporation; provided, however, that the
corporation shall not indemnify any person if such action would
be in violation of the provisions of the Investment Company Act
of 1940. The indemnification provided by this bylaw provision
shall not be exclusive of any other rights to which those
indemnified may be entitled under any other bylaw or under any
agreement, and shall not limit in any way any right which the
corporation may have to make different or further
indemnifications which respect to the same or different persons
or classes of persons.
<PAGE> 7
On March 25, 1988, the shareholders approved the Board of Directors'
recommendation that the Articles of Incorporation be amended by
adopting the following Article Fifteenth:
"A director shall not be personally liable to the corporation or
to its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this sentence shall not
eliminate nor limit the liability of a director:
A. for any breach of his or her duty of loyalty to the
corporation or to its stockholders;
B. for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
C. for any unlawful dividend, stock purchase or redemption
under the provisions of Kansas Statutes Annotated (K.S.A.)
17-6424 and amendments thereto; or
D. for any transaction from which the director derived an
improper personal benefit."
Item 28. Business or Other Connections of Investment Adviser
SECURITY MANAGEMENT COMPANY:
Security Management Company also acts as investment manager to Security
Equity Fund, Security Ultra Fund, Security Growth and Income Fund,
Security Cash Fund, SBL Fund, and Security Tax-Exempt Fund and as
administrator to The Parkstone Advantage Fund.
<PAGE> 8
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Jeffrey B. Pantages President, Chief Investment Officer and
Director
Security Management Company
Director
Security Cash Fund, Security Income Fund,
Security Tax-Exempt Fund, SBL Fund,
Security
Growth and Income Fund, Security Equity
Fund,
Security Ultra Fund
Senior Vice President and Chief Investment Officer
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
Director
Mulvane Art Center
Mulvane Art Museum
Washburn University
17th & Jewell
Topeka, Kansas
United Way of Greater Topeka
P.O. Box 4188
Topeka, Kansas
John D. Cleland Senior Vice President and Director
Security Management Company
President and Director
Security Cash Fund, Security Income Fund,
Security Tax-Exempt Fund, SBL Fund,
Security
Growth and Income Fund, Security Equity
Fund,
Security Ultra Fund
Vice President and Director
Security Distributors, Inc.
Trustee and Treasurer
Mount Hope Cemetery Corporation
4700 SW 17th
Topeka, Kansas
Past President
Top of the Tower Club
1 Townsite Plaza
Topeka, Kansas
Trustee
Topeka Community Foundation
5100 SW 10th
Topeka, Kansas
<PAGE> 9
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
James W. Lammers Senior Vice President and Director
Security Management Company
National Sales Manager, Senior Vice President and
Director
Security Distributors, Inc.
James R. Schmank Senior Vice President, Treasurer, Chief Fiscal
Officer and Director
Security Management Company
Chairman of the Board, President and Trustee
The Parkstone Advantage Fund Vice
President and Director
Security Distributors, Inc.
Vice President
Security Benefit Group, Inc. and Security
Benefit Life Insurance Company
Vice President and Treasurer
Security Growth and Income Fund, Security
Income Fund, Security Cash Fund, Security
Tax-Exempt Fund, Security Ultra Fund,
Security Equity Fund, SBL Fund
Donald E. Caum Director
Security Management Company
Senior Vice President
Security Benefit Life Insurance Company
Security Benefit Group
Director
YMCA Metro
225 SW 12th Street
Topeka, Kansas
Executive Director
Boy Scouts of America
1020 SE Monroe
Topeka, Kansas
Jayhawk Area Council BSA
1020 SE Monroe
Topeka, Kansas
Metropolitan Ballet
Topeka, Kansas
<PAGE> 10
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
James L. Woods Senior Vice President
Security Management Company
Senior Vice President and Treasurer
Security Benefit Life Insurance Company
and Security Benefit Group, Inc.
Director
Midwest Superconductivity
1315 Wakarusa Drive
Lawrence, Kansas
Mark E. Young Vice President - Operations
Security Management Company
Vice President
Security Growth and Income Fund, Security
Income Fund, Security Cash Fund, Security
Tax-Exempt Fund, Security Ultra Fund,
Security Equity Fund, SBL Fund, Security
Distributors, Inc.
Trustee
Topeka Zoological Foundation
635 Gage Boulevard
Topeka, Kansas
Terry A. Milberger Senior Portfolio Manager and Vice President
Security Management Company
Vice President
Security Equity Fund, SBL Fund
Jane A. Tedder Vice President and Senior Portfolio Manager
Security Management Company
Vice President
Security Cash Fund, Security Income Fund,
Security Tax-Exempt Fund, SBL Fund
Gregory A. Hamilton Second Vice President
Security Management Company
Director
Downtown Topeka, Inc.
906 South Kansas Avenue
Topeka, Kansas
Trustee
Kansas State University Foundation
Manhattan, Kansas
<PAGE> 11
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Scott F. Stephenson Assistant Vice President and Senior Investment
Analyst
Security Management Company
Treasurer
Horizon Construction
927 North 1464 Road
Lawrence, Kansas
Andrew P. Mohn Vice President
Security Distributors, Inc.
Assistant Vice President, Mutual Fund
Marketing Administration
Security Management Company
Vesper Member
St. Michaels and All Angels Episcopalian
Church
6630 Nall Avenue
Mission, Kansas
Amy J. Lee Second Vice President and Assistant Counsel
Security Benefit Group, Inc. and Security
Benefit Life Insurance Company
Secretary
Security Management Company, Security
Distributors, Inc. Security Cash Fund,
Security Equity Fund, Security Tax Exempt
Fund, Security Ultra Fund, SBL Fund,
Security Growth and Income Fund, Security
Income Fund
Vice President, Assistant Secretary and Assistant
Treasurer
The Parkstone Advantage Fund
Director
Everywoman's Resource Center
1002 SW Garfield Avenue
Topeka, Kansas
<PAGE> 12
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Brenda M. Luthi Assistant Vice President, Assistant Treasurer and
Assistant Secretary
Security Management Company
Assistant Treasurer and Assistant Secretary
Security Equity Fund, Security Ultra
Fund, Security Growth and Income Fund,
Security Income Fund, Security Cash Fund,
SBL Fund, Security Tax-Exempt Fund
Treasurer
Security Distributors, Inc.
Trustee, Vice President, Treasurer and Secretary
The Parkstone Advantage Fund
Steven M. Bowser Assistant Vice President and Portfolio Manager
Security Management Company
Assistant Vice President
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
Thomas A. Swank Assistant Vice President and Portfolio Manager
Security Management Company
Assistant Vice President
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
Barbara J. Davison Assistant Vice President
Security Management Company
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
President
Topeka Chapter International
Institute of Internal Auditors
Topeka, Kansas
Executive Mentor
ASSIST Catholic Social Services
Topeka, Kansas
Cindy L. Shields Assistant Vice President and Portfolio Manager
Security Management Company
Larry L. Valencia Assistant Vice President and Senior Research
Analyst
Security Management Company
*Located at 700 Harrison, Topeka, Kansas 66636-0001
<PAGE> 13
LEXINGTON MANAGEMENT CORPORATION:
Lexington Management Corporation, sub-adviser to Global Aggressive
Bond Series, acts as investment adviser, sub-adviser and/or sponsor to 15
investment companies other than Registrant.
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Robert M. DeMichele President and Director
Piedmont Management Company, Inc.
Chairman and Chief Executive Officer
Lexington Management Corporation,
Lexington Funds Distributor, Inc.
Director
Reinsurance Corporation of New York,
Continental National Corporation,
Navigator's Insurance Group, Vanguard
Cellular Systems, Inc.
Chairman of the Board
Lexington Group of Investment Companies,
Market Systems Research, Inc., Market
Systems Research Advisors, Inc., Lexington
Capital Management, Inc.
Richard M. Hisey Chief Financial Officer, Managing Director and
Director
Lexington Management Corporation
Chief Financial Officer, Vice President and
Director
Lexington Funds Distributor, Inc.
Vice President and Treasurer
Market Systems Research Advisors, Inc.
Chief Financial Officer and Vice President
Lexington Group of Investment Companies
Lawrence Kantor Executive Vice President, Managing Director and
Director
Lexington Management Corporation
Executive Vice President and Director
Lexington Funds Distributor, Inc.
Vice President and Director
Lexington Group of Investment Companies
James H. O'Leary Managing Director and Director
Lexington Management Corporation
Peter Palenzona Director
Lexington Management Corporation
Chief Financial Officer and Senior Vice President
Piedmont Management Company, Inc.
<PAGE> 14
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Stuart S. Richardson Director
Lexington Management Corporation
Vice Chairman
Piedmont Management Company, Inc.
John B. Waymire Vice President and Director
Lexington Management Corporation
President and Director
Lexington Capital Management, Inc.
* Located at P.O. Box 1515, Saddle Brook, New Jersey 07662, except
for Messrs. Palenzona and Richardson whose address is 80 Maiden
Lane, New York, New York 10038 and Mr. Waymire whose address is
2339 Gold Meadow Way, Gold River, California 95670.
MFR ADVISORS, INC.:
Lexington Management Corporation contracts with MFR Advisors, Inc.
which provides advisory services for Global Aggressive Bond
Series. MFR Advisors, Inc. serves as advisor to no investment
companies other than Registrant.
Business* and Other Connections of the
Executive Officers and Directors of
Name Registrant's Adviser
---- --------------------------------------
Maria Fiorini Ramirez Chief Executive Officer and President
MFR Advisors, Inc.
Director
Statewide Savings Bank S.L.A. of New
Jersey
Pace University
Medic Alert Foundation
Money Marketeers
Women's Economic Roundtable
Bruce Jensen Executive Vice President
MFR Advisors, Inc.
Timothy F. Downing Chief Financial Officer MFR
Advisors, Inc.
* Located at One World Financial Center, 200 Liberty Street, New York, NY
10281
<PAGE> 15
Item 29. Principal Underwriters
(a) SBL Fund
Security Equity Fund
Security Ultra Fund
Security Growth and Income Fund
Security Tax-Exempt Fund
Variflex Variable Annuity Account
Varilife
Parkstone Variable Annuity Account
The Parkstone Advantage Fund
Security Varilife Separate Account
Variflex LS Variable Annuity Account
(b)
(1) (2) (3)
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
------------------ -------------------- --------------------
Richard K Ryan President and Director None
John D. Cleland Vice President President and Director
and Director
James W. Lammers National Sales Manager, None
Senior Vice President
and Director
Louis R. Jicha Vice President and None
Director
James R. Schmank Vice President and Vice President
Director and Treasurer
Mark E. Young Vice President Vice President
Amy J. Lee Secretary Secretary
Brenda M. Luthi Treasurer Assistant Secretary and
Assistant Treasurer
Andrew P. Mohn Vice President None
Daniel J. McNichol Vice President None
Steven D. Eklund Regional Vice President None
Sharon A. Burlingame Regional Vice President None
Steven S. Doerrer Regional Vice President None
<PAGE> 16
(1) (2) (3)
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
------------------ -------------------- --------------------
Anthony L. Hammock Regional Vice President None
Douglas J. Ikenberry Regional Vice President None
Robert L. Kirchner Regional Vice President None
Daniel R. Murphy Regional Vice President None
Ronald V. Vermillion Regional Vice President None
Jennifer A. Zaat Regional Vice President None
Kent N. Spillman Regional Vice President None
*700 Harrison, Topeka, Kansas 66636-0001
(c) Not applicable.
Item 30. Location of Accounts and Records.
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by Security Management
Company, 700 Harrison, Topeka, Kansas 66636-0001. Records
relating to the duties of the Registrant's custodian are
maintained by UMB Bank, n.a., 928 Grand Avenue, Kansas City,
Missouri 64106 and Chase Manhattan Bank, n.a., 1211 Avenue of the
Americas, New York, New York 10036.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective date
of Registrant's 1933 Act Registration Statement.
(c) Registrant hereby undertakes to furnish each person, to whom
a prospectus is delivered, a copy of the Registrant's latest
report to shareholders upon request and without charge.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Topeka, and State of Kansas on the 28th day of
April, 1995.
SECURITY INCOME FUND
(The Registrant)
By: John D. Cleland, President
-----------------------------------
John D. Cleland, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
Date: April 28, 1995
--------------------------------
Willis A. Anton, Jr. Director
- ------------------------------------
Willis A. Anton, Jr.
Donald A. Chubb, Jr. Director
- ------------------------------------
Donald A. Chubb, Jr.
John D. Cleland President and Director
- ------------------------------------
John D. Cleland
Jack H. Hamilton Director
- ------------------------------------
Jack H. Hamilton
Donald L. Hardesty Director
- ------------------------------------
Donald L. Hardesty
Penny A. Lumpkin Director
- ------------------------------------
Penny A. Lumpkin
Mark L. Morris, Jr. Director
- ------------------------------------
Mark L. Morris, Jr.
Jeffrey B. Pantages Director
- ------------------------------------
Jeffrey B. Pantages
Harold G. Worswick Director
- ------------------------------------
Harold G. Worswick
<PAGE> 18
EXHIBIT INDEX
(1) None
(2) Bylaws
(3) None
(4) Share Certificates
(5) (a) Investment Advisory Contract
(b) Sub-Advisory Agreement-Lexington
(c) Sub-Advisory Agreement-MFR
(6) (a) Distribution Agreement
(b) Class B Distribution Agreement
(7) None
(8) (a) Custodian Agreement-UMB
(b) Custodian Agreement-Chase
(9) (a) Administrative Services and Transfer Agency Agreement
(b) Sub-Administrative Agreement
(10) None
(11) None
(12) None
(13) None
(14) None
(15) (a) Distribution Plan
(b) Class B Distribution Plan
(16) None
<PAGE> 1
EXHIBIT 2
BYLAWS
OF
SECURITY INCOME FUND
OFFICES
1. Registered Office and Registered Agent. The location of the registered
office and the name of the registered agent of the Corporation in the
State of Kansas shall be as stated in the Articles of Incorporation or
as shall be determined from time the time by the Board of Directors and
on file in the appropriate public offices of the State of Kansas
pursuant to applicable provisions of law.
2. Corporate Offices. The Corporation may have such other corporate
offices and places of business anywhere within or without the State of
Kansas as the Board of Directors may from time to time designate or the
business of the Corporation may require.
3. Corporate Records. The books and records of the Corporation may be kept
at any one or more offices of the Corporation within or without the
State of Kansas, except that the original or duplicate stock ledger
containing the names and addresses of the stockholders, and the number
of shares held by them, respectively, shall be kept at the registered
office of the Corporation in the State of Kansas.
4. Stockholders' Right of Inspection. A stockholder of record, upon
written demand to inspect the records of the Corporation pursuant to any
statutory or other legal right, shall be privileged to inspect such
records only during the usual and customary hours of business and in
such manner will not unduly interfere with the regular conduct of the
business of the Corporation. A stockholder may delegate his/her right
of inspection to a certified or public accountant on the condition, to
be enforced at the option of the Corporation, that the stockholder and
accountant agree with the Corporation to furnish to the Corporation
promptly a true and correct copy of each report with respect to such
inspection made by such accountant. No stockholder shall use, permit to
be used or acquiesce in the use by others of any information so obtained
to the detriment competitively of the Corporation, nor shall he/she
furnish or permit to be furnished any information so obtained to any
competitor or prospective competitor of the Corporation. The
Corporation as a condition precedent to any stockholder's inspection of
the records of the Corporation may require the stockholder to indemnify
the Corporation, in such manner and for such amount as may be determined
by the Board of Directors, against any loss or damage which may be
suffered by it arising out of or resulting from any unauthorized
disclosure made or permitted to be made by such stockholder of
information obtained in the course of such inspection.
1
<PAGE> 2
SEAL
5. Seal. The Corporation shall have a corporate seal inscribed with the
name of the Corporation and the words "Corporate Seal - Kansas". The
form of the seal may be altered at pleasure and shall be used by causing
it or a facsimile thereof to be impressed, affixed, reproduced or
otherwise used.
STOCKHOLDERS' MEETINGS
6. Place of Meetings. Meetings of the stockholders may be held at any
place within or without the State of Kansas, as shall be determined from
time to time by the Board of Directors. All meetings of the stockholders
for the election of Directors shall be held at the principal office of
the Corporation in Kansas. Meetings of the stockholders for any purpose
other than the election of Directors may be held at such place as shall
be specified in the notice thereof.
7. Annual Meeting. No annual meeting of stockholders is required to be
held for the purpose of electing directors or any other reason, except
when specifically and expressly required under state or federal law.
When an annual meeting is held for the purpose of electing directors,
such directors shall hold office until the next annual meeting at which
directors are to be elected and until their successors are elected and
qualified, or until their earlier resignation or removal herein.
8. Special Meetings. Special meetings of the stockholders for any purpose
or purposes, unless otherwise prescribed by statute, may be called by
the President, or a Vice President, by the Board of Directors or by the
holders of not less than 10% of all outstanding shares of stock entitled
to vote at any annual meeting; and shall be called by any officer
directed to do so by the Board of Directors.
The "call" and the "notice" of any such meeting shall be deemed to be
synonymous.
9. Notice of Meetings. Written or printed notice of each meeting of the
stockholders, whether annual or special, stating the place, date and
time thereof and in case of a special meeting, the purpose or purposes
thereof shall be delivered or mailed to each stockholder entitled to
vote thereat, not less than ten (10) days nor more than fifty (50) days
prior to the meeting. unless as to a particular matter, other or further
notice is required by law, in which case such other or further notice
shall be given. The Board of Directors may fix in advance a date, which
shall not be more than sixty (60) days nor less than ten (10) days
preceding the date of any meeting of the stockholders, as a record date
for the determination of the stockholders entitled to notice of, and to
vote at, any such meeting and any adjournment thereof; provided,
however, that the Board of Directors may fix a new record date for any
adjourned meeting. Any notice of a stockholders' meeting sent by mail
shall be deemed to be delivered when deposited in the United States mail
with postage prepaid thereon, addressed to the stockholder at his/her
address as it appears on the books of the Corporation.
2
<PAGE> 3
10. Registered Stockholders - Exceptions - Stock Ownership Presumed. The
Corporation shall be entitled to treat the holders of the shares of
stock of the Corporation, as recorded on the stock record or transfer
books of the Corporation, as the holders of record and as the holders
and owners in fact thereof and, accordingly, the Corporation shall not
be required to recognize any equitable or other claim to or interest in
any such shares on the part of any other person or other claim to or
interest in any such shares on the part of any other person, firm,
partnership, corporation or association, whether or not the Corporation
shall have express or other notice thereof, except as is otherwise
expressly required by law, and the term "stockholder" as used in these
Bylaws means one who is a holder of record of shares of the Corporation;
provided, however, that if permitted by law,
(a) shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of
such provision, as the Board of Directors of such corporation may
determine;
(b) shares held by a person in a fiduciary capacity may be voted by
such person; and,
(c) a stockholder whose shares are pledged shall be entitled to vote
such shares, unless in the transfer of the shares by the pledgor
on the books of the Corporation, he/she shall have expressly
empowered the pledgee to vote thereon, in which case only the
pledgee or his/her proxy may represent said stock and vote
thereon.
11. Consent of Stockholders in Lieu of Meeting. To the extent, if any, and
in the manner permitted by statute and unless otherwise provided in the
Articles of Incorporation, any action required to be taken at any annual
or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such
stockholders, may be taken by written consent without a meeting.
12. Waiver of Notice. Whenever any notice is required to be given under the
provisions of these Bylaws, the Articles of Incorporation of the
Corporation, or of any law, a waiver thereof, if not expressly
prohibited by law, in writing signed by the person or persons entitled
to notice shall, whether before or after the time stated therein, be
deemed the equivalent to the giving of such notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting,
except when a person attends a meeting for the express purpose of
objecting at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
13. Quorum. Except as otherwise may be provided by law, by the Articles of
Incorporation of the Corporation or by these Bylaws, the holders of a
majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be required
for and shall constitute a quorum at all meetings of the stockholders
for the transaction of any business. Every decision of a majority in
amount of shares of such
3
<PAGE> 4
quorum shall be valid as a corporate act, except in those specific
instances in which a larger vote is required by law or by the Articles
of Incorporation or by these Bylaws.
If a quorum be not present at any meeting, the stockholders entitled to
vote thereat, present in person or by proxy, shall have power to adjourn
the meeting from time to time without notice other than announcement at
the meeting, until the requisite amount of voting stock shall be
present. If the adjournment is for more than thirty (30) days, or if
after adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. At any subsequent session of the
meeting at which a quorum is present in person or by proxy any business
may be transacted which could have been transacted at the initial
session of the meeting if a quorum had been present.
14. Proxies. At any meeting of the stockholders, every stockholder having
the right to vote shall be entitled to vote in person or by proxy
executed by an instrument in writing subscribed by such a stockholder
and bearing a date not more than three (3) years prior to said meeting
unless said instrument provides that it shall be valid for a longer
period.
15. Voting. Each stockholder shall have one vote for each share of stock
having voting power registered in his/her name on the books of the
Corporation and except where the transfer books of the Corporation shall
have been closed or a date shall have been fixed as a record date for
the determination of its stockholders entitled to vote, no share of
stock shall be voted at any election for directors which shall have been
transferred on the books of the Corporation within twenty (20) days next
preceding such election of Directors. At all elections of Directors,
cumulative voting shall prevail, so that each stockholder shall be
entitled to as many votes as shall equal the number of his/her shares of
stock multiplied by the number of Directors to be elected, and he/she
may cast all of such votes for a single Director or may distribute them
among the number to be voted for, or any two or more as he/she sees fit.
Voting shall be ballot for the election of Directors and on such matters
as may be required by law, provided that voting by ballot on any matter
may be waived by the unanimous consent of those stockholders entitled to
vote present at the meeting. A stockholder holding stock in a fiduciary
capacity shall be entitled to vote the shares so held, and a stockholder
whose stock is pledged shall be entitled to vote unless, in the transfer
by the pledgor on the books of the Corporation, (s)he shall have
expressly empowered the pledgee to vote thereon, in which case only the
pledgee or his/her proxy may represent said stock and vote thereon.
16. Stockholders' Lists. A complete list of the stockholders entitled to
vote at every election of Directors, arranged in alphabetical order,
with the address of and the number of voting shares held by each
stockholder, shall be prepared by the officer having charge of the stock
books of the Corporation and for at least ten (10) days prior to the
date of the election shall be open at the place where the election is to
be held, during the usual hours for business, to the examination of any
stockholder and shall be produced and kept open at the place of the
election during the whole time thereof for the inspection of any
stockholder present. The original or duplicate stock ledger shall be
the only evidence as to who are stockholders
4
<PAGE> 5
entitled to examine such lists, or the books of the Corporation, or to
vote in person or by proxy, at such election. Failure to comply with
the foregoing shall not affect the validity or any action taken at any
such meeting.
17. Presiding Officials. Every meeting of the stockholders, for whatever
object, shall be convened by the President, or by the officer or person
who called the meeting by notice as above provided, but it shall be
presided over by the officers specified in paragraphs 37 and 38 of these
Bylaws; provided, however, that the stockholders at any meeting, by a
majority vote in amount of shares represented thereat, and
notwithstanding anything to the contrary contained elsewhere in these
Bylaws, may select any persons of their choosing to act as Chairman and
Secretary of such meeting or any session thereof.
BOARD OF DIRECTORS
18. Offices. The Directors may have one or more offices, and keep the books
of the Corporation (except the original or duplicated stock ledgers, and
such other books and records as may by law be required to be kept at a
particular place) at such place or places within or without the State of
Kansas as the Board of Directors may from time to time determine.
19. Management. The management of all affairs, property and business of the
corporation shall be vested in a Board of Directors, consisting of a
minimum of six (6) and a maximum of nine (9) directors. Unless required
by the Articles of Incorporation, Directors need not be stockholders.
Each person who shall serve on the Board of Directors and who shall be
recommended and nominated for election or reelection as a director shall
be a person who is in good standing in his/her community and who shall
not, at the time of election or reelection, have attained his/her 70th
birthday. In addition to the power and authorities by these Bylaws and
the Articles of Incorporation expressly conferred upon it, the Board of
Directors may exercise all such powers of the Corporation, and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or
done by the stockholders.
20. Vacancies and Newly Created Directorships. Vacancies and newly created
directorships resulting from any increase in the authorized number of
Directors may be filled by a majority of the Directors then in office,
though less than a quorum, or by a sole remaining Director, unless it is
otherwise provided in the Articles of Incorporation or these Bylaws, and
the Directors so chosen shall hold office until the next annual election
and until their successors are duly elected and qualified, or until
their earlier resignation or removal. If there are no Directors in
office, then an election of Directors may be held in the manner provided
by statute.
21. Meetings of the Newly Elected Board -- Notice. The first meeting of the
members of each newly elected Board of Directors shall be held (a) at
such time and place either within or without the State of Kansas as
shall be suggested or provided by resolution of the stockholders at the
meeting at which such newly elected Board was elected, and no notice
5
<PAGE> 6
of such meeting shall be necessary to the newly elected Directors in
order legally to constitute the meeting, provided a quorum shall be
present, or (b) if not so suggested or provided for by resolution of
the stockholders or if a quorum shall not be present, at such time and
place as shall be consented to in writing by a majority of the newly
elected Directors, provided that written or printed notice of such
meeting shall be given to each of the other Directors in the same manner
as provided in section 23 of these Bylaws with respect to the giving of
notice for special meetings of the Board except that it shall not be
necessary to state the purpose of the meeting in such notice, or (c)
regardless of whether or not the time and place of such meeting shall be
suggested or provided for by resolution of the stockholders, at such
time and place as shall be consented to in writing by all of the newly
elected Directors.
Every Director of the Corporation, upon his/her election, shall qualify
by accepting the office of the Director, and his/her attendance at, or
his/her written approval of the minutes of, any meeting of the Board
subsequent to his/her election shall constitute his/her acceptance of
such office; or he/she may execute such acceptance by a separate
writing, which shall be placed in the minute book.
22. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such times and places either within or without
the State of Kansas as shall from time to time be fixed by resolution
adopted by the full Board of Directors. Any business may be transacted
at a regular meeting.
23. Special Meetings. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board, the President, and Vice
President or the Secretary, or by any two (2) or more of the Directors.
The place may be within or without the State of Kansas as designated in
the notice.
24. Notice of Special Meetings. Written or printed notice of each special
meeting of the Board, stating the place, day and hour of the meeting and
the purpose or purposes thereof, shall be mailed to each Director
addressed to him/her at his/her residence or usual place of business at
least three (3) days before the day on which the meeting is to be held,
or shall be sent to him/her by telegram, or delivered to him/her
personally, at least two (2) days before the day on which the meeting
is to be held. If mailed, such notice shall be deemed to be delivered
when it is deposited in the United States mail with postage thereon
addressed to the Director at his/her residence or usual place of
business. If given by telegraph, such notice shall be deemed to be
delivered when it is delivered to the telegraph company. The notice may
be given by any officer having authority to call the meeting. "Notice"
and "call" with respect to such meetings shall be deemed to be
synonymous. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given if all Directors
shall be present.
25. Meetings by Conference Telephone or Similar Communications Equipment.
Unless otherwise restricted by law, the Articles of Incorporation or
these Bylaws, members of the Board of Directors of the Corporation, or
any committee designated by the board, may
6
<PAGE> 7
participate in a meeting of the board or committee by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant hereto shall constitute presence in
person at such meeting.
26. Quorum. Unless otherwise required by law, the Articles of Incorporation
or these Bylaws, a majority of the total number of Directors shall be
necessary at all meetings to constitute a quorum for the transaction of
business, and except as may be otherwise provided by law, the Articles
of Incorporation or these Bylaws, the act of a majority of the Directors
present at any meeting at which there is a quorum shall be the act of
the Board of Directors.
If at least two (2) Directors or one-third (1/3) of the whole Board of
Directors, whichever is greater, is present at any meeting at which a
quorum is not present, a majority of the Directors present at such
meeting shall have power successively to adjourn the meeting from time
to time to a subsequent date, without notice to any Directors other than
announcement at the meeting. At such adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the original meeting with was adjourned.
27. Standing or Temporary Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board,
designate one (1) or more committees, each committee to consist of one
(1) or more Directors of the Corporation. The Board may designate one
(1) or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he/she or they constitute a
quorum, may unanimously appoint another member of the Board of Directors
to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of
the Board of Directors or in these Bylaws, shall have and may exercise
all of the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which
may require it; but no such committee shall have the power of authority
of the Board of Directors with respect to amending the Articles of
Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
a dissolution, or amending the Bylaws of the Corporation; and, unless
the resolution, these Bylaws or the Articles of Incorporation expressly
so provide, no such committee shall have power or authority to declare a
dividend or to authorize the issuance of stock.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of
Directors. All committees so appointed shall, unless otherwise provided
by the Board of Directors, keep regular minutes of the transactions at
their meetings and shall cause them to be recorded in books kept for
that
7
<PAGE> 8
purpose in the office of the Corporation and shall report the same to
the Board of Directors at its next meeting. The Secretary or an
Assistant Secretary of the Corporation may act as Secretary of the
committee if the committee so requests.
28. Compensation. Unless otherwise restricted by the Articles of
Incorporation, the Board of Directors may, by resolution, fix the
compensation to be paid Directors for serving as Directors of the
Corporation and may, by resolution, fix a sum which shall be allowed and
paid for attendance at each meeting of the Board of Directors and may
provide for reimbursement of expenses incurred by Directors in attending
each meeting; provided that nothing herein contained shall be construed
to preclude any Director from serving the Corporation in any other
capacity and receiving his/her regular compensation therefor. Members
of special or standing committees may be allowed similar compensation
for attending committee meetings. Nothing herein contained shall be
construed to preclude any Director or committee member from serving the
Corporation in any other capacity and receiving compensation therefor.
29. Resignations. Any Director may resign at any time upon written notice
to the Corporation. Such resignation shall take effect at the time
specified therein or shall take effect upon receipt thereof by the
Corporation if no time is specified therein, and unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
30. Indemnification and Liability of Directors and Officers. Each person
who is or was a Director or officer of the Corporation or is or was
serving at the request of the Corporation as a Director or officer of
another corporation (including the heirs, executors, administrators and
estate of such person) shall be indemnified by the Corporation as of
right to the full extent permitted or authorized by the laws of the
State of Kansas, as now in effect and is hereafter amended, against any
liability, judgment, fine, amount paid in settlement, cost and expense
(including attorneys' fees) asserted or threatened against and incurred
by such person in his/her capacity as or arising out of his/her status
as a Director or officer of the Corporation or, if serving at the
request of the Corporation, as a Director or officer of another
corporation. The indemnification provided by this bylaw provision shall
not be exclusive of any other rights to which those indemnified may be
entitled under the Articles of Incorporation, under any other bylaw or
under any agreement, vote of stockholders or disinterested directors or
otherwise, and shall not limit in any way any right which the
Corporation may have to make different or further indemnification with
respect to the same or different persons or classes of persons.
No person shall be liable to the Corporation for any loss, damage,
liability or expense suffered by it on account of any action taken or
omitted to be taken by him/her as a Director or officer of the
Corporation or of any other corporation which he/she serves as a
Director or officer at the request of the Corporation, if such person
(a) exercised the same degree of care and skill as a prudent man would
have exercised under the circumstances in the conduct of his/her own
affairs, or (b) took or omitted to take such action in reliance upon
advice of counsel for the Corporation, or for such other corporation, or
upon
8
<PAGE> 9
statement made or information furnished by Directors, officers,
employees or agents of the Corporation, or of such other corporation,
which he/she had no reasonable grounds to disbelieve.
In the event any provision of this section 30 shall be in violation of
the Investment Company Act of 1940, as amended, or of the rules and
regulations promulgated thereunder, such provisions shall be void to the
extent of such violations.
31. Action Without a Meeting. Unless otherwise restricted by the Articles
of Incorporation or these Bylaws, any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if written consent thereto is signed by
all members of the Board of Directors or of such committee, as the case
may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
32. Numbers and Powers of the Board. The property and business of this
Corporation shall be managed by a Board of Directors, and the number of
Directors to constitute the Board shall be not less than five (5) nor
more than eight (8). Directors need not be stockholders. In addition
to the powers and authorities by these Bylaws expressly conferred upon
the Board of Directors, the Board may exercise all such powers of the
corporation and do or cause to be done all such lawful acts and things
as are not by statute or by the Articles of Incorporation or by these
Bylaws prohibited, or required to be exercised or done by the
stockholders only.
33. Term of Office. The first Board of Directors shall be elected at the
first duly held meeting of the incorporators and thereafter they shall
be elected at the annual meetings of the stockholders. Except as may
otherwise be provided by law, the Articles of Incorporation or these
Bylaws, each Director shall hold office until the next annual election
and until a successor shall be duly elected and qualified, or until
his/her written resignation shall have been filed with the Secretary of
the Corporation. Each Director, upon his/her election, shall qualify by
accepting the office of Director by executing and filing with the
Corporation a written acceptance of his/her election which shall be
placed in the minute book.
34. Waiver. Any notice provided or required to be given to the Directors
may be waived in writing by any of them. Attendance of a Director at
any meeting shall constitute a waiver of notice of such meeting except
where he/she attends for the express purpose of objecting to the
transaction of any business thereat because the meeting is not lawfully
called or convened.
OFFICERS
35. (a) Officers -- Who Shall Constitute. The officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, a Treasurer, one or more Assistant
Secretaries and one or more Assistant Treasurers. The Board shall
9
<PAGE> 10
elect a President, a Secretary and a Treasurer at its first
meeting after each annual meeting of the stockholders. The Board
then, or from time to time, may elect one or more of the other
prescribed officers as it may deem advisable, but need not elect
any officers other than a President, a Secretary and a Treasurer.
The Board may, if it desires, elect or appoint additional officers
and may further identify or describe any one or more of the
officers of the Corporation. In the discretion of the Board of
Directors, the office of Chairman of the Board of Directors may
remain unfilled. The Chairman of the Board of Directors, if any,
shall at all times be, and other officers may be, members of the
Board of Directors.
Officers of the Corporation need not be members of the Board of
Directors. Any two (2) or more offices may be held by the same
person.
An officer shall be deemed qualified when he/she enters upon the
duties of the office to which he/she has been elected or appointed
and furnishes any bond required by the Board; but the Board may
also require his/her written acceptance and promise faithfully to
discharge the duties of such office.
(b) Term of Office. Each officer of the Corporation shall hold
his/her office at the pleasure of the Board of Directors or for
such other period as the Board may specify at the time of his/her
election or appointment, or until his/her death, resignation or
removal by the Board, whichever first occurs. In any event, each
officer of the Corporation who is not reelected or reappointed at
the annual election of officers by the Board next succeeding
his/her election or appointment shall be deemed to have been
removed by the Board, unless the Board provides otherwise at the
time of his/her election or appointment.
(c) Other Agents. The Board from time to time may also appoint such
other agents for the Corporation as it shall deem necessary or
advisable, each of whom shall serve at the pleasure of the Board
or for such period as the Board may specify, and shall exercise
such powers, have such titles and perform such duties as shall be
determined from time to time by the Board or by an officer
empowered by the Board to make such determinations.
36. Chairman of the Board. If a Chairman of the Board be elected, he/she
shall preside at all meetings of the stockholders and Directors at which
he/she may be present and shall have such other duties, powers and
authority as any be prescribed elsewhere in these Bylaws. The Board of
Directors may delegate such other authority and assign such additional
duties to the Chairman of the Board, other than those conferred by law
exclusively upon the President, as it may from time to time determine,
and, to the extent permissible by law, the Board may designate the
Chairman of the Board as the Chief Executive Officer of the Corporation
with all of the powers otherwise conferred upon the President of the
Corporation under paragraph 37 of these Bylaws, or it may, from time to
time, divide the responsibilities, duties and authority for the general
control and management of the Corporation's business and affairs between
the Chairman of the Board and the President.
10
<PAGE> 11
37. The President. Unless the Board otherwise provides, the President shall
be the Chief Executive Officer of the Corporation with such general
executive powers and duties of supervision and management as are usually
vested in the office of the Chief Executive Officer of a corporation,
and he/she shall carry into effect all directions and resolutions of the
Board. The President, in the absence of the Chairman of the Board or if
there be no Chairman of the Board, shall preside at all meetings of the
stockholders and Directors.
The President may execute all bonds, notes, debentures, mortgages and
other instruments for and in the name of the Corporation, may cause the
corporate seal to be affixed thereto, and may execute all other
instruments for and in the name of the Corporation.
Unless the Board otherwise provides, the President, or any person
designated in writing by him/her, shall have full power and authority on
behalf of this Corporation (a) to attend and vote or take action at any
meeting of the holders of securities of corporations in which this
Corporation may hold securities, and at such meetings shall possess and
may exercise any and all rights and powers incident to being a holder of
such securities, and (b) to execute and deliver waivers of notice and
proxies for and in the name of the Corporation with respect to any
securities held by this Corporation.
He/she shall, unless the Board otherwise provides, be ex officio a
member of all standing committees.
He/she shall have such other or further duties and authority as may be
prescribed elsewhere in these Bylaws or from time to time by the Board
of Directors.
If a Chairman of the Board be elected or appointed and designated as the
Chief Executive Officer of the Corporation, as provided in paragraph 36
of these Bylaws, the President shall perform such duties as may be
specifically delegated to him/her by the Board of Directors or are
conferred by law exclusively upon him/her, and in the absence,
disability, or inability or refusal to act of the Chairman of the Board,
the President shall perform the duties and exercise the powers of the
Chairman of the Board.
38. Vice President. In the absence of the President or in the event of
his/her disability or inability or refusal to act, any Vice President
may perform the duties and exercise the powers of the President until
the Board otherwise provides. Vice Presidents shall perform such other
duties as the Board may from time to time prescribe.
39. Secretary and Assistant Secretaries. The Secretary shall attend all
sessions of the Board and all meetings of the stockholders, shall
prepare minutes of all proceedings at such meetings and shall preserve
them in a minute book of the Corporation. He/she shall perform similar
duties for the executive and other standing committees when requested by
the Board or any such committee.
11
<PAGE> 12
It shall be the principal responsibility of the Secretary to give, or
cause to be given, notice of all meetings of the stockholders and of the
Board of Directors, but this shall not lessen the authority of others to
give such notice as is authorized elsewhere in these Bylaws.
The Secretary shall see that all books, records, lists and information,
or duplicates, required to be maintained in Kansas, or elsewhere, are so
maintained.
The Secretary shall keep in safe custody the seal of the Corporation,
and shall have authority to affix the seal to any instrument requiring a
corporate seal and, when so affixed, he/she shall attest the seal by
his/her signature. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by his/her signature.
The Secretary shall have the general duties, responsibilities and
authorities of a Secretary of a Corporation and shall perform such other
duties and have such other responsibility and authority as may be
prescribed elsewhere in these Bylaws or from time to time by the Board
of Directors or the Chief Executive Officer of the Corporation, under
whose direct supervision (s)he shall be.
In the absence of the Secretary or in the event of his/her disability,
or inability or refusal to act, any Assistant Secretary may perform the
duties and exercise the powers of the Secretary until the Board
otherwise provides. Assistant Secretaries shall perform such other
duties as the Board of Directors may from time to time prescribe.
40. Treasurer and Assistant Treasurers. The Treasurer shall have
responsibility for the safekeeping of the funds and securities of the
Corporation, shall keep or cause to be kept full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and
shall keep, or cause to be kept, all other books of account and
accounting records of the Corporation. He/she shall deposit or cause to
be deposited all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be designated
by the Board of Directors or by any officer of the Corporation to whom
such authority has been granted by the Board.
He/she shall disburse, or permit to be disbursed, the funds of the
Corporation as may be ordered, or authorized generally, by the Board,
and shall render to the Chief Executive Officer of the Corporation and
the Directors whenever they may require it, an account of all his/her
transactions as Treasurer and of those under his/her jurisdiction, and
of the financial condition of the Corporation.
He/she shall perform such other duties and shall have such other
responsibility and authority as may be prescribed elsewhere in these
Bylaws or from time to time by the Board of Directors.
12
<PAGE> 13
He/she shall have the general duties, powers and responsibility of a
Treasurer of a corporation and shall, unless otherwise provided by the
Board, be the Chief Financial and Accounting Officer of the Corporation.
If required by the Board, he/she shall give the Corporation a bond in a
sum and with one or more sureties satisfactory to the Board, for the
faithful performance of the duties of his/her office and for the
restoration to the Corporation, in the case of his/her death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his/her
possession or under his/her control which belong to the Corporation.
In the absence of the Treasurer or in the event of his/her disability,
or inability or refusal to act, any Assistant Treasurer may perform the
duties and exercise the powers of the Treasurer until the Board
otherwise provides. Assistant Treasurers shall perform such other
duties and have such other authority as the Board of Directors may from
time to time prescribe.
41. Duties of Officers May be Delegated. If any officer of the Corporation
be absent or unable to act, or for any other reason that the Board may
deem sufficient, the Board may delegate, for the time being, some or all
of the functions, duties, powers and responsibilities of any officer to
any other officer, or to any other agent or employee of the Corporation
or other responsible person, provided a majority of the whole Board
concurs.
42. Removal. Any officer or agent elected or appointed by the Board of
Directors, and any employee, may be removed or discharged by the Board
whenever in its judgment the best interests of the Corporation would be
served thereby, but such removal or discharge shall be without prejudice
to the contract rights, if any, of the person so removed or discharged.
43. Salaries and Compensation. Salaries and compensation of all elected
officers of the Corporation shall be fixed, increased or decreased by
the Board of Directors, but this power, except as to the salary or
compensation of the Chairman of the Board and the President, may, unless
prohibited by law, be delegated by the Board to the Chairman of the
Board or the President, or may be delegated to a committee. Salaries
and compensation of all appointed officer, agents, and employees of the
Corporation may be fixed, increased or decreased by the Board of
Directors, but until action is taken with respect thereto by the Board
of Directors the same fixed, increased or decreased by the Chairman of
the Board, the President or such other officer or officers as may be
empowered by the Board of Directors to do so.
44. Delegation of Authority to Hire, Discharge and Designate Duties. The
Board from time to time may delegate to the Chairman of the Board, the
President or other officer or executive employee of the Corporation,
authority to hire, discharge and fix and modify the duties, salary or
other compensation of employees of the Corporation under their
jurisdiction, and the Board may delegate to such officer or executive
employee similar authority with respect
13
<PAGE> 14
to obtaining and retaining for the Corporation the services of
attorneys, accountants and other experts.
STOCK
45. Certificates for Shares of Stock. Certificates for shares of stock
shall be issued in numerical order, and each stockholder shall be
entitled to a certificate signed by, or in the name of the Corporation
by, the Chairman of the Board or the President or a Vice President, and
by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, certifying the number of shares owned by him/her.
To the extent permitted by statute, any of or all of the signatures on
such certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, such certificate
may nevertheless be issued by the Corporation with the same effect as if
such officer, transfer agent or registrar who signed such certificate,
or whose facsimile signature shall have been used thereon, had not
ceased to be such officer, transfer agent or registrar of the
Corporation.
46. Transfers of Stock. Transfers of stock shall be made only upon the
transfer books of the Corporation, kept at the office of the Corporation
or of the transfer agent designated to transfer the class of stock, and
before a new certificate is issued the old certificate shall be
surrendered for cancellation. Until and unless the Board appoints some
other person, firm or corporation as its transfer agent (and upon the
revocation of any such appointment, thereafter, until a new appointment
is similarly made) the Secretary of the Corporation shall be the
transfer agent of the Corporation without the necessity of any formal
action of the Board, and the Secretary, or any person designated by
him/her, shall perform all of the duties thereof.
47. Registered Stockholders. Only registered stockholders shall be entitled
to be treated by the Corporation as the holders and owner in fact of
the shares standing in their respective names, and the Corporation shall
not be bound to recognize any equitable or other claim to or interest in
such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as expressly provided by
the laws of Kansas.
48. Lost Certificates. The Board of Directors may authorize the Secretary
to direct that a new certificate or certificates be issued in place of
any certificate or certificates theretofore issued by the Corporation,
alleged to have been lost, stolen or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate or
certificates to be lost, stolen or destroyed. When authorizing such
issue of a replacement certificate or certificates, the Secretary may,
as a condition precedent to the issuance thereof, require the owner of
such lost, stolen or destroyed certificate or certificates, or his/her
legal representative, to give the Corporation and its transfer agents
and registrars, if any, a bond in such sum as it may direct to indemnify
it against any claim that may be made against it with respect to the
certificate or certificates alleged to have been lost, stolen or
destroyed, or with respect to the issuance of such new certificate or
certificates.
14
<PAGE> 15
49. Regulations. The Board of Directors shall have power and authority to
make all such rules and regulations as it may deem expedient concerning
the issue, transfer, conversion and registration of certificates for
shares of stock of the Corporation, not inconsistent with the laws of
the State of Kansas, the Articles of Incorporation of the Corporation
and these Bylaws.
50. Fixing Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix, in advance, a record date, which shall not
be more than sixty (60) days not less than ten (10) days before the date
of such meeting, nor more than sixty (60) days prior to any other
action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
DIVIDENDS AND FINANCE
51. Dividends. Dividends upon the outstanding shares of stock of the
Corporation, subject to the provisions of the Articles of Incorporation
and of any applicable law and of these Bylaws, may be declared by the
Board of Directors at any meeting. Subject to such provisions,
dividends may be paid in cash, in property, or in shares of stock of the
Corporation.
52. Creation of Reserves. The Directors may set apart out of any of the
funds of the Corporation available for dividends a reserve or reserves
for any proper purpose or may abolish any such reserve in the manner in
which it was created.
53. Depositories. The moneys of the Corporation shall be deposited in the
name of the Corporation in such bank or banks or other depositories as
the Board of Directors shall designate, and shall be drawn out only by
check signed by persons designated by resolution adopted by the Board of
Directors, except that the Board of Directors may delegate said powers
in the manner hereinafter provided in this bylaw 53. The Board of
Directors may by resolution authorize an officer or officers of the
Corporation to designate any bank or banks or other depositories in
which moneys of the Corporation may be deposited, and to designate the
persons who may sign checks drawn on any particular account or accounts
of the Corporation, whether created by direct designation of the Board
of Directors or by authorized officer or officers as aforesaid.
54. Fiscal Year. The Board of Directors shall have power to fix and from
time to time change the fiscal year of the Corporation. In the absence
of action by the Board of Directors, the fiscal year of the Corporation
shall end each year on the date which the Corporation treated
15
<PAGE> 16
as the close of its first fiscal year, until such time, if any, as the
fiscal year shall be changed by the Board of Directors.
55. Directors' Statement. The Board of Directors may present at each annual
meeting of the stockholders, and when called for by vote of the
stockholders shall present to any annual or special meeting of the
stockholders, a full and clear statement of the business and condition
of the Corporation.
56. Fixing of Capital, Transfers of Surplus. Except as may be specifically
otherwise provided in the Articles of Incorporation, the Board of
Directors is expressly empowered to exercise all authority conferred
upon it or the Corporation by any law or statute, and in conformity
therewith, relative to:
(a) the determination of what part of the consideration received for
shares of the Corporation shall be capital;
(b) increasing or reducing capital;
(c) transferring surplus to capital or capital to surplus;
(d) all similar or related matters;
provided that any concurrent action or consent by or of the Corporation
and its stockholders required to be taken or given pursuant to law shall
be duly taken or given in connection therewith.
57. Loans to Officers and Directors Prohibited. The Corporation shall not
loan money to any officer or director of the Corporation.
58. Books, Accounts and Records. The books, accounts and records of the
Corporation, except as may be otherwise required by the laws of the
State of Kansas, may be kept outside the State of Kansas, at such place
or places as the Board of Directors may from time to time determine.
The Board of Directors shall determine whether, to what extent and the
conditions upon which the book, accounts and records of the Corporation,
or any of them, shall be open to the inspection of the stockholders, and
no stockholder shall have any right to inspect any book, account or
record of the Corporation, except as conferred by law or by resolution
of the stockholders or Directors.
INVESTMENT AND MANAGEMENT POLICIES
59. Custody of Securities. Without limitation as to any restriction imposed
by the Articles of Incorporation of the Corporation or by operation of
law on the conduct of the Corporation's investment company business, the
custody of the Corporation's securities shall be subject to the
following requirements:
16
<PAGE> 17
(a) The securities of the Corporation shall be placed in the custody
and care of a custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and
undivided profits.
(b) Upon the resignation or inability to serve of the custodian, the
officers and directors shall be required to use their best efforts
to locate a successor, to whom all cash and securities must be
delivered directly, and in the event that no successor can be
found, to submit to stockholders the question of whether the
corporation should be liquidated or shall function without a
custodian.
(c) Any agreement with the custodian shall require it to deliver
securities owned by the Corporation only (1) upon sale of such
securities for the account of the Corporation and receipt of
payment; (2) to the broker or dealer selling the securities in
accordance with "street delivery" custom; (3) on redemption,
retirement of maturity; (4) on conversion or exchange into other
securities pursuant to a conversion or exchange privilege, or plan
of merger, consolidation, reorganization, recapitalization,
readjustment, share split-up, change of par value, deposit in or
withdrawal from a voting trust, or similar transaction or event
affecting the issuer; or (5) pursuant to the redemption in kind
of any securities of the Corporation.
(d) Any agreement with the custodian shall require it to deliver funds
of the Corporation only (1) upon the purchase of securities for
the portfolio of the Corporation and delivery of such securities
to the custodian, or (2) for the redemption of shares by the
Corporation, the payment of interest, dividend disbursements,
taxes, management fees, the making of payments in connection with
the conversion, exchange or surrender of securities owned by the
Corporation and the payment of operating expenses of the
Corporation.
60. Restrictions on the Investment of Funds. Without limitation as to any
restrictions imposed by the Articles of Incorporation of the of the
Corporation or by operation of law on the conduct of the Corporation's
investment company business, the officers and Directors of the
Corporation shall not permit the Corporation to take any action not
permitted by its fundamental investment policies, as amended, set forth
in the Corporation's registration statement.
61. Distribution of Earnings.
A. The Directors by appropriate resolution shall from time to time
distribute the net earnings of the Corporation to its shareholders
pro-rata by mailing checks to the shareholders at the address
shown on the books of the Company.
B. In addition to paying all current expenses, it shall be the duty
of the officers and Directors to set up adequate reserves to cover
taxes, auditors' fees, and any and all necessary expenses that can
be anticipated but are not currently payable, and same shall be
deducted from gross earnings before net earnings may be
distributed.
17
<PAGE> 18
C. If any of the net earnings of this Corporation is profit from sale
of its securities or from any source that would be considered as
capital gains, this information shall be clearly revealed to the
stockholders and the basis of calculation of such gains set forth.
D. The officers and Directors shall distribute not less than that
amount of net earnings of this Corporation to its shareholders as
may be required or advisable under applicable law and special
distribution of net earnings may be made at the discretion of the
Directors at any time to meet this requirement or for any other
reason.
62. Underwriting or Principal Broker Agreement.
A. The officers and Directors of this Corporation shall not enter
into an agreement or contract with any person or corporation to
act as underwriter or principal broker for the sale and/or
distribution of its shares, unless said person or corporation is
fully qualified as a broker and has net all the requirements of
the Kansas Corporation Commission and United States Securities and
Exchange Commission and is currently in good standing with said
Commissions.
B. No commission, sales load or discount from the offering price of
said shares shall be greater than that which is permitted under
the Investment Company Act of 1940 and the rules, regulations and
orders promulgated thereunder.
C. Any such contract so made shall not endure for a period of more
than on year, unless such extension has been duly ratified and
approved by a majority vote of the Directors of the Corporation,
and such contract shall contain a provision that it may be
terminated for cause upon sixty days written notice by either
party.
MISCELLANEOUS
63. Waiver of Notice. Whenever any notice is required to be given under the
provisions of the statutes of Kansas, or of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, Directors or
members of a committee of directors need be specified in any written
waiver of notice unless so required by the Articles of Incorporation of
these Bylaws.
64. Contracts. The Board of Directors may authorize any officer or
officers, or agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and
18
<PAGE> 19
on behalf of the Corporation, and such authority may be general or
confined to specific instances.
65. Amendments. These Bylaws may be altered, amended or repealed, or new
Bylaws may be adopted, in any of the following ways: (i) by the holders
of a majority of the outstanding shares of stock of the Corporation
entitled to vote, or (ii) by a majority of the full Board of Directors
and any change so made by the stockholders may thereafter be further
changed by a majority of the directors; provided, however, that the
power of the Board of Directors to alter, amend or repeal the Bylaws, or
to adopt new Bylaws, may be denied as to any Bylaws or portion thereof
as the stockholders shall so expressly provide.
CERTIFICATE
The undersigned Secretary of Security Equity Fund, a Kansas
Corporation, hereby certifies that the foregoing Bylaws are the
amended/restated Bylaws of said Corporation adopted by the Directors of the
Corporation.
Dated: February 3, 1995
Amy J. Lee
Secretary
19
<PAGE> 1
EXHIBIT 4
No. SHARES _______________
SECURITY INCOME FUND
CORPORATE BOND SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
1,000,000,000 Shares of Capital Stock of Security Income Fund with a Par Value
of $1.00 Each
THIS CERTIFIES THAT
is the owner of
fully paid and non-assessable shares of Common Stock, each of the par value of
$1.00 per share, of SECURITY INCOME FUND, transferable on the books of the
corporation by the holder hereof in person or by attorney, upon surrender of
this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.
IN WITNESS WHEREOF, SECURITY INCOME FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.
Dated Account No.
SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT
(SEAL)
<PAGE> 2
No. SHARES _______________
SECURITY INCOME FUND
U.S. GOVERNMENT SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
1,000,000,000 Shares of Capital Stock of Security Income Fund with a Par Value
of $1.00 Each
THIS CERTIFIES THAT
is the owner of
fully paid and non-assessable shares of Common Stock, each of the par value of
$1.00 per share, of SECURITY INCOME FUND, transferable on the books of the
corporation by the holder hereof in person or by attorney, upon surrender of
this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.
IN WITNESS WHEREOF, SECURITY INCOME FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.
Dated Account No.
SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT
(SEAL)
<PAGE> 3
No. SHARES _______________
SECURITY INCOME FUND
LIMITED MATURITY BOND SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
1,000,000,000 Shares of Capital Stock of Security Income Fund with a Par Value
of $1.00 Each
THIS CERTIFIES THAT
is the owner of
fully paid and non-assessable shares of Common Stock, each of the par value of
$1.00 per share, of SECURITY INCOME FUND, transferable on the books of the
corporation by the holder hereof in person or by attorney, upon surrender of
this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.
IN WITNESS WHEREOF, SECURITY INCOME FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.
Dated Account No.
SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT
(SEAL)
<PAGE> 4
No. SHARES _______________
SECURITY INCOME FUND
GLOBAL AGGRESSIVE BOND SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
1,000,000,000 Shares of Capital Stock of Security Income Fund with a Par Value
of $1.00 Each
THIS CERTIFIES THAT
is the owner of
fully paid and non-assessable shares of Common Stock, each of the par value of
$1.00 per share, of SECURITY INCOME FUND, transferable on the books of the
corporation by the holder hereof in person or by attorney, upon surrender of
this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.
IN WITNESS WHEREOF, SECURITY INCOME FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.
Dated Account No.
SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT
(SEAL)
<PAGE> 1
EXHIBIT 5(a)
INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made this 27th day of March, 1987, between SECURITY INCOME
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; and
WHEREAS, the Fund 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 Fund currently offers shares in three separate series designated
the Corporate Bond Series, the U.S. Government Series, and the High Yield
Series (the "Series"), such series together with all other series subsequently
established by the Fund with respect to which the Fund 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 each Series of the Fund with
respect to the investment of its assets, and to supervise and arrange the
purchase of securities for and the sale of securities held in the
portfolios of the Series of the Fund, subject always to the supervision
of the Board of Directors of the Fund, 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 Fund establishes additional 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 Fund 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 Fund and
the Management Company in accordance with applicable law.
<PAGE> 2
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 each series shall be held uninvested and shall arrange for the
purchase of securities and other investments for and the sale 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 Investment Company 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 Fund's Board of Directors
(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 or statement of additional
information, the Management Company is authorized to direct the
execution of portfolio transactions for the Fund to brokers who
furnish investment information or research service to the
Management Company. Such allocation shall be in such amounts and
proportions as the Management Company may determine. If the
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
<PAGE> 3
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. The
Management Company will also provide the Fund with a president, a chief
financial officer, and a secretary, subject to the approval of the Board
of Directors, and will pay the salaries and expenses of such officers of
the Fund who are also directors, officer or employees of the Management
Company.
Other than as specifically indicated in the preceding sentences, 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 and any membership dues; fees of
custodian, transfer agent, registrar and dividend disbursing agent (if
any); expenses of obtaining quotations on the Fund's portfolio securities
and pricing of the Fund's shares; cost of stock certificates and any
other expenses (including clerical expenses) of issue, sale, repurchase
or redemption of shares of the Fund's capital stock; costs and expenses
in connection with the registration of the Fund's 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, printing and distributing
reports, proxy statements, prospectuses, statements or additional
information, notices and distributions to stockholders; costs of
stationery; costs of stockholder and other meetings;
<PAGE> 4
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 Fund's fiscal years
this Agreement is in effect, the Fund shall pay the Management
Company an annual fee equal to .5 percent of the average daily
closing value of the net assets of each 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 in which
a fee is owed for any Series, 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
Series shall be computed in the same manner as the value of such
net assets is computed in connection with the determination of the
net asset value of the shares of the Fund as described in the
Fund's Prospectus and Statement of Additional Information. The net
asset value of each Series shall be included in and comprise a
part of the net assets of the Fund for purposes of determining
said fee under this Section.
(b) For each of the Fund's full fiscal years this Agreement remains
in force, the Management Company agrees that if the 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 with 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 Fund's portfolio securities (including but not
limited to the tender or delivery of any securities held in the Fund's
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.
<PAGE> 5
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 security holders 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 are 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 March 27, 1987, provided that on that date it is 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
April 1, 1988, 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 Advisory Contract, it will be
<PAGE> 6
continued for that series even though the Advisory Contract 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 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, 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 corporate officers thereto duly authorized on the
day, month and year first above written.
SECURITY INCOME FUND
By Michael J. Provines
President
ATTEST:
Amy J. Lee
Secretary
SECURITY MANAGEMENT COMPANY
By Michael J. Provines
President
ATTEST:
Amy J. Lee
Secretary
Please note that this Agreement was re-executed October 21, 1991 to correct a
typographical error.
<PAGE> 7
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Income Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Investment Advisory Contract dated
March 27, 1987 (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, Security Income Fund currently offers its shares in two series, the
Corporate Bond Series and the U.S. Government Series (hereinafter collectively
referred to as the "Series");
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 each Series of
the Fund approved such amendment to this Agreement;
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 March 27, 1987, 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 this Agreement remains in
force, the Management Company agrees that if the total annual
expenses of each Series of the Fund, 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, 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
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
<PAGE> 8
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 with
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.
SECURITY INCOME FUND
By: Michael J. Provines
--------------------------------
ATTEST:
Amy J. Lee
- ----------------------------
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: Michael J. Provines
-------------------------------
ATTEST:
Amy J. Lee
- ----------------------------
Amy J. Lee, Secretary
<PAGE> 9
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Income Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Investment Advisory Contract dated
March 27, 1987, as amended (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 October 21, 1994, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Limited
Maturity Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series and U.S. Government Series;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Limited Maturity Bond Series in two
classes, designated Class A shares and Class B shares;
WHEREAS, on October 21, 1994, 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 each class of
common stock of the Limited Maturity Bond Series of the Fund under the terms
and conditions of the Advisory Contract; and
WHEREAS, on December 30, 1994, the initial shareholder of the Limited Maturity
Bond Series approved such amendment to the Advisory Contract;
NOW, THEREFORE BE IT RESOLVED, that the Fund and the Management Company hereby
amend the Advisory Contract, to provide that the Management Company shall
provide all investment advisory services, and each of the Management Company
and the Fund shall fulfill all of their respective obligations under the
Advisory Contract, as to each Series of the Fund, including the Limited
Maturity Bond Series.
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 30th day of December 1994.
SECURITY INCOME FUND
By: John D. Cleland
------------------------------
John D. Cleland, President
ATTEST:
Amy J. Lee
- ----------------------------
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: Jeffrey B. Pantages
------------------------------
Jeffrey B. Pantages, President
ATTEST:
Amy J. Lee
- ----------------------------
Amy J. Lee, Secretary
<PAGE> 11
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Income Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Investment Advisory Contract dated
March 27, 1987, as amended (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 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Global
Aggressive Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series, Limited Maturity Bond Series and
U.S. Government Series;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Global Aggressive Bond Series in two
classes, designated Class A shares and Class B shares;
WHEREAS, on February 3, 1995, 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 each class of
common stock of the Global Aggressive Bond Series of the Fund under the terms
and conditions of the Advisory Contract; and
WHEREAS, on April____, 1995, the initial shareholder of the Global Aggressive
Bond Series approved such amendment to the Advisory Contract;
NOW, THEREFORE BE IT RESOLVED, that the Fund and the Management Company hereby
amend the Advisory Contract, dated March 27, 1987, as follows, effective May 1,
1995:
<PAGE> 12
Paragraph 5(a) shall be amended as follows (new language underlined):
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 equal to .75 percent of the average daily closing value of the net
assets of Global Aggressive Bond Series of the Fund, and .50 percent of the
average daily closing value of the net assets of Corporate Bond Series,
Limited Maturity Bond Series, and U.S. Government Series 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
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 ____ day of April, 1995.
SECURITY INCOME FUND
By: ________________________________
John D. Cleland, President
ATTEST:
________________________
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: ________________________________
Jeffrey B. Pantages, President
ATTEST:
________________________
Amy J. Lee, Secretary
<PAGE> 1
EXHIBIT 5(b)
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made this ______ day of ___________________ 1995, by and
between SECURITY MANAGEMENT COMPANY, a Kansas Corporation (The "Adviser"), and
LEXINGTON MANAGEMENT CORPORATION, a Delaware corporation (the "Sub-Adviser"),
WITNESSETH:
WHEREAS, the Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended, and engages in the business of acting as an
investment adviser;
WHEREAS, the Adviser is the investment adviser for the Security Income Fund
(the "Fund"), and provides investment advisory services to the Fund on the
terms and conditions set forth in an investment advisory contract;
WHEREAS, the Fund is registered as a diversified, open-end investment company
under the Investment Company Act of 1940, as amended, (the "1940 Act"), and the
rules and regulations promulgated thereunder;
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Adviser desires to retain the Sub-Adviser as the Adviser's agent
to furnish certain advisory services to the Global Aggressive Bond Series of
the Fund (the "Series"), on the terms and conditions hereinafter set forth.
<PAGE> 2
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Adviser hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Series for the period and on the
terms set forth in this Agreement. Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation
herein provided.
2. INVESTMENT ADVICE. The Sub-Adviser shall furnish the Series with
investment research and advice consistent with the investment policies set
forth in the Prospectus and Statement of Additional Information of the
Fund, subject at all times to the policies and control of the Fund's Board
of Directors and the supervision of the Adviser. In addition, the
Sub-Adviser may avail itself of any investment research or advice provided
by the Adviser. The Sub-Adviser shall give the Series the benefit of its
best judgment, efforts and facilities in rendering its services as
Sub-Adviser.
3. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its obligation
under paragraph 2 hereof, the Sub-Adviser shall:
(a) determine which issuers and securities shall be represented in
the Series' portfolio and regularly report thereon to the
Fund's Board of Directors and the Adviser;
(b) formulate and implement continuing programs for the purchase
and sale of the securities of such issuers and regularly
report thereon to the Fund's Board of Directors and the
Adviser;
(c) continuously review the Series' security holdings and the
investment program and the investment policies of the Series;
and
(d) take, on behalf of the Series, all actions which appear
necessary to carry into effect such purchase and sale
programs, including the placement of orders for the purchase
and sale of securities for the Series.
2
<PAGE> 3
4. BROKER-DEALER RELATIONSHIPS. The Sub-Adviser is responsible for decisions
to buy and sell securities for the Series, broker/dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be execution at the
most favorable price. In selecting a broker/dealer to execute each
particular transaction, the Sub-Adviser will take the following into
consideration: the best net price available; the reliability, integrity
and financial condition of the broker/dealer; the size of and difficulty
in executing the order; and the value of the expected contribution of the
broker/dealer to the investment performance of the Series on a continuing
basis. Accordingly, the price to the Series in any transaction may be
less favorable than that available from another broker/dealer if the
difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Board of
Directors may determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Series to pay a broker
for effecting a portfolio investment transaction in excess of the amount
of commission another broker or dealer would have charged for effecting
that transaction if the Sub-Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Sub-Adviser's
overall responsibilities with respect to the Series and to its other
clients as to which it exercises investment discretion. The Sub-Adviser
is further authorized to place and/or to effect orders with such brokers
and dealers who may provide research or statistical material or other
services to the Series or to the Sub-Adviser. Such allocation shall be in
such amounts and proportions as the Sub-Adviser shall determine and the
Sub-Adviser will report on said allocations regularly to the Board of
Directors of the Fund and the Adviser indicating the brokers to whom such
allocations have been made and the basis therefor.
3
<PAGE> 4
5. CONTROL BY BOARD OF DIRECTORS. Any investment program undertaken by the
Sub-Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Series pursuant thereto,
shall at all times be subject to any directives of the Board of Directors
of the Fund.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its obligations
under this Agreement, the Sub-Adviser shall ensure that the Series
complies with:
(a) all applicable provisions of the 1940 Act;
(b) the provisions of the Registration Statement of the Fund, as
amended, under the Securities Act of 1933 and the 1940 Act;
(c) all applicable statutes and regulations necessary to qualify
the Series as a Regulated Investment Company under Subchapter
M of the Internal Revenue Code (or any successor or similar
provision), and shall notify the Adviser immediately upon
having a reasonable basis for believing that the Series has
ceased to so qualify or that it might not so qualify in the
future;
(d) the provisions of the Fund's Articles of Incorporation, as
amended;
(e) the provisions of the Bylaws of the Fund, as amended; and
(f) any other applicable provisions of state and federal law.
7. RECORDS. The Sub-Adviser hereby agrees to maintain all records relating
to its activities and obligations under this Agreement which are required
to be maintained by Rule 31a-1 under the 1940 Act and agrees to preserve
such records for the periods prescribed by Rule 31a-2 under the Act. The
Sub-Adviser further agrees that all such records are the property of the
Fund and agrees to surrender promptly to the Fund any such records upon
the Fund's request.
8. EXPENSES. The expenses connected with the Fund shall be borne by the
Sub-Adviser as follows:
(a) The Sub-Adviser shall maintain, at its expense and without
cost to the Adviser or the Series, a trading function in order
to carry out its obligations under subparagraph (d) of
4
<PAGE> 5
paragraph 3 hereof to place orders for the purchase and sale
of portfolio securities for the Series.
(b) The Sub-Adviser shall pay any expenses associated with
carrying out its obligation under subparagraph (b) of
paragraph 2 hereof to prepare reports for the Fund's Board of
Directors concerning issuers and securities represented in the
Series' portfolio and the expenses of any travel by employees
of the Sub-Adviser in connection with such reports to the
Fund's Board of Directors.
(c) The Sub-Adviser shall pay any expenses that it may incur in
communicating with the Adviser in connection with its
obligations under this Agreement, including the expenses of
telephone calls, special mail services and telecopier charges.
9. DELEGATION OF RESPONSIBILITIES. Upon request of the Adviser and with
the approval of the Fund's Board of Directors, the Sub-Adviser may
perform services on behalf of the Fund which are not required by this
Agreement. Such services will be performed on behalf of the Fund, and
the Sub-Adviser's cost in rendering such services may be billed monthly
to the Adviser, subject to examination by the Adviser's independent
accountants. Payment or assumption by the Sub-Adviser of any Fund
expense that the Sub-Adviser is not required to pay or assume under this
Agreement shall not relieve the Adviser or the Sub-Adviser of any of
their obligations to the Fund or obligate the Sub-Adviser to pay or
assume any similar Fund expense on any subsequent occasions.
10. DELEGATION OF DUTIES. The Sub-Adviser may, at its discretion, delegate,
assign or subcontract any of the duties, responsibilities and services
governed by this agreement to a third party, whether or not by formal
written agreement, provided that such arrangement with a third party has
been approved by the Board of Directors of the Fund. The Sub-Adviser
shall, however, retain ultimate responsibility to the Fund and shall
implement such reasonable procedures as may be necessary for assuring
that any duties, responsibilities or services so assigned, subcontracted
or delegated are performed in conformity with the terms and conditions
of this agreement.
5
<PAGE> 6
11. COMPENSATION. For the services to be rendered and the facilities
furnished hereunder, the Adviser shall pay the Sub-Adviser an annual fee
equal to .35 percent of the average daily closing value of the net
assets of the Series, computed on a daily basis. Such fee shall be
computed and payable monthly. If this Agreement shall be effective for
only a portion of a year, then the Sub-Adviser's compensation for said
year shall be prorated for such portion. For purposes of this
paragraph 11, the value of the net assets of the 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 Series' shares as described in the Fund's
prospectus and statement of additional information. Payment of the
Sub-Adviser's compensation for the preceding month shall be made as
promptly as possible after the end of each month.
12. NON-EXCLUSIVITY. The services of the Sub-Adviser to the Adviser are not
to be deemed to be exclusive, and the Sub-Adviser shall be free to
render investment advisory or other services to others (including other
investment companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby.
13. TERM. This Agreement shall become effective at the close of business on
the date first shown above. It shall remain in force and effect,
subject to paragraph 14 hereof for one year from the date hereof.
14. RENEWAL. Following the expiration of its initial year term, this
Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the Series' outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the directors who are
not parties to this Agreement or interested persons of a party
to this Agreement (other than as a director of the Fund), by
votes cast in person at a meeting specifically called for such
purpose.
6
<PAGE> 7
15. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors or by
vote of a majority of the Series' outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), or by the Adviser or by
the Sub-Adviser on sixty (60) days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
"assignment" as that term is defined in Section 2(a)(4) of the 1940 Act.
This Agreement shall automatically terminate in the event that the
investment advisory contract between the Adviser and the Fund is
terminated, assigned or not renewed.
16. LIABILITY OF THE SUB-ADVISER. In the absence of willful misfeasance,
bad faith or gross negligence on the part of the Sub-Adviser or its
officers, directors or employees, or reckless disregard by the
Sub-Adviser of its duties under this Agreement, the Sub-Adviser shall
not be liable to the Adviser, the Fund or to any shareholder of the Fund
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security, provided the Sub-Adviser has
acted in good faith.
17. INDEMNIFICATION. The Adviser and the Sub-Adviser each agree to
indemnify the other against any claim against, loss, or liability to,
such other party (including reasonable attorney's fees) arising out of
any action on the part of the indemnifying party which constitutes
willful misfeasance, bad faith or gross negligence.
18. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage-paid to the other party at
such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that the
address of the Sub-Adviser for this purpose shall be Park 80 West, Plaza
Two, Saddle Brook, New Jersey 07662, and the address of the Adviser for
this purpose shall be 700 Harrison Street, Topeka, Kansas 66636-0001.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
ATTEST: SECURITY MANAGEMENT COMPANY
Title:___________________________ By:________________________________
Senior Vice President
ATTEST: LEXINGTON MANAGEMENT CORPORATION
Title:___________________________ By:________________________________
8
<PAGE> 1
EXHIBIT 5(c)
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made this _______ day of ____________ 1995 by and between
LEXINGTON MANAGEMENT CORPORATION, a Delaware corporation ("LMC"), and MFR
ADVISORS, INC., a New York corporation ("MFR"), with respect to the following
recital of fact:
RECITAL
WHEREAS, Security Income Fund - Global Income Series (the "Fund") is registered
as an open-end, diversified management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
promulgated thereunder, and
WHEREAS, Security Management Company ("SMC") is a registered investment advisor
is the investment advisor to the Fund; and
WHEREAS, LMC is registered as an investment advisor under the Investment
Advisers Act of 1940, as amended, and engages in the business of acting as an
investment advisor, and
WHEREAS, LMC is the sub-advisor to the Fund pursuant to a Sub-Advisory
Agreement dated _____________ between LMC and SMC; and
WHEREAS, MFR is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and engages in the business of acting as an
investment advisor; and
WHEREAS, LMC desires to appoint MFR as its sub-advisor to provide certain
investment advisory services to the Fund; and
WHEREAS, MFR proposes to render investment management services to LMC in
connection with LMC's responsibilities to the Fund on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agrees as follows:
1. Duties. MFR shall:
(a) Provide LMC with such economic research and securities
analysis as LMC may from time to time consider necessary.
(b) Obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally or the Fund.
<PAGE> 2
2. Control by Board of Directors. Any investment program undertaken by
MFR pursuant to this Agreement, as well as any other activities
undertaken by MFR on behalf of the Fund pursuant thereto, shall at all
times be subject to any directives of the Board of Directors of the
Fund.
3. Compliance With Applicable Requirements. In carrying out its
obligations under this Agreement, MFR shall at all times conform to:
(a) all applicable provisions of the 1940 Act; and
(b) the provisions of the Registration Statement of the fund under
the Securities Act of 1933 and the 1940 Act; and
(c) the provisions of the Fund's Agreement and Articles of
Incorporation and
(d) the provisions of the By-Laws of the Fund; and
(e) all applicable statutes and regulations necessary to qualify
the Fund as a Regulated Investment Company under Sub-Chapter M
of the Internal Revenue Code (or any successor or similar
provision), and shall notify LMC immediately upon having a
reasonable basis for believing that the Fund has ceased to so
qualify or that it might not so qualify in the future; and
(f) any other applicable provisions of state and federal law.
4. Expenses. The expenses connected with the Fund shall be borne by MFR
as follows:
(a) MFR shall pay the salaries and payroll expenses of persons
serving as officers or Directors of the Fund who are also
employees of MFR or any of its affiliates.
5. Delegation of Responsibilities. MFR shall provide such services to
LMC for the Fund subject to the oversight and supervision of LMC, SMC
and the Fund's Board of Directors.
6. Other Services. Upon request of LMC and with the approval of the
Fund's Board of Directors MFR may perform services on behalf of the
Fund which are not required by this Agreement. Such services will be
performed on behalf of the Fund and MFR's cost in rendering such
services may be billed monthly to LMC, subject to examination by LMC's
independent accountants. Payment or assumption by MFR of any Fund
expense that MFR is not required to pay or assume under this Agreement
shall not relieve LMC or MFR of any of their obligations to the Fund
or obligate MFR to pay or assume any similar Fund expense on any
subsequent occasions.
7. Compensation. For the services to be rendered and the facilities
furnished hereunder, LMC shall pay MFR monthly compensation of the sum
of the amount determined by applying the following annual rate of the
Fund's average daily net assets net of reimbursement, .15% of the
Fund's annual average daily net assets. Compensation under this
Agreement shall be
<PAGE> 3
paid monthly. If this Agreement becomes effective subsequent to the
first day of the month or shall terminate before the last day of the
month, compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation
for the preceding month and shall be made as promptly as possible
after the end of each month.
8. Term. This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Section 11 hereof for one year from the date hereof.
9. Renewal. Following the expiration of its initial term, this Agreement
shall continue in force and effect from year to year, provided that
such continuance is specifically approved at least annually.
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Directors who are
not parties of this Agreement or interested persons of a party
to the Agreement (other than as a Director of the Fund), by
votes cast in person at a meeting specifically called for such
purposes.
10. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Fund's Board of Directors
or by vote of a majority of the Fund's outstanding voting securities
or by MFR on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for the purposes having the meaning
defined in Section 2(a)(42) of the Investment Company Act of 1940.
11. Liability of MFR. In the absence of willful misfeasance, bad faith,
gross negligence on the part of MFR or its officers, directors or
employees, or reckless disregard by MFR of its duties under this
Agreement, MFR shall not be liable to LMC, the Fund or to any
shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security,
provided MFR has acted in good faith.
12. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that
the address of LMC shall be Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663, and that of MFR for this purpose shall be One World
Financial Center, 200 Liberty Street, New York, New York 10281.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
LEXINGTON MANAGEMENT CORPORATION
By ___________________________
Attest: Executive Vice President
___________________________ MFR ADVISORS, INC.
By ____________________________
President
Attest:
___________________________
<PAGE> 1
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 14th day of September, 1970, between SECURITY BOND
FUND, INC., a Kansas corporation (hereinafter referred to as the "Company"),
and SECURITY DISTRIBUTORS, INC., a Kansas corporation (hereinafter referred to
as the "Distributor").
WITNESSETH:
WHEREAS, the Company is engaged in business as an open-end, management
investment company registered under the federal Investment Company Act of 1940;
and
WHEREAS, the Distributor is willing to act as principal underwriter for the
Company to offer for sale, sell and deliver after sale shares of the Company's
$1 par value common stock (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 Company hereby employs the Distributor to
act as principal underwriter for the Company and hereby agrees that
during the term of this Agreement, and any renewal or extension thereof,
or until any prior termination thereof, the Distributor shall have the
exclusive right to offer for sale and to distribute any and all Shares
issued or to be issued by the Company. The Distributor hereby accepts
such employment and agrees to act as the distributor of the Shares issued
or to be issues by the Company 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 Company 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 Company
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
Company of the sale of such Shares. The Distributor shall be entitled to
charge a commission on each such sale of Shares in the amount set forth
in the Company's Prospectus, 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 Company. All Shares shall be sold to the
public only at their public offering price at the time of such sale, and
the Company 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 Company shall pay all costs and expenses in connection
with the registration of Shares under the Securities Act of 1933,
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.
<PAGE> 2
During the period this Agreement is in effect the Distributor will pay or
reimburse the Company for:
(a) 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;
(b) 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
(c) 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 Company 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. 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 Company, 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
Federal Investment Company Act of 1940 and in particular with Section
17(c) of said statute and the Rules and Regulations of the Securities and
Exchange Commission promulgated thereunder.
5. Agreement 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 Investment Company Act of 1940,
the Securities Act of 1933, the Securities Exchange Act of 1934, and the
rules and regulations of the Securities and exchange Commission under
said statutes, in strict accordance with all applicable state "Blue Sky"
laws and the rules and regulations thereunder, and in strict accordance
with the provisions of the Articles of Incorporation and Bylaws of the
Company.
6. Duration and Termination of Agreement. This Agreement shall become
effective at the date and time that the Company's prospectus, reflecting
the underwriting arrangements provided by this Agreement, shall become
effective under the Securities Act of 1933, and shall continue in force
until December 31, 1971, and from year to year thereafter, but only if
such continuance is specifically approved at least annually by the board
of directors of the Company and the majority of the board of directors
who are not parties to this Agreement or affiliated persons of any such
party, or by the vote of a majority of the outstanding voting securities
of the Company. Written notice of any such approval by the board of
directors or by the holders of a majority of the outstanding voting
securities of the Company shall be given promptly to the Distributor.
<PAGE> 3
This Agreement may be terminated by the Company at any time 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 Company at least sixty (60) days
previous written notice of such intention to terminate.
This Agreement shall terminate automatically in the event of its
assignment by the Distributor. As used in the preceding sentence, the
word "assignment" shall have the meaning set forth in Section 2(a)(4) of
the Investment Company Act of 1940.
7. Construction of Agreement. No provision of this Agreement is intended to
or shall be construed as protecting the Distributor against any liability
to the Company or to the Company's security holders to which the
Distributor would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by
reason of the Distributor's reckless disregard of its obligations and
duties under this Agreement.
Terms or words used in this Agreement, which also occur in the Articles
of Incorporation or Bylaws of the Company, shall have the same meaning
herein as given to such terms or words in Articles of Incorporation or
Bylaws of the Company.
8. Distributor an Independent Contributor. The Distributor shall be deemed
to be an independent contractor and, except as expressly provided or
authorized by the Company, shall have no authority to act for or
represent the Company.
9. 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 Bond Fund, Inc.
Security Benefit Life Building
700 Harrison Street
Topeka, Kansas
Security Distributors, Inc.
Security Benefit Life Building
700 Harrison Street
Topeka, Kansas
10. Amendment of Agreement. No amendment to this Agreement shall be
effective until approved by (a) a majority of the board of directors of
the Company and a majority of the board of directors of the Company 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 Company.
<PAGE> 4
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 BOND FUND, INC.
By Dean L. Smith
President
ATTEST:
Will J. Miller, Jr.
Secretary
(SEAL)
SECURITY DISTRIBUTORS, INC.
By Dave E. Davidson
President
ATTEST:
Will J. Miller, Jr.
Secretary
<PAGE> 5
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Bond Fund, Inc. (the "Company") and Security Distributors,
Inc. (the "Distributor") are parties to a Distribution Agreement dated as of
September 14, 1970, (the "Distribution Agreement") under which the Distributor
agrees to act as principal underwriter in connection with sales of the shares
of the Company's capital stock; and,
WHEREAS, certain provisions of the Federal Investment Company Act of 1940 have
been amended, and those amendments have an effect upon the relationship between
the Company and the Distributor, and the Distribution Agreement; and,
WHEREAS, The Company and the Distributor wish to amend the Distribution
Agreement to conform to the requirements of the Federal Investment Company Act
of 1940, as amended:
NOW, THEREFORE, The Company and Distributor hereby amend the Distribution
Agreement, effective immediately, as follows:
1. Section 6 of the Distribution Agreement is amended to provide as follows:
"6. Duration and Termination of Agreement. This Agreement shall
become effective at the date and time that the Company's
prospectus, reflecting the underwriting arrangements provided by
this Agreement, shall become effective under the Securities Act of
1933, and shall continue in force until December 31, 1971, and
from year to year thereafter, provided that such continuance for
each successive year after April 30, 1972, is specifically
approved in advance at least annually by the vote of the board of
directors (including approval by the vote of a majority of the
directors of the Company who are not parties to the Agreement or
interested persons of any such party) cast in person at a meeting
called for the purpose of voting upon such approval, or by the
vote of a majority (as defined in the Investment Company Act of
1940) of the outstanding voting securities of the Company and by
such a vote of the board of directors. As used in the preceding
sentence, the words "interested persons" shall have the meaning
set forth in Section 2(a)(19) of the Investment Company Act of
1940. Written notice of any such approval by the board of
directors or by the holders of a majority of the outstanding
voting securities of the Company shall be given promptly to the
Distributor.
This Agreement may be terminated by the Company at any time 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 Company 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 Investment Company Act of 1940."
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 14th day of January 1972.
SECURITY BOND FUND, INC.
By Dean L. Smith
President
(Corporate Seal)
ATTEST:
Will J. Miller, Jr.
Secretary
SECURITY DISTRIBUTORS, INC.
By Dave E. Davidson
President
(Corporate Seal)
ATTEST:
Will J. Miller, Jr.
Secretary
<PAGE> 7
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Company"), formerly Security Bond Fund, and
Security Distributors, Inc. (the "Distributor") are parties to a Distribution
Agreement dated as of September 14, 1970, (the "Distribution Agreement") under
which the Distributor agrees to act as principal underwriter in connection with
the sales of shares of the Company's capital stock; and
WHEREAS, a Distribution Plan (the "Plan") has been adopted by the directors and
shareholders of Security Income Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"), the provisions of which have an
effect upon the relationship between the Company and the Distributor, and the
Distribution Agreement; and
WHEREAS, the Company and Distributor wish to amend the Distribution Agreement
to conform to the requirements of Rule 12b-1 under the Act and to incorporate
the necessary provisions into the Agreement.
NOW THEREFORE, the Company and Distributor hereby amend the Distribution
Agreement, effective immediately, as follows:
1. New Section 4A is added to the Agreement, which provides as follows:
4A. Distribution Plan.
(a) Pursuant to a Distribution Plan adopted by the Fund, the Fund
agrees to make monthly payments to the Distributor in an amount
computed at an annual rate of .25 of 1% of the Fund's average
daily net assets, to finance activities undertaken by the
Distributor for the purpose of distributing the Fund's shares to
investors. The Distributor is obligated to and hereby agrees to
use the entire amount of said fee to finance the following
distribution-related activities:
(i) Preparation, printing and distribution of the
Prospectus and Statement of Additional Information
and any supplement thereto used in connection with
the offering of shares to the public;
(ii) Printing of additional copies for use by the
Distributor as sales literature, of reports and other
communications which were prepared by the Fund for
distribution to existing shareholders;
(iii) Preparation, printing and distribution of any other
sales literature used in connection with the offering
of shares to the public;
(iv) Expenses incurred in advertising, promoting and
selling shares of the Fund to the public; and
<PAGE> 8
(v) Any fees paid by the Distributor to securities
dealers as distribution or service fees who have
executed a Dealer's Distribution Agreement with the
Distributor.
(b) All payments to the Distributor pursuant to this paragraph
are subject to the following conditions being met by the
Distributor:
(i) For the fiscal year of the Fund during which this
Plan becomes effective and for each subsequent fiscal
year of the Fund during which this Plan remains in
effect, the Distributor shall submit to the Fund a
budget setting forth in reasonable detail the
distribution-related activities to which the
Distributor proposes to apply payments made by the
Fund hereunder;
(ii) Before any payment is made to the Distributor in
respect of any fiscal year, the budget relating
thereto shall be approved by vote of the Fund's
Directors, including the affirmative vote of a
majority of the Independent Directors.
(iii) The Distributor shall furnish the Fund with quarterly
reports of its expenditures pursuant to each budget
so approved, together with receipts or other
appropriate written evidence of the amounts expended,
and such other information relating to such budget or
expenditures or to the other distribution-related
activities undertaken or proposed to be undertaken by
the Distributor during such fiscal year under its
Distribution Agreement with the Fund as the Fund may
reasonably request;
(c) The Dealer's Distribution Agreement (the "Agreement")
contemplated by paragraph 2(v) above shall permit payments
to securities dealers by the Distributor 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 any Agreement a
quarterly fee for distribution and marketing services
provided by such other party. Such quarterly fee shall be
payable in arrears in an amount equal to such percentage
(not in excess of .000685% per day) of the aggregate net
asset value of the 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
distribution and marketing services contemplated hereby
shall include, but are not limited to, answering inquiries
regarding the Fund, account designations and addresses,
maintaining the investment of such other party's customers
or clients in the Fund and similar services. In determining
the extent of such other party's assistance in maintaining
such investment by its customers or clients, the Distributor
may take into account the possibility that the shares held
by such customer or client would be redeemed in the absence
of such quarterly fee.
(d) The provisions of the Distribution Plan approved by the
Shareholders of the Fund on July 12, 1985, and by the Board
of Directors of the Fund on May 3,
<PAGE> 9
1985, are fully incorporated herein by reference. In the
event the Distribution Plan is terminated by the Board of
Directors or Shareholders of the Fund as provided therein,
this paragraph shall no longer be effective.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 15th day of August 1985.
SECURITY INCOME FUND
By Everett S. Gille
President
ATTEST:
Barbara W. Rankin
Secretary
SECURITY DISTRIBUTORS, INC.
By Everett S. Gille
President
ATTEST:
Barbara W. Rankin
Secretary
<PAGE> 10
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Fund"), formerly Security Bond Fund, and
Security Distributors, Inc. (the "Distributor") are parties to a Distribution
Agreement dated September 14, 1970, as amended January 14, 1972, and August 15,
1985, (the "Distribution Agreement") under which the Distributor agrees to act
as principal underwriter in connection with the sales of shares of the Fund's
capital stock;
WHEREAS, a Distribution Plan (the "Plan") has been adopted by the directors and
shareholders of the Fund pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), certain provisions of which have been incorporated
into the Distribution Agreement;
WHEREAS, the Board of Directors of the Fund (including all directors who are
not interested persons of the Fund as defined in the Act) have approved an
amendment to the Plan to provide for expenditures under the Plan to promote
sales of shares of the Fund by securities dealers; and
WHEREAS, the Fund and Distributor wish to amend the Distribution Agreement to
incorporate the Plan amendments into the Agreement.
NOW, THEREFORE, the Fund and Distributor hereby amend the Distribution
Agreement, effective November 26, 1990, as follows:
Section 4A., Distribution Plan, is amended by adding the following
Section 4A.(a)(vi):
(vi) Expenses incurred in promoting sales of shares of the Fund
by securities dealers, including the costs of preparation of
materials for presentations, travel expenses, costs of
entertainment, and other expenses incurred in connection
with promoting sales of Fund shares by dealers.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 26th day of November 1990.
SECURITY INCOME FUND
By Michael J. Provines
President
ATTEST:
Amy J. Lee
Secretary
SECURITY DISTRIBUTORS, INC.
By Howard R. Fricke
President
ATTEST:
Amy J. Lee
Secretary
<PAGE> 12
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Company") and Security Distributors, Inc.
(the "Distributor") are parties to a Distribution Agreement dated September 14,
1970, as amended (the "Distribution Agreement"), under which the Distributor
agreed to act as principal underwriter in connection with sales of the shares
of the Company's capital stock; and
WHEREAS, the Company expects to receive an exemptive order from the Securities
and Exchange Commission allowing the Company to issue and offer for sale two or
more classes of the Company's capital stock; and
WHEREAS, the Company and the Distributor wish to amend the Distribution
Agreement to clarify that the Distribution Agreement applies only to the sale
of Class A shares of the capital stock of the Corporate Bond Series and U.S.
Government Series of the Company and the Class A shares of all other Series
subsequently established by the Company:
NOW THEREFORE, the Company and Distributor hereby amend the Distribution
Agreement, effective immediately, as follows:
1. The term "Shares" as referred to in the Distribution Agreement shall
refer to the Class A Shares of the Company's $1.00 par value stock.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 1st day of October 1993.
SECURITY INCOME FUND
By: Michael J. Provines
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
SECURITY DISTRIBUTORS, INC.
By: Howard R. Fricke
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
<PAGE> 13
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Distributors, Inc. (the
"Distributor") are parties to a Distribution Agreement dated September 14,
1970, as amended (the "Distribution Agreement"), under which the Distributor
has agreed to act as principal underwriter in connection with sales of the
shares of the Fund's Class A common stock;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Limited
Maturity Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series and U.S. Government Series;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Limited Maturity Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on October 21, 1994, the Board of Directors of the Fund approved an
amendment to the Distribution Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Limited Maturity Bond Series;
NOW, THEREFORE BE IT RESOLVED, that the Fund and Distributor hereby amend the
Distribution Agreement to include the sale of Class A shares of the Limited
Maturity Bond Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Distribution Agreement this 30th day of December 1994.
SECURITY INCOME FUND
By: John D. Cleland
President
ATTEST:
Amy J. Lee
Secretary
SECURITY DISTRIBUTORS, INC.
By: Richard K Ryan
President
ATTEST:
Amy J. Lee
Secretary
<PAGE> 14
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Distributors, Inc. (the
"Distributor") are parties to a Distribution Agreement dated September 14,
1970, as amended (the "Distribution Agreement"), under which the Distributor
has agreed to act as principal underwriter in connection with sales of the
shares of the Fund's Class A common stock;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Global
Aggressive Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series, Limited Maturity Bond Series and
U.S. Government Series;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Global Aggressive Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on February 3, 1995, the Board of Directors of the Fund approved an
amendment to the Distribution Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Global Aggressive Bond Series;
NOW, THEREFORE BE IT RESOLVED, that the Fund and Distributor hereby amend the
Distribution Agreement to include the sale of Class A shares of the Global
Aggressive Bond Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Distribution Agreement this 18th day of April, 1995.
ATTEST: SECURITY INCOME FUND
By: Amy J. Lee By: John D. Cleland
------------------------ ----------------------------
Amy J. Lee, Secretary John D. Cleland, President
ATTEST: SECURITY DISTRIBUTORS, INC.
By: Amy J. Lee By: Richard K Ryan
------------------------- -----------------------------
Amy J. Lee, Secretary Richard K Ryan, President
<PAGE> 1
EXHIBIT 6(b)
CLASS B
DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 1st day of October 1993, between Security Income
Fund, a Kansas corporation (hereinafter referred to as the "Company"), and
Security Distributors, Inc., a Kansas corporation (hereinafter referred to as
the "Distributor").
WITNESSETH:
WHEREAS, the Company 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 Distributor is willing to act as principal underwriter for the
Company to offer for sale, sell and deliver after sale, the Class B Shares of
the Company's $1.00 par value common stock (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 Company hereby employs the Distributor to
act as principal underwriter for the Company with respect to its Class B
Shares and hereby agrees that during the term of this Agreement, and any
renewal or extension thereof, or until any prior termination thereof, the
Distributor shall have the exclusive right to offer for sale and to
distribute any and all of its Class B Shares issued or to be issued by
the Company. The Distributor hereby accepts such employment and agrees
to act as the distributor of the Class B Shares issued or to be issued by
the Company 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 Company 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 Company
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
Company 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 Company 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 Company 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.
-1-
<PAGE> 2
The Company will 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 Company 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 Company 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 Charges. A contingent deferred sales charge shall be retained by
the Distributor from the net asset value of Shares of the Fund that it
has redeemed, it being understood that such amounts will not be in excess
of that set forth in the then-current registration statement of the Fund.
Furthermore, the Distributor may retain any amounts authorized for
payment to it under the Fund's Distribution Plan.
6. 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 Company, 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.
7. 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 Company.
-2-
<PAGE> 3
8. Duration and Termination of Agreement. This Agreement shall become
effective at the date and time that the Company's prospectus, reflecting
the underwriting arrangements provided by this Agreement, shall become
effective under the 1933 Act, 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 1940 Act) of the
outstanding voting securities of the Company and, in either event, by the
vote of a majority of the directors of the Company 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. Written notice of
any such approval by the Board of Directors or by the holders of a majority
of the outstanding voting securities of the Company and by the directors
who are not such interested persons shall be given promptly to the
Distributor.
This Agreement may be terminated at any time without the payment of any penalty
by the Company 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 Company 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.
9. Construction of Agreement. No provision of this Agreement is intended to
or shall be construed as protecting the Distributor against any liability
to the Company or to the Company's security holders to which the
Distributor would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties under this
Agreement.
Terms or words used in the Agreement, which also occur in the Articles of
Incorporation or Bylaws of the Company, shall have the same meaning herein as
given to such terms or words in the Articles of Incorporation or Bylaws of the
Company.
10. Distributor an Independent Contractor. The Distributor shall be deemed
to be an independent contractor and, except as expressly provided or
authorized by the Company, shall have no authority to act for or
represent the Company.
11. 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 Income Fund
-3-
<PAGE> 4
Security Benefit Group Building
700 Harrison
Topeka, Kansas
Security Distributors, Inc.
Security Benefit Group Building
700 Harrison
Topeka, Kansas
12. Amendment of Agreement. No amendment to this Agreement shall be
effective until approved by (a) a majority of the Board of Directors of
the Company and a majority of the directors of the Company 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 Company.
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 INCOME FUND
BY: Michael J. Provines
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
SECURITY DISTRIBUTORS, INC.
BY: Howard R. Fricke
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
-4-
<PAGE> 5
AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Distributors, Inc. (the
"Distributor") are parties to a Class B Distribution Agreement dated October 1,
1994 (the "Distribution Agreement"), under which the Distributor has agreed to
act as principal underwriter in connection with sales of the shares of the
Fund's Class B common stock;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Limited
Maturity Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series and U.S. Government Series;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Limited Maturity Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on October 21, 1994, the Board of Directors of the Fund approved an
amendment to the Class B Distribution Agreement between the Fund and the
Distributor to include the sale of Class B shares of the Limited Maturity Bond
Series;
NOW, THEREFORE BE IT RESOLVED, that the Fund and Distributor hereby amend the
Class B Distribution Agreement to include the sale of Class B shares of the
Limited Maturity Bond Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Class B Distribution Agreement this 30th day of December 1994.
SECURITY INCOME FUND
By: John D. Cleland
President
ATTEST:
Amy J. Lee
Secretary
SECURITY DISTRIBUTORS, INC.
By: Richard K Ryan
President
ATTEST:
Amy J. Lee
Secretary
-5-
<PAGE> 6
AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Distributors, Inc. (the
"Distributor") are parties to a Class B Distribution Agreement dated October 1,
1993 (the "Distribution Agreement"), under which the Distributor has agreed to
act as principal underwriter in connection with sales of the shares of the
Fund's Class B common stock;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Global
Aggressive Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series, Limited Maturity Bond Series and
U.S. Government Series;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Global Aggressive Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on February 3, 1995, the Board of Directors of the Fund approved an
amendment to the Class B Distribution Agreement between the Fund and the
Distributor to include the sale of Class B shares of the Global Aggressive Bond
Series;
NOW, THEREFORE BE IT RESOLVED, that the Fund and Distributor hereby amend the
Class B Distribution Agreement to include the sale of Class B shares of the
Global Aggressive Bond Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Class B Distribution Agreement this 18th day of April, 1995.
ATTEST: SECURITY INCOME FUND
By: Amy J. Lee By: John D. Cleland
------------------------- ----------------------------
Amy J. Lee, Secretary John D. Cleland, President
ATTEST: SECURITY DISTRIBUTORS, INC.
By: Amy J. Lee By: Richard K Ryan
------------------------- ---------------------------
Amy J. Lee, Secretary Richard K Ryan, President
-6-
<PAGE> 1
EXHIBIT 8(a)
CUSTODY AGREEMENT
DATED JANUARY 1, 1995
BETWEEN
UMB BANK, N.A.
AND
SECURITY MANAGEMENT COMPANY
FAMILY OF FUNDS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. APPOINTMENT OF CUSTODIAN 1
2. DEFINITIONS 1
(a) Securities 1
(b) Assets 1
(c) Instructions and Special Instructions 1
3. DELIVERY OF CORPORATE DOCUMENTS 2
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN 3
(a) Safekeeping 3
(b) Manner of Holding Securities 4
(c) Free Delivery of Assets 6
(d) Exchange of Securities 6
(e) Purchases of Assets 6
(f) Sales of Assets 7
(g) Options 8
(h) Futures Contracts 8
(i) Segregated Accounts 9
(j) Depository Receipts 9
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 10
(l) Interest Bearing Deposits 10
(m) Foreign Exchange Transactions Other than as Principal 11
(n) Pledges or Loans of Securities 11
(o) Stock Dividends, Rights, Etc. 12
(p) Routine Dealings 12
(q) Collections 12
(r) Bank Accounts 13
(s) Dividends, Distributions and Redemptions 13
(t) Proceeds from Shares Sold 13
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985 14
(v) Books and Records 14
(w) Opinion of Fund's Independent Certified Public Accountants 14
(x) Reports by Independent Certified Public Accountants 14
(y) Bills and Other Disbursements 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5. SUBCUSTODIANS 15
(a) Domestic Subcustodians 15
(b) Foreign Subcustodians 15
(c) Interim Subcustodians 16
(d) Special Subcustodians 17
(e) Termination of a Subcustodian 17
(f) Certification Regarding Foreign Subcustodians 17
6. STANDARD OF CARE 17
(a) General Standard of Care 17
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Armed Conflict, Sovereign Risk, Etc. 18
(c) Liability for Past Records 18
(d) Advice of Counsel 18
(e) Advice of the Fund and Others 19
(f) Instructions Appearing to be Genuine 19
(g) Exceptions from Liability 19
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS 20
(a) Domestic Subcustodians 20
(b) Liability for Acts and Omissions of Foreign Subcustodians 20
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies 20
(d) Defaults or Insolvencies of Brokers, Banks, Etc. 20
(e) Reimbursement of Expenses 20
8. INDEMNIFICATION 21
(a) Indemnification by Fund 21
(b) Indemnification by Custodian 21
9. ADVANCES 21
10. LIENS 22
11. COMPENSATION 22
12. POWERS OF ATTORNEY 22
13. TERMINATION AND ASSIGNMENT 23
14. ADDITIONAL FUNDS 23
15. NOTICES 23
16. MISCELLANEOUS 24
</TABLE>
<PAGE> 4
CUSTODY AGREEMENT
This agreement made as of this 1st day of January, 1995, between UMB Bank,
n.a., a national banking association with its principal place of business
located at Kansas City, Missouri (hereinafter "Custodian"), and each of the
Funds which have executed the signature page hereof together with such
additional Funds which shall be made parties to this Agreement by the execution
of a separate signature page hereto (individually, a "Fund" and collectively,
the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for the
custody of Assets (as hereinafter defined) owned by such Fund which Assets are
to be held in such accounts as such Fund may establish from time to time; and
WHEREAS, Custodian is willing to accept such appointment on the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto, intending to be legally bound, mutually covenant and agree as
follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to
time deposited with the Custodian. Custodian accepts such appointment as
a custodian and agrees to perform the duties and responsibilities of
Custodian as set forth herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills,
rights, script, warrants, interim certificates and all negotiable
or nonnegotiable paper commonly known as Securities and other
instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex, a
written (including, without limitation, facsimile transmission)
request, direction, instruction or
1
<PAGE> 5
certification signed or initialed by or on behalf of a Fund by an
Authorized Person; (ii) a telephonic or other oral communication
from a person the Custodian reasonably believes to be an
Authorized Person; or (iii) a communication effected directly
between an electro-mechanical or electronic device or system
(including, without limitation, computers) on behalf of a Fund.
Instructions in the form of oral communications shall be confirmed
by the appropriate Fund by tested telex or in writing in the
manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral Instructions prior to the
Custodian's receipt of such confirmation. Each Fund authorizes
the Custodian to record any and all telephonic or other oral
Instructions communicated to the Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any
Assistant Treasurer of a Fund or any other person designated by
the Treasurer of such Fund in writing, which countersignature or
confirmation shall be included on the same instrument containing
the Instructions or on a separate instrument relating thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission
or telex number agreed upon from time to time by the Custodian and
each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall be
continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution does
not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required
corporate action to authorize the execution and delivery of this Agreement
has been taken.
Each Fund has furnished the Custodian with copies, properly certified or
authenticated, with all amendments or supplements thereto, of the
following documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund
as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
2
<PAGE> 6
Each Fund shall promptly furnish the Custodian with copies of any updates,
amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or
Trustees and all amendments or supplements thereto, properly certified or
authenticated, designating certain officers or employees of each such Fund
who will have continuing authority to certify to the Custodian: (a) the
names, titles, signatures and scope of authority of all persons authorized
to give Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of each Fund, and (b) the names,
titles and signatures of those persons authorized to countersign or
confirm Special Instructions on behalf of each Fund (in both cases
collectively, the "Authorized Persons" and individually, an "Authorized
Person"). Such Resolutions and certificates may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth
therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not
include the name(s) of a person previously authorized to give Instructions
or to countersign or confirm Special Instructions, such persons shall no
longer be considered an Authorized Person authorized to give Instructions
or to countersign or confirm Special Instructions. Unless the certificate
specifically requires that the approval of anyone else will first have
been obtained, the Custodian will be under no obligation to inquire into
the right of the person giving such Instructions or Special Instructions
to do so. Notwithstanding any of the foregoing, no Instructions or
Special Instructions received by the Custodian from a Fund will be deemed
to authorize or permit any director, trustee, officer, employee, or agent
of such Fund to withdraw any of the Assets of such Fund upon the mere
receipt of such authorization, Special Instructions or Instructions from
such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to Sections
5(b), (c), or (d) of this Agreement, the Custodian shall have and perform
the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed
pursuant to Section 5(a).
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be
responsible for any property of a Fund held or received by such
Fund and not delivered to the Custodian.
3
<PAGE> 7
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each
Fund either: (i) by physical possession of the share
certificates or other instruments representing such
Securities in registered or bearer form; or (ii) in
book-entry form by a Securities System (as hereinafter
defined) in accordance with the provisions of sub-paragraph
(3) below.
(2) The Custodian may hold registrable portfolio Securities
which have been delivered to it in physical form, by
registering the same in the name of the appropriate Fund or
its nominee, or in the name of the Custodian or its nominee,
for whose actions such Fund and Custodian, respectively,
shall be fully responsible. Upon the receipt of
Instructions, the Custodian shall hold such Securities in
street certificate form, so called, with or without any
indication of fiduciary capacity. However, unless it
receives Instructions to the contrary, the Custodian will
register all such portfolio Securities in the name of the
Custodian's authorized nominee. All such Securities shall
be held in an account of the Custodian containing only
assets of the appropriate Fund or only assets held by the
Custodian as a fiduciary, provided that the records of the
Custodian shall indicate at all times the Fund or other
customer for which such Securities are held in such accounts
and the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic
Securities owned by a Fund in, and each Fund hereby approves
use of: (a) The Depository Trust Company; (b) The
Participants Trust Company; and (c) any book-entry system as
provided in (i) Subpart 0 of Treasury Circular No. 300, 31
CFR 306.115, (ii) Subpart B of Treasury Circular Public Debt
Series No. 27-76, 31 CFR 350.2, or (iii) the book-entry
regulations of federal agencies substantially in the form of
31 CFR 306.115. Upon the receipt of Special Instructions,
the Custodian may deposit and/or maintain domestic
Securities owned by a Fund in any other domestic clearing
agency registered with the Securities and Exchange
Commission ("SEC") under Section 17A of the Securities
Exchange Act of 1934 (or as may otherwise be authorized by
the SEC to serve in the capacity of depository or clearing
agent for the Securities or other assets of investment
companies) which acts as a Securities depository. Each of
the foregoing shall be referred to in this Agreement as a
"Securities System", and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities
System shall be in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are
also qualified to act as custodians for investment
companies.
4
<PAGE> 8
(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that such
Securities are represented in an account ("Account")
of the Custodian in the Securities System that
includes only assets held by the Custodian as a
fiduciary, custodian or otherwise for customers.
(iii) The books and records of the Custodian shall at all
times identify those Securities belonging to any one
or more Funds which are maintained in a Securities
System.
(iv) The Custodian shall pay for Securities purchased for
the account of a Fund only upon (a) receipt of advice
from the Securities System that such Securities have
been transferred to the Account of the Custodian in
accordance with the rules of the Securities System,
and (b) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall
transfer Securities sold for the account of a Fund
only upon (a) receipt of advice from the Securities
System that payment for such Securities has been
transferred to the Account of the Custodian in
accordance with the rules of the Securities System,
and (b) the making of an entry on the records of the
Custodian to reflect such transfer and payment for
the account of such Fund. Copies of all advices from
the Securities System relating to transfers of
Securities for the account of a Fund shall be
maintained for such Fund by the Custodian. The
Custodian shall deliver to a Fund on the next
succeeding business day daily transaction reports
which shall include each day's transactions in the
Securities System for the account of such Fund. Such
transaction reports shall be delivered to such Fund
or any agent designated by such Fund pursuant to
Instructions, by computer or in such other manner as
such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund pursuant
to Instructions, provide such Fund with reports
obtained by the Custodian or any Subcustodian with
respect to a Securities System's accounting system,
internal accounting control and procedures for
safeguarding Securities deposited in the Securities
System.
(vi) Upon receipt of Special Instructions, the Custodian
shall terminate the use of any Securities System on
behalf of a Fund as promptly as practicable and shall
take all actions reasonably practicable to safeguard
the Securities of such Fund maintained with such
Securities System.
5
<PAGE> 9
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except
as provided in Section 3 hereof, the Custodian, upon receipt of
Special Instructions, will undertake to make free delivery of
Assets, provided such Assets are on hand and available, in
connection with a Fund's transactions and to transfer such Assets
to such broker, dealer, Subcustodian, bank, agent, Securities
System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange
portfolio Securities held by it for a Fund for other Securities or
cash paid in connection with any reorganization, recapitalization,
merger, consolidation, or conversion of convertible Securities,
and will deposit any such Securities in accordance with the terms
of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange
Securities held by it in temporary form for Securities in
definitive form, to surrender Securities for transfer into a name
or nominee name as permitted in Section 4(b)(2), to effect an
exchange of shares in a stock split or when the par value of the
stock is changed, to sell any fractional shares, and, upon
receiving payment therefor, to surrender bonds or other Securities
held by it at maturity or call.
(e) Purchase of Assets.
(1) Securities Purchases. In accordance with Instructions,
the Custodian shall, with respect to a purchase of
Securities, pay for such Securities out of monies held
for a Fund's account for which the purchase was made, but
only insofar as monies are available therein for such
purpose, and receive the portfolio Securities so
purchased. Unless the Custodian has received Special
Instructions to the contrary, such payment will be made
only upon receipt of Securities by the Custodian, a
clearing corporation of a national Securities exchange of
which the Custodian is a member, or a Securities System
in accordance with the provisions of Section 4(b)(3)
hereof. Notwithstanding the foregoing, upon receipt of
Instructions: (i) in connection with a repurchase
agreement, the Custodian may release funds to a
Securities System prior to the receipt of advice from the
Securities System that the Securities underlying such
repurchase agreement have been transferred by book-entry
into the Account maintained with such Securities System
by the Custodian, provided that the Custodian's
instructions to the Securities System require that the
Securities System may make payment of such funds to the
other party to the repurchase agreement only upon
transfer by book-entry of the Securities underlying the
repurchase agreement into such Account; (ii) in the case
of Interest Bearing Deposits, currency deposits, and
6
<PAGE> 10
other deposits, foreign exchange transactions, futures
contracts or options, pursuant to Sections 4(g), 4(h),
4(1), and 4(m) hereof, the Custodian may make payment
therefor before receipt of an advice of transaction; and
(iii) in the case of Securities as to which payment for
the Security and receipt of the instrument evidencing the
Security are under generally accepted trade practice or
the terms of the instrument representing the Security
expected to take place in different locations or through
separate parties, such as commercial paper which is
indexed to foreign currency exchange rates, derivatives
and similar Securities, the Custodian may make payment
for such Securities prior to delivery thereof in
accordance with such generally accepted trade practice or
the terms of the instrument representing such Security.
(2) Other Assets Purchased. Upon receipt of Instructions and
except as otherwise provided herein, the Custodian shall pay
for and receive other Assets for the account of a Fund as
provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the
Custodian will, with respect to a sale, deliver or cause to
be delivered the Securities thus designated as sold to the
broker or other person specified in the Instructions
relating to such sale. Unless the Custodian has received
Special Instructions to the contrary, such delivery shall be
made only upon receipt of payment therefor in the form of:
(a) cash, certified check, bank cashier's check, bank
credit, or bank wire transfer; (b) credit to the account of
the Custodian with a clearing corporation of a national
Securities exchange of which the Custodian is a member; or
(c) credit to the Account of the Custodian with a Securities
System, in accordance with the provisions of Section 4(b)(3)
hereof. Notwithstanding the foregoing, Securities held in
physical form may be delivered and paid for in accordance
with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for
such Securities, provided that the Custodian shall have
taken reasonable steps to ensure prompt collection of the
payment for, or return of, such Securities by the broker or
its clearing agent, and provided further that the Custodian
shall not be responsible for the selection of or the failure
or inability to perform of such broker or its clearing agent
or for any related loss arising from delivery or custody of
such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except
as otherwise provided herein, the Custodian shall receive
payment for and deliver other Assets for the account of a
Fund as provided in Instructions.
7
<PAGE> 11
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an
option or sale of a covered call option, the Custodian
shall: (a) receive and retain confirmations or other
documents, if any, evidencing the purchase or writing of the
option by a Fund; (b) if the transaction involves the sale
of a covered call option, deposit and maintain in a
segregated account the Securities (either physically or by
book-entry in a Securities System) subject to the covered
call option written on behalf of such Fund; and (c) pay,
release and/or transfer such Securities, cash or other
Assets in accordance with any notices or other
communications evidencing the expiration, termination or
exercise of such options which are furnished to the
Custodian by the Options Clearing Corporation (the "OCC"),
the securities or options exchanges on which such options
were traded, or such other organization as may be
responsible for handling such option transactions.
(2) Upon receipt of Instructions relating to the sale of a naked
option (including stock index and commodity options), the
Custodian, the appropriate Fund and the broker-dealer shall
enter into an agreement to comply with the rules of the OCC
or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such
Fund's Instructions, the Custodian shall: (a) receive and
retain confirmations or other documents, if any, evidencing
the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by
book-entry in a Securities System), cash and/or other
Assets; and (c) pay, release and/or transfer such
Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications
evidencing the expiration, termination or exercise of such
option which are furnished to the Custodian by the OCC, the
securities or options exchanges on which such options were
traded, or such other organization as may be responsible for
handling such option transactions. The appropriate Fund and
the broker-dealer shall be responsible for determining the
quality and quantity of assets held in any segregated
account established in compliance with applicable margin
maintenance requirements and the performance of other terms
of any option contract.
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a
futures margin procedural agreement among the appropriate Fund,
the Custodian and the designated futures commission merchant (a
"Procedural Agreement"). Under the Procedural Agreement the
Custodian shall: (a) receive and retain confirmations, if any,
evidencing the purchase or sale of a futures contract or an option
on a futures contract by such Fund; (b) deposit and maintain in a
segregated account cash, Securities and/or other Assets designated
as initial, maintenance or variation
8
<PAGE> 12
"margin" deposits intended to secure such Fund's performance of
its obligations under any futures contracts purchased or sold, or
any options on futures contracts written by such Fund, in
accordance with the provisions of any Procedural Agreement
designed to comply with the provisions of the Commodity Futures
Trading Commission and/or any commodity exchange or contract
market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (c) release
Assets from and/or transfer Assets into such margin accounts only
in accordance with any such Procedural Agreements. The
appropriate Fund and such futures commission merchant shall be
responsible for determining the type and amount of Assets held in
the segregated account or paid to the broker-dealer in compliance
with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures
contract in accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and
maintain on its books a segregated account or accounts for and on
behalf of a Fund, into which account or accounts may be
transferred Assets of such Fund, including Securities maintained
by the Custodian in a Securities System pursuant to Paragraph
(b)(3) of this Section 4, said account or accounts to be
maintained (i) for the purposes set forth in Sections 4(g), 4(h)
and 4(n) and (ii) for the purpose of compliance by such Fund with
the procedures required by the SEC Investment Company Act Release
Number 10666 or any subsequent release or releases relating to the
maintenance of segregated accounts by registered investment
companies, or (iii) for such other purposes as may be set forth,
from time to time, in Special Instructions. The Custodian shall
not be responsible for the determination of the type or amount of
Assets to be held in any segregated account referred to in this
paragraph, or for compliance by the Fund with required procedures
noted in (ii) above.
(j) Depository Receipts.
Upon receipt of Instructions, the Custodian shall surrender or
cause to be surrendered Securities to the depositary used for such
Securities by an issuer of American Depositary Receipts or
International Depositary Receipts (hereinafter referred to,
collectively, as "ADRs"), against a written receipt therefor
adequately describing such Securities and written evidence
satisfactory to the organization surrendering the same that the
depositary has acknowledged receipt of instructions to issue ADRs
with respect to such Securities in the name of the Custodian or a
nominee of the Custodian, for delivery in accordance with such
instructions.
Upon receipt of Instructions, the Custodian shall surrender or
cause to be surrendered ADRs to the issuer thereof, against a
written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the organization
surrendering the same that the issuer of the ADRs has
9
<PAGE> 13
acknowledged receipt of instructions to cause its depository to
deliver the Securities underlying such ADRs in accordance with
such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar Securities to the issuer
or trustee thereof (or to the agent of such issuer or trustee) for
the purpose of exercise or sale, provided that the new Securities,
cash or other Assets, if any, acquired as a result of such actions
are to be delivered to the Custodian; and (b) deposit Securities
upon invitations for tenders thereof, provided that the
consideration for such Securities is to be paid or delivered to
the Custodian, or the tendered Securities are to be returned to
the Custodian.
Notwithstanding any provision of this Agreement to the contrary,
the Custodian shall take all necessary action, unless otherwise
directed to the contrary in Instructions, to comply with the terms
of all mandatory or compulsory exchanges, calls, tenders,
redemptions, or similar rights of security ownership, and shall
notify the appropriate Fund of such action in writing by facsimile
transmission or in such other manner as such Fund and Custodian
may agree in writing.
The Fund agrees that if it gives an Instruction for the
performance of an act on the last permissible date of a period
established by any optional offer or on the last permissible date
for the performance of such act, the Fund shall hold the Bank
harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase
interest bearing fixed term and call deposits (hereinafter
referred to, collectively, as "Interest Bearing Deposits") for the
account of a Fund, the Custodian shall purchase such Interest
Bearing Deposits in the name of such Fund with such banks or trust
companies, including the Custodian, any Subcustodian or any
subsidiary or affiliate of the Custodian (hereinafter referred to
as "Banking Institutions"), and in such amounts as such Fund may
direct pursuant to Instructions. Such Interest Bearing Deposits
may be denominated in U.S. dollars or other currencies, as such
Fund may determine and direct pursuant to Instructions. The
responsibilities of the Custodian to a Fund for Interest Bearing
Deposits issued by the Custodian shall be that of a U.S. bank for
a similar deposit. With respect to Interest Bearing Deposits
other than those issued by the Custodian, (a) the Custodian shall
be responsible for the collection of income and the transmission
of cash to and from such accounts; and (b) the Custodian shall
have no duty with respect to the selection of the Banking
Institution or for the failure of such Banking Institution to pay
upon demand.
10
<PAGE> 14
(m) Foreign Exchange Transactions Other than as Principal.
(1) Upon receipt of Instructions, the Custodian shall settle
foreign exchange contracts or options to purchase and sell
foreign currencies for spot and future delivery on behalf of
and for the account of a Fund with such currency brokers or
Banking Institutions as such Fund may determine and direct
pursuant to Instructions. Each Fund accepts full
responsibility for its use of third party foreign exchange
brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any
and all costs and interest charges which may be incurred as
a result of the failure or delay of its third party broker
to deliver foreign exchange. The Custodian shall have no
responsibility with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or,
so long as the Custodian acts in accordance with
Instructions, for the failure of such brokers or Banking
Institutions to comply with the terms of any contract or
option.
(2) Notwithstanding anything to the contrary contained herein,
upon receipt of Instructions the Custodian may, in
connection with a foreign exchange contract, make free
outgoing payments of cash in the form of U.S. Dollars or
foreign currency prior to receipt of confirmation of such
foreign exchange contract or confirmation that the
countervalue currency completing such contract has been
delivered or received.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian will
release or cause to be released Securities held in custody
to the pledgees designated in such Instructions by way of
pledge or hypothecation to secure loans incurred by such
Fund with various lenders including but not limited to UMB
Bank, n.a.; provided, however, that the Securities shall be
released only upon payment to the Custodian of the monies
borrowed, except that in cases where additional collateral
is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be
released or delivered for that purpose upon receipt of
Instructions. Upon receipt of Instructions, the Custodian
will pay, but only from funds available for such purpose,
any such loan upon re-delivery to it of the Securities
pledged or hypothecated therefor and upon surrender of the
note or notes evidencing such loan. In lieu of delivering
collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a
segregated account for the benefit of the pledgee.
11
<PAGE> 15
(2) Upon receipt of Special Instructions, and execution of a
separate Securities Lending Agreement, the Custodian will
release Securities held in custody to the borrower
designated in such Instructions and may, except as otherwise
provided below, deliver such Securities prior to the receipt
of collateral, if any, for such borrowing, provided that, in
case of loans of Securities held by a Securities System that
are secured by cash collateral, the Custodian's instructions
to the Securities System shall require that the Securities
System deliver the Securities of the appropriate Fund to the
borrower thereof only upon receipt of the collateral for
such borrowing. The Custodian shall have no responsibility
or liability for any loss arising from the delivery of
Securities prior to the receipt of collateral. Upon receipt
of Instructions and the loaned Securities, the Custodian
will release the collateral to the borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends,
rights, and other items of like nature and, upon receipt of
Instructions, take action with respect to the same as directed in
such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and
mechanical matters in accordance with industry standards in
connection with the sale, exchange, substitution, purchase,
transfer, or other dealings with Securities or other property of
each Fund except as may be otherwise provided in this Agreement or
directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others
from the Assets for disbursements and out-of-pocket expenses
incidental to handling Securities or other similar items relating
to its duties under this Agreement, provided that all such
payments shall be accounted for to the appropriate Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each
Fund with respect to portfolio Securities and other Assets;
(b) promptly credit to the account of each Fund all income and
other payments relating to portfolio Securities and other Assets
held by the Custodian hereunder upon Custodian's receipt of such
income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and
deliver any instruments required to effect such collection; and
(d) promptly execute ownership and other certificates and
affidavits for all federal, state, local and foreign tax purposes
in connection with receipt of income or other payments with
respect to portfolio Securities and other Assets, or in connection
with the transfer of such Securities or other Assets; provided,
however, that with respect to portfolio Securities registered in
so-called street name, or physical Securities with variable
interest rates, the Custodian shall use its
12
<PAGE> 16
best efforts to collect amounts due and payable to any such Fund.
The Custodian shall notify a Fund in writing by facsimile
transmission or in such other manner as such Fund and Custodian
may agree in writing if any amount payable with respect to
portfolio Securities or other Assets is not received by the
Custodian when due. The Custodian shall not be responsible for
the collection of amounts due and payable with respect to
portfolio Securities or other Assets that are in default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank
account or accounts on the books of the Custodian; provided that
such bank account(s) shall be in the name of the Custodian or a
nominee thereof, for the account of one or more Funds, and shall
be subject only to draft or order of the Custodian. The
responsibilities of the Custodian to any one or more such Funds
for deposits accepted on the Custodian's books shall be that of a
U.S. bank for a similar deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders
who have requested repurchase or redemption of their shares of
each such Fund (collectively, the "Shares"), the Custodian shall
release cash or Securities insofar as available. In the case of
cash, the Custodian shall, upon the receipt of Instructions,
transfer such funds by check or wire transfer to any account at
any bank or trust company designated by each such Fund in such
Instructions. In the case of Securities, the Custodian shall,
upon the receipt of Special Instructions, make such transfer to
any entity or account designated by each such Fund in such Special
Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments
received for shares issued or sold from time to time by each Fund,
and shall credit such funds to the account of the appropriate
Fund. The Custodian shall notify the appropriate Fund of
Custodian's receipt of cash in payment for shares issued by such
Fund by facsimile transmission or in such other manner as such
Fund and the Custodian shall agree. Upon receipt of Instructions,
the Custodian shall: (a) deliver all federal funds received by
the Custodian in payment for shares as may be set forth in such
Instructions and at a time agreed upon between the Custodian and
such Fund; and (b) make federal funds available to a Fund as of
specified times agreed upon from time to time by such Fund and the
Custodian, in the amount of checks received in payment for shares
which are deposited to the accounts of such Fund.
13
<PAGE> 17
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985.
The Custodian shall deliver or cause to be delivered to the
appropriate Fund all forms of proxies, all notices of meetings,
and any other notices or announcements affecting or relating to
Securities owned by such Fund that are received by the Custodian,
any Subcustodian, or any nominee of either of them, and, upon
receipt of Instructions, the Custodian shall execute and deliver,
or cause such Subcustodian or nominee to execute and deliver, such
proxies or other authorizations as may be required. Except as
directed pursuant to Instructions, neither the Custodian nor any
Subcustodian or nominee shall vote upon any such Securities, or
execute any proxy to vote thereon, or give any consent or take any
other action with respect thereto.
The Custodian will not release the identity of any Fund to an
issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and any such Fund unless a
particular Fund directs the Custodian otherwise in writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its
activities under this Agreement as are required to be maintained
by Rule 31a-1 under the Investment Company Act of 1940 ("the 1940
Act") and to preserve them for the periods prescribed in Rule
31a-2 under the 1940 Act. These records shall be open for
inspection by duly authorized officers, employees or agents
(including independent public accountants) of the appropriate Fund
during normal business hours of the Custodian.
The Custodian shall provide accountings relating to its activities
under this Agreement as shall be agreed upon by each Fund and the
Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may
request to obtain from year to year favorable opinions from each
such Fund's independent certified public accountants with respect
to the Custodian's activities hereunder and in connection with the
preparation of each such Fund's periodic reports to the SEC and
with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund
a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the
Custodian under this Agreement, including, without
14
<PAGE> 18
limitation, the Custodian's accounting system, internal accounting
control and procedures for safeguarding cash, Securities and other
Assets, including cash, Securities and other Assets deposited
and/or maintained in a Securities System or with a Subcustodian.
Such report shall be of sufficient scope and in sufficient detail
as may reasonably be required by such Fund and as may reasonably
be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to
be paid, all bills, statements, or other obligations of a Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Special Subcustodians, or Interim Subcustodians (as
each are hereinafter defined) to act on behalf of any one or more Funds.
A Domestic Subcustodian, in accordance with the provisions of this
Agreement, may also appoint a Foreign Subcustodian, Special Subcustodian,
or Interim Subcustodian to act on behalf of any one or more Funds. For
purposes of this Agreement, all Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians and Interim Subcustodians shall be
referred to collectively as "Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any
bank as defined in Section 2(a)(5) of the 1940 Act or any trust
company or other entity, any of which meet the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and
regulations thereunder, to act for the Custodian on behalf of any
one or more Funds as a subcustodian for purposes of holding Assets
of such Fund(s) and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"). Each Fund
shall approve in writing the appointment of the proposed Domestic
Subcustodian; and the Custodian's appointment of any such Domestic
Subcustodian shall not be effective without such prior written
approval of the Fund(s). Each such duly approved Domestic
Subcustodian shall be listed on Appendix A attached hereto, as it
may be amended, from time to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic
Subcustodian to appoint, any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under
Section 17(f) of the 1940 Act and the rules and regulations
thereunder to act for the Custodian on behalf of any one or more
Funds as a subcustodian or sub-subcustodian (if appointed by a
Domestic Subcustodian)
15
<PAGE> 19
for purposes of holding Assets of the Fund(s) and performing other
functions of the Custodian in countries other than the United
States of America (hereinafter referred to as a "Foreign
Subcustodian" in the context of either a subcustodian or a
sub-subcustodian); provided that the Custodian shall have obtained
written confirmation from each Fund of the approval of the Board
of Directors or other governing body of each such Fund (which
approval may be withheld in the sole discretion of such Board of
Directors or other governing body or entity) with respect to
(i) the identity of any proposed Foreign Subcustodian (including
branch designation), (ii) the country or countries in which, and
the securities depositories or clearing agencies (hereinafter
"Securities Depositories and Clearing Agencies"), if any, through
which, the Custodian or any proposed Foreign Subcustodian is
authorized to hold Securities and other Assets of each such Fund,
and (iii) the form and terms of the subcustodian agreement to be
entered into with such proposed Foreign Subcustodian. Each such
duly approved Foreign Subcustodian and the countries where and the
Securities Depositories and Clearing Agencies through which they
may hold Securities and other Assets of the Fund(s) shall be
listed on Appendix A attached hereto, as it may be amended, from
time to time. Each Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which
is to be held in a country in which no Foreign Subcustodian is
authorized to act, in order that there shall be sufficient time
for the Custodian, or any Domestic Subcustodian, to effect the
appropriate arrangements with a proposed Foreign Subcustodian,
including obtaining approval as provided in this Section 5(b). In
connection with the appointment of any Foreign Subcustodian, the
Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian
in form and substance approved by each such Fund. The Custodian
shall not consent to the amendment of, and shall cause any
Domestic Subcustodian not to consent to the amendment of, any
agreement entered into with a Foreign Subcustodian, which
materially affects any Fund's rights under such agreement, except
upon prior written approval of such Fund pursuant to Special
Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall
invest in an Asset to be held in a country in which no Foreign
Subcustodian is authorized to act, the Custodian shall notify such
Fund in writing by facsimile transmission or in such other manner
as such Fund and the Custodian shall agree in writing of the
unavailability of an approved Foreign Subcustodian in such
country; and upon the receipt of Special Instructions from such
Fund, the Custodian shall, or shall cause its Domestic
Subcustodian to, appoint or approve an entity (referred to herein
as an "Interim Subcustodian") designated in such Special
Instructions to hold such Security or other Asset.
16
<PAGE> 20
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall on
behalf of a Fund, appoint one or more banks, trust companies or
other entities designated in such Special Instructions to act for
the Custodian on behalf of such Fund as a subcustodian for
purposes of: (i) effecting third-party repurchase transactions
with banks, brokers, dealers or other entities through the use of
a common custodian or subcustodian; (ii) providing depository and
clearing agency services with respect to certain variable rate
demand note Securities, (iii) providing depository and clearing
agency services with respect to dollar denominated Securities, and
(iv) effecting any other transactions designated by such Fund in
such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be
listed on Appendix A attached hereto, as it may be amended from
time to time. In connection with the appointment of any Special
Subcustodian, the Custodian shall enter into a subcustodian
agreement with the Special Subcustodian in form and substance
approved by the appropriate Fund in Special Instructions. The
Custodian shall not amend any subcustodian agreement entered into
with a Special Subcustodian, or waive any rights under such
agreement, except upon prior approval pursuant to Special
Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification
to the appropriate Fund(s), terminate any Subcustodian of such
Fund(s) in accordance with the termination provisions under the
applicable subcustodian agreement, and upon the receipt of Special
Instructions, the Custodian will terminate any Subcustodian in
accordance with the termination provisions under the applicable
subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign
Subcustodian then acting on behalf of the Custodian; (ii) the
countries in which and the Securities Depositories and Clearing
Agencies through which each such Foreign Subcustodian is then
holding cash, Securities and other Assets of such Fund; and
(iii) such other information as may be requested by such Fund, and
as the Custodian shall be reasonably able to obtain, to evidence
compliance with rules and regulations under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages
and reasonable costs and expenses suffered or incurred by such
Fund resulting from the gross
17
<PAGE> 21
negligence or willful misfeasance of the Custodian; provided,
however, in no event shall the Custodian be liable for special,
indirect or consequential damages arising under or in connection
with this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder if the Custodian or any Subcustodian or
Securities System, or any subcustodian, Securities System,
Securities Depository or Clearing Agency utilized by the Custodian
or any such Subcustodian, or any nominee of the Custodian or any
Subcustodian (individually, a "Person") is prevented, forbidden or
delayed from performing, or omits to perform, any act or thing
which this Agreement provides shall be performed or omitted to be
performed, by reason of: (i) any provision of any present or
future law or regulation or order of the United States of America,
or any state thereof, or of any foreign country, or political
subdivision thereof or of any court of competent jurisdiction (and
neither the Custodian nor any other Person shall be obligated to
take any action contrary thereto); or (ii) any event beyond the
control of the Custodian or other Person such as armed conflict,
riots, strikes, lockouts, labor disputes, equipment or
transmission failures, natural disasters, or failure of the mails,
transportation, communications or power supply; or (iii) any
"Sovereign Risk." A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other
charges affecting a Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event
beyond the Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a
Fund, insofar as such loss, damage or expense arises from the
performance of the Custodian or any Domestic Subcustodian in
reliance upon records that were maintained for such Fund by
entities other than the Custodian or any Domestic Subcustodian
prior to the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to
receive and act upon advice of counsel of its own choosing on all
matters. The Custodian and all Domestic Subcustodians shall be
without liability for any actions taken or omitted in good faith
pursuant to the advice of counsel.
18
<PAGE> 22
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the
advice of any Fund and upon statements of such Fund's accountants
and other persons believed by it in good faith to be expert in
matters upon which they are consulted, and neither the Custodian
nor any Domestic Subcustodian shall be liable for any actions
taken or omitted, in good faith, pursuant to such advice or
statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully
protected and indemnified in acting as a custodian hereunder upon
any Resolutions of the Board of Directors or Trustees,
Instructions, Special Instructions, advice, notice, request,
consent, certificate, instrument or paper appearing to it to be
genuine and to have been properly executed and shall, unless
otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained
from any Fund hereunder a certificate signed by any officer of
such Fund authorized to countersign or confirm Special
Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof,
neither the Custodian nor any Domestic Subcustodian shall be under
any duty or obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by or
for any Fund, the legality of the purchase thereof or
evidence of ownership required to be received by any such
Fund, or the propriety of the decision to purchase or amount
paid therefor;
(ii) the legality of the sale of any Securities by or for any
Fund, or the propriety of the amount for which the same were
sold; or
(iii) any other expenditures, encumbrances of Securities,
borrowings or similar actions with respect to any Fund's
Assets;
and may, until notified to the contrary, presume that all
Instructions or Special Instructions received by it are not in
conflict with or in any way contrary to any provisions of any such
Fund's Declaration of Trust, Partnership Agreement, Articles of
Incorporation or By-Laws or votes or proceedings of the
shareholders, trustees, partners or directors of any such Fund, or
any such Fund's currently effective Registration Statement on file
with the SEC.
19
<PAGE> 23
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any
Domestic Subcustodian to the same extent as if such actions or
omissions were performed by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to
such Fund caused by or resulting from the acts or omissions of any
Foreign Subcustodian to the extent that, under the terms set forth
in the subcustodian agreement between the Custodian or a Domestic
Subcustodian and such Foreign Subcustodian, the Foreign
Subcustodian has failed to perform in accordance with the standard
of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign
Subcustodian under the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage
or expense suffered or incurred by such Fund resulting from or
occasioned by the actions or omissions of a Securities System,
Interim Subcustodian, Special Subcustodian, or Securities
Depository and Clearing Agency unless such loss, damage or expense
is caused by, or results from, the gross negligence or willful
misfeasance of the Custodian.
(d) Defaults or Insolvencies of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense
suffered or incurred by any Fund resulting from or occasioned by
the actions, omissions, neglects, defaults or insolvency of any
broker, bank, trust company or any other person with whom the
Custodian may deal (other than any of such entities acting as a
Subcustodian, Securities System or Securities Depository and
Clearing Agency, for whose actions the liability of the Custodian
is set out elsewhere in this Agreement) unless such loss, damage
or expense is caused by, or results from, the gross negligence or
willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket
expenses incurred by the Custodian in connection with this
Agreement, but excluding salaries and usual overhead expenses.
20
<PAGE> 24
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund
agrees to indemnify and hold harmless the Custodian and its
nominees from all losses, damages and expenses (including
attorneys' fees) suffered or incurred by the Custodian or its
nominee caused by or arising from actions taken by the Custodian,
its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to,
any indemnification obligations undertaken by the Custodian under
any relevant subcustodian agreement; provided, however, that such
indemnity shall not apply to the extent the Custodian is liable
under Sections 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect
to Securities, which action involves the payment of money or which
may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to such Fund being liable for the payment of
money or incurring liability of some other form, such Fund, as a
prerequisite to requiring the Custodian to take such action, shall
provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in
addition to the obligations provided in Sections 6 and 7, the
Custodian agrees to indemnify and hold harmless each Fund from all
losses, damages and expenses suffered or incurred by each such
Fund caused by the gross negligence or willful misfeasance of the
Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing
Agency acting either directly or indirectly under agreement with the
Custodian (each of which for purposes of this Section 9 shall be referred
to as "Custodian"), makes any payment or transfer of funds on behalf of
any Fund as to which there would be, at the close of business on the date
of such payment or transfer, insufficient funds held by the Custodian on
behalf of any such Fund, the Custodian may, in its discretion without
further Instructions, provide an advance ("Advance") to any such Fund in
an amount sufficient to allow the completion of the transaction by reason
of which such payment or transfer of funds is to be made. In addition, in
the event the Custodian is directed by Instructions to make any payment or
transfer of funds on behalf of any Fund as to which it is subsequently
determined that such Fund has overdrawn its cash account with the
Custodian as of the close of business on the date of such payment or
transfer, said overdraft shall constitute an Advance. Any
21
<PAGE> 25
Advance shall be payable by the Fund on behalf of which the Advance was
made on demand by Custodian, unless otherwise agreed by such Fund and the
Custodian, and shall accrue interest from the date of the Advance to the
date of payment by such Fund to the Custodian at a rate agreed upon in
writing from time to time by the Custodian and such Fund. It is
understood that any transaction in respect of which the Custodian shall
have made an Advance, including but not limited to a foreign exchange
contract or transaction in respect of which the Custodian is not acting as
a principal, is for the account of and at the risk of the Fund on behalf
of which the Advance was made, and not, by reason of such Advance, deemed
to be a transaction undertaken by the Custodian for its own account and
risk. The Custodian and each of the Funds which are parties to this
Agreement acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of Securities for prompt delivery in
accordance with the settlement terms of such transactions or to meet
emergency expenses not reasonably foreseeable by a Fund. The Custodian
shall promptly notify the appropriate Fund of any Advance. Such
notification shall be sent by facsimile transmission or in such other
manner as such Fund and the Custodian may agree.
10. LIENS.
The Bank shall have a lien on the Property in the Custody Account to
secure payment of fees and expenses for the services rendered under this
Agreement. If the Bank advances cash or securities to the Fund for any
purpose or in the event that the Bank or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of its duties hereunder, except such as
may arise from its or its nominee's negligent action, negligent failure to
act or willful misconduct, any Property at any time held for the Custody
Account shall be security therefor and the Fund hereby grants a security
interest therein to the Bank. The Fund shall promptly reimburse the Bank
for any such advance of cash or securities or any such taxes, charges,
expenses, assessments, claims or liabilities upon request for payment, but
should the Fund fail to so reimburse the Bank, the Bank shall be entitled
to dispose of such Property to the extent necessary to obtain
reimbursement. The Bank shall be entitled to debit any account of the
Fund with the Bank including, without limitation, the Custody Account, in
connection with any such advance and any interest on such advance as the
Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to each such
Fund and paid in cash to the Custodian.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary
or desirable in connection with
22
<PAGE> 26
the performance by the Custodian or any Subcustodian of their respective
obligations under this Agreement or any applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return
receipt requested) to the other not less than 90 days prior to the date
upon which such termination shall take effect. Upon termination of this
Agreement, the appropriate Fund shall pay to the Custodian such fees as
may be due the Custodian hereunder as well as its reimbursable
disbursements, costs and expenses paid or incurred. Upon termination of
this Agreement, the Custodian shall deliver, at the terminating party's
expense, all Assets held by it hereunder to the appropriate Fund or as
otherwise designated by such Fund by Special Instructions. Upon such
delivery, the Custodian shall have no further obligations or liabilities
under this Agreement except as to the final resolution of matters relating
to activity occurring prior to the effective date of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by
its Board of Directors or Trustees.
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund
or Funds and the Custodian. If this Agreement is terminated as to one or
more of the Funds (but less than all of the Funds) or if an additional
Fund or Funds shall become a party to this Agreement, there shall be
delivered to each party an Appendix B or an amended Appendix B, signed by
each of the additional Funds (if any) and each of the remaining Funds as
well as the Custodian, deleting or adding such Fund or Funds, as the case
may be. The termination of this Agreement as to less than all of the
Funds shall not affect the obligations of the Custodian and the remaining
Funds hereunder as set forth on the signature page hereto and in Appendix
B as revised from time to time.
15. NOTICES.
As to each Fund, notices, requests, instructions and other writings
delivered to The Security Benefit Group of Companies, 700 Harrison,
Topeka, KS 66636-0001 , postage prepaid, or to such other address as any
particular Fund may have designated to the Custodian in writing, shall be
deemed to have been properly delivered or given to a Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration Department of the Custodian at its office at 928
Grand Avenue, Kansas City, Missouri, or mailed postage prepaid, to the
Custodian's Securities Administration Department, Post Office Box 226,
Kansas City, Missouri 64141, or to such other addresses as the Custodian
may have designated to each Fund in writing, shall be deemed
23
<PAGE> 27
to have been properly delivered or given to the Custodian hereunder;
provided, however, that procedures for the delivery of Instructions and
Special Instructions shall be governed by Section 2(c) hereof..
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri
and shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or
waived, in any manner except in writing, properly executed by both
parties hereto; provided, however, Appendix A may be amended from
time to time as Domestic Subcustodians, Foreign Subcustodians,
Special Subcustodians, and Securities Depositories and Clearing
Agencies are approved or terminated according to the terms of this
Agreement.
(d) The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(e) This Agreement shall be effective as of the date of execution
hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following
sections of the Agreement:
24
<PAGE> 28
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2
Authorized Person 3
Banking Institution 4(l)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(l)
Liability 10
OCC 4(g)(2)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2
Securities Depositories and Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2
Special Subcustodian 5(c)
Subcustodian 5
1940 Act 4(v)
</TABLE>
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any
court of competent jurisdiction, the remaining portion or portions
shall be considered severable and shall not be affected, and the
rights and obligations of the parties shall be construed and
enforced as if this Agreement did not contain the particular part,
term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof,
and accordingly supersedes, as of the effective date of this
Agreement, any custodian agreement heretofore in effect between
the Fund and the Custodian.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Custody Agreement to be
executed by their respective duly authorized officers.
ATTEST: Security Ultra Fund
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Equity Fund
Equity Series
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Growth and Income Fund
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Income Fund
Corporate Bond Series
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Income Series
Limited Maturity Bond Series
Amy J. Lee By: John D. Cleland
Title: President
26
<PAGE> 30
ATTEST: Security Income Fund
U. S. Government Series
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Tax-Exempt Fund
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: Security Cash Fund
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: SBL Fund
Series A, B, C, E, S and J
Amy J. Lee By: John D. Cleland
Title: President
ATTEST: UMB BANK, N.A.
R. William Bloom By: David Swan
Title: Senior Vice President
27
<PAGE> 31
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
SPECIAL SUBCUSTODIANS:
Bank of New York
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
--------- --------------------- -----------------
Euroclear
Security Income Fund
Security Ultra Fund Limited Maturity Bond Series
By: John D. Cleland By: John D. Cleland
Title: President Title: President
Security Equity Fund Security Income Fund
Equity Series U. S. Government Series
By: John D. Cleland By: John D. Cleland
Title: President Title: President
Security Growth and Income Fund SBL Fund
By: John D. Cleland By: John D. Cleland
Title: President Title: President
Security Income Fund
Corporate Bond Series UMB BANK, N.A.
By: John D. Cleland By: David Swan
Title: President Title: Senior Vice President
28
<PAGE> 1
EXHIBIT 8(b)
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective May 1, 1995, and is between THE CHASE MANHATTAN
BANK, N.A. (the "Bank") and _________________________ (the "Customer").
1. CUSTOMER ACCOUNTS.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money, bullion,
coin and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests
therein and other similar property whether certified or
uncertified as may be received by the Bank or its Subcustodian (as
defined in Section 3) for the account of the Customer
("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its
Subcustodian for the account of the Customer, which cash shall not
be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions
(as defined in Section 11) concerning the Accounts. The Bank may deliver
securities of the same class in place of those deposited in the Custody
Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located,
where such Securities are to be presented for payment or where
such Securities are acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the
legal currency for the payment of public or private debts.
<PAGE> 2
Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency. To the
extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit
for the Customer with itself or one of its affiliates at such reasonable
rates of interest as may from time to time be paid on such accounts, or
in non-interest bearing accounts as the Customer may direct, if
acceptable to the Bank.
If the customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in
Section 3 (or their securities depositories), such arrangement must be
authorized by a written agreement, signed by the Bank and the Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the
Bank to hold Assets in the Accounts in accounts which the Bank has
established with one or more of its branches or Subcustodians.
The Bank and Subcustodians are authorized to hold any of the Securities
in their account with any securities depository in which they
participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment
to Schedule A. Upon request by the Customer, the Bank will identify the
name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such
Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on
such Subcustodian's books as special custody accounts for the
exclusive benefit of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities
held in a securities depository for the account of a Subcustodian
will be subject only to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be
subject to any right, charge, security interest, lien or claim of
any kind in favor of such Subcustodian except for safe custody or
administration, and that the beneficial ownership of such assets
will be freely transferable without the payment of money or value
other than for safe custody
1
<PAGE> 3
or administration. The foregoing shall not apply to the extent of
any special agreement or arrangement made by the Customer with any
particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information
required by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in
its discretion, may advance the Customer such excess amount which
shall be deemed a loan payable on demand, bearing interest at the
rate customarily charged by the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the
Deposit Account, with interest, dividends, redemptions or any
other amount due, the Customer will promptly return any such
amount upon oral or written notification: (i) that such amount
has not been received in the ordinary course of business or (ii)
that such amount was incorrectly credited. If the Customer does
not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the
Customer, to reverse such credit by debiting the Deposit Account
for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such
amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which
include all information required by the Bank. Settlement and
payment for Securities received for and delivery of Securities out
of, the Custody Account may be made in accordance with the
customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivery of Securities to a purchaser, dealer or their agents
against a receipt with the expectation of receiving later payment
and free delivery. Delivery of Securities out of the Custody
Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect
to any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to the Accounts on the
date cash or Securities are actually received by the Bank and
reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts
in its discretion if the related transaction fails to settle
within a reasonable period, determined by
2
<PAGE> 4
the Bank in its discretion, after the contractual settlement
date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the
credits and debits of the particular transaction at any
time.
7. ACTIONS OF THE BANK.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the
Bank will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other
income items which call for payment upon presentation, to the
extent that the Bank or Subcustodian is actually aware of such
opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank
or any Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of
the Assets. Unless the Customer sends the Bank a written exception or
objection to any Bank statement within sixty (60) days of receipt, the
Customer shall be deemed to have approved such statement. In such event,
or where the Customer has otherwise approved any such statement, the Bank
shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or
reasonably implied therefrom as though it had been settled by the decree
of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the
Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by
delay in the actual receipt of notice by the Bank or by its Subcustodians
of any payment, redemption or other transaction regarding Securities in
the Custody Account in respect of which the Bank has agreed to take any
action under this Agreement.
3
<PAGE> 5
8. CORPORATE ACTIONS; PROXIES.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities
(other than a proxy), such as subscription rights, bonus issues, stock
repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"),
the Bank will give the Customer notice of such Corporate Actions to the
extent that the Bank's central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if
Instructions are not received in time for the Bank to take timely action,
or actual notice of such Corporate Action was received too late to seek
Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the Deposit Account with the proceeds
or take any other action it deems, in good faith, to be appropriate in
which case it shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in
writing. Such proxies shall be executed in the appropriate nominee name
relating to Securities in the Custody Account registered in the name of
such nominee, but without indicating the manner in which such proxies are
to be voted; and where bearer Securities are involved, proxies will be
delivered in accordance with Instructions.
9. NOMINEES.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as
the case may be. The Bank may without notice to the Customer cause any
such Securities to cease to be registered in the name of any such nominee
and to be registered in the name of the Customer. In the event that any
Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems
to be fair and equitable. The Customer agrees to hold the Bank,
Subcustodians, and their respective nominees harmless from any liability
arising directly or indirectly from their status as a mere record holder
of Securities in the Custody Account.
10. AUTHORIZED PERSONS.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by
written notice from the Customer or its designated agent to act on behalf
of the Customer under this Agreement. Such persons shall continue to be
Authorized Persons until such time as the Bank receives Instructions from
the Customer or its designated agent that any such employee or agent is
no longer an Authorized Person.
4
<PAGE> 6
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission,
bank wire or other teleprocess or electronic instruction or trade
information system acceptable to the Bank which the Bank believes in good
faith to have been given by Authorized Persons or which are transmitted
with proper testing or authentication pursuant to terms and conditions
which the Bank may specify. Unless otherwise expressly provided, all
Instructions shall continue in full force and effect until canceled or
superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which
confirmation may bear the facsimile signature of such Person), but the
Customer will hold the Bank harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such
confirmation to conform to the telephone instructions received or the
Bank's failure to produce such confirmation at any subsequent time. The
Bank may electronically record any Instructions given by telephone, and
any other telephone discussions with respect to the Custody Account. The
Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained
in Instructions which are consistent with the provisions of this
Agreement as follows:
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
Assets. The Bank shall be liable to the Customer for any
loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the
safekeeping of such Assets to the same extent that the Bank
would be liable to the Customer if the Bank were holding
such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its
Subcustodian to utilize reasonable care, the Bank shall be
liable to the Customer only to the extent of the Customer's
direct damages, to be determined based on the market value
of the property which is the subject of the loss at the date
of discovery of such loss and without reference to any
special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent which it
or a Subcustodian appoints unless such appointment was made
negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank
whether pursuant to Instructions or otherwise within the
scope of this Agreement if such act or omission was in good
faith, without negligence. In performing its obligations
under this Agreement, the
5
<PAGE> 7
Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless
from any liability or loss resulting from the imposition or
assessment of any taxes or other governmental charges, and
any related expenses with respect to income from or Assets
in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the
advice of counsel (who may be counsel for the Customer) on
all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of
the Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of
investing, or 2) investing or holding Assets in a particular
country including, but not limited to, losses resulting from
nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and
market conditions which prevent the orderly execution of
securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due
to forces beyond their control including, but not limited to
strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall
have no duty or responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any
security other than as provided in Section 5(c) of this
Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or
other party to which Securities are delivered or payments
are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined
in Section 10) issuing Instructions shall bear
6
<PAGE> 8
any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or
circumstances are such that the Bank may have a potential conflict
of duty or interest including the fact that the Bank or any of its
affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender
to the issuer of Securities, act in the same transaction as agent
for more than one customer, have a material interest in the issue
of Securities, or earn profits from any of the activities listed
herein.
13. FEES AND EXPENSES.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not
limited to, legal fees. The Bank shall have a lien on and is authorized
to charge any Accounts of the Customer for any amount owing to the Bank
under any provision of this Agreement.
14. MISCELLANEOUS.
(a) Foreigner Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is
authorized to enter into spot or forward foreign exchange
contracts with the Customer or an Authorized Person for the
Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to
such contracts but the Bank may establish rules or limitations
concerning any foreign exchange facility made available. In all
cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign
exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement
shall apply to such transaction.
(b) Certification of Residence, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank
of any changes in residency. The Bank may rely upon this
certification or the certification of such other facts as may be
required to administer the Bank's obligations under this
Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or
indirectly from any such certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of
the Bank relating to the Assets as is required in connection with
their examination of books and records pertaining to the
Customer's affairs. Subject to restrictions under applicable law,
the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of
any Subcustodian which has physical possession of
7
<PAGE> 9
any Assets as may be required in connection with the examination
of the Customer's books and records.
(d) Governing Law: Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be
assignable by either party, but shall bind the successors in
interest of the Customer and the Bank.
(e) Entire Agreement: Application Riders. Customer represents that
the Assets deposited in the Accounts are (Check one):
________ Employee Benefit Plan or other assets subject
to the Employee Retirement Income Security Act of
1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and
________ Exchange Commission ("SEC") rules and regulations;
________ Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I- ___________ and thefollowing Rider(s)
[Check applicable rider(s)]:
________ ERISA
X MUTUAL FUND
________
________ SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect
on the basis of any particular circumstances or in any
jurisdiction, the validity, legality and enforceability of such
provision or provisions under other circumstances or in other
jurisdictions and of the remaining provisions will not in any way
be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor does
any single or partial exercise of any power or right preclude any
other or further exercise, or the exercise of any other power or
right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may
be required under this Agreement are
8
<PAGE> 10
to be sent to the parties at the following addresses or such other
addresses as may subsequently be given to the other party in
writing:
BANK: The Chase Manhattan Bank, NA
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex: __________________________
CUSTOMER:
700 Harrison Street.
Topeka, Kansas 66636 0001
Attention: James Schmank
or telex: __________________________
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other,
provided that such notice to the Bank shall specify the Dames of
the persons to whom the Bank shall deliver the Assets in the
Accounts. If notice of termination is given by the Bank, the
Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of
the persons to whom the Bank shall deliver the Assets. In either
case, the Bank will deliver the Assets to the persons so specified
after deducting any amounts which the Bank determines in good
faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying
the names of the persons to whom the Bank shall deliver the
Assets, the Bank, at its election, may deliver the Assets to a
bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this
Agreement, or to Authorized Persons, or may continue to hold the
Assets until Instructions are provided to the Bank.
__________________________________
By: __________________________________
Title
THE CHASE MANHATTAN BANK, N.A.
By: __________________________________
Title
9
<PAGE> 11
STATE OF )
: ss.
COUNTY OF )
On this ______ day of __________________, 19____, before me personally came
_________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides in __________________ at
__________________________; that he/she is _______________ of
____________________, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
__________________________________
Sworn to before me this ______ day of ______________________, 19___.
_______________________________________
Notary
10
<PAGE> 12
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ______ day of ____________________, 19____, before me personally came
_________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides in _____________________ at ______________________;
that he/she is a Vice President of THE CHASE MANHATTAN BANK, (National
Association), the corporation described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation, that the seal
affixed to said instrument is such corporate seal, that it was so affixed by
order of the Board of Directors of said corporation, and that he/she signed
his/her name thereto by like order.
__________________________________
Sworn to before me this ______ day of ______________________, 19___.
_______________________________________
Notary
11
<PAGE> 13
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
__________________________________
effective May 1, 1995
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same
may be amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under
the authority of the SEC or the Exemptive Order applicable to accounts of
this nature issued to the Bank (Investment Company Act of 1940, Release
No. 12053, November 20, 1981), as amended, or unless the Bank has
otherwise specifically agreed, the Customer shall be solely responsible
to assure that the maintenance of Assets under this Agreement complies
with such rules, regulations, interpretations or interpretations or
exemptive order promulgated by or under the authority of the Securities
Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which are
further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by
that country's government or an agency thereof and that has
shareholders' equity in excess of $200 million in U.S. currency
(or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws
of a country other than the United States and that has
shareholders' equity in excess of $100 million in U.S. currency
(or a foreign currency equivalent thereof), (iii) a banking
institution or trust company incorporated or organized under the
laws of a country other than the United States or a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws
of a country other than the United States which has such other
qualifications as shall be specified in Instructions and approved
by the Bank; or (iv) any other entity that shall have been so
qualified by exemptive order, rule or other appropriate action of
the SEC; and
12
<PAGE> 14
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i)
the central system for handling securities or equivalent
book-entries in that country, or (ii) a transnational system for
the central handling of securities or equivalent book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of
the subcustody agreements between the Bank and each Subcustodian, which
are attached as Exhibits I through _____ of Schedule A, and further
represents that its Board has determined that the use of each
Subcustodian and the terms of each subcustody agreement are consistent
with the best interests of the Fund(s) and its (their) shareholders. The
Bank will supply the Customer with any amendment to Schedule A for
approval. The Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolution(s) with respect to
the foregoing prior to placing Assets with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes
listed below. Instructions must specify the purpose for which any
transaction is to be made and Customer shall be solely responsible to
assure that Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be set forth in
its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as
13
<PAGE> 15
specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of,
the Bank, its Subcustodian or the Customer's transfer agent, such
shares to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's
transfer agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released
only upon payment to the Bank of monies for the premium due and a
receipt for the Securities which are to be held in escrow. Upon
exercise of the option, or at expiration, the Bank will receive
from brokers the Securities previously deposited. The Bank will
act strictly in accordance with Instructions in the delivery of
Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly
when due other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a
statement of the purpose for which the delivery or payment is to
be made, the amount of the payment or specific Securities to be
delivered, the name of the person or persons to whom delivery or
payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care: Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by
each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities
depository holding the Customer's Securities pursuant to this
Agreement afford
14
<PAGE> 16
protection for such Securities at least equal to that afforded by
the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New
York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer
with such similar reports as it may reasonably request with respect to
each Subcustodian and securities depository holding the Customer's
assets.
15
<PAGE> 17
THE CHASE MANHATTAN BANK, N.A.
FEE SCHEDULE
FOR
SECURITY MANAGEMENT COMPANY
I. DOMESTIC CUSTODY
(Market value fees and transaction charges to be applied on a fund by
fund basis)
MARKET VALUE FEES
$0 - $300MM 1.00bp
$300MM - $600MM 0.75bp
Over $600MM 0.50bp
TRANSACTIONS
Book Entry $ 8.00
Physical $15.00
II. GLOBAL CUSTODY
MARKET VALUE FEES (To be applied on a fund family basis - Combined
Lexington and SBL market values)
$0 - $300MM 1.5bp
Over $300MM 1.0bp
COUNTRY SAFEKEEPING AND TRANSACTION FEES
(To be applied on a fund by fund basis)
Basis Point Transactions
----------- ------------
Band A 2.0 $ 30
Band B 4.0 $ 40
Band C 5.0 $ 60
Band D 8.0 $ 60
Band E 10.0 $ 80
Band F 25.0 $120
Band G 40.0 $120
MINIMUM ANNUAL CUSTODY FEE $25,000
16
<PAGE> 18
III. MISCELLANEOUS FEES
<TABLE>
<S> <C>
Out of pocket expenses (i.e., scrip fees, As incurred
stamp taxes, transaction costs, etc.)
Transfer to successor custodian Refer to country bands
THE CHASE MANHATTAN BANK, N.A. SECURITY MANAGEMENT COMPANY
</TABLE>
17
<PAGE> 19
COUNTRY BAND SCHEDULE
BAND A BAND B BAND C
- ------ ------ ------
Japan Canada Australia
Cedel Germany Belgium
Euroclear Netherlands Denmark
Switzerland France
New Zealand
Norway
Sweden
United Kingdom
BAND D BAND E BAND F
- ------ ------ ------
Austria Mexico Argentina
Finland Portugal Brazil
Hong Kong Spain Chile
Ireland Thailand Colombia
Italy Greece
Luxembourg Indonesia
Malaysia Jordan
Singapore Pakistan
South Africa Philippines
South Korea
Turkey
Venezuela
BAND G
------
Bangladesh India
Botswana Mauritius
China (Shenzhen & Shanghai) Morocco
Czech Republic Peru
Ghana Poland
Hungary Sri Lanka
Taiwan
18
<PAGE> 1
EXHIBIT 9(a)
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
This Agreement, made and entered into this 1st day of April, 1987, by and
between Security Income Fund, a Kansas corporation ("Fund"), and Security
Management Company, a Kansas corporation, ("SMC").
WHEREAS, the Fund is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Security Management Company is willing to provide general
administrative, fund accounting, transfer agency, and dividend disbursing
services to the Fund under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties agree as follows:
1. Employment of Security Management Company
SMC will provide the Fund with general administrative, fund
accounting, transfer agency, and dividend disbursing services
described and set forth in Schedule A attached hereto and made a part
of this agreement by reference. SMC agrees to maintain sufficient
trained personnel and equipment and supplies to perform such services
in conformity with the current prospectus of the Fund and such other
reasonable standards of performance as the Fund may from time to time
specify, and otherwise in an accurate, timely, and efficient manner.
2. Compensation
As consideration for the services described in Section I, the Fund
agrees to pay SMC a fee as described and set forth in Schedule B
attached hereto and made a part of this agreement by reference, as it
may be amended from time to time, such fee to be calculated and
accrued daily and payable monthly.
3. Expenses
A. Expenses of SMC. SMC shall pay all of the expenses incurred
in providing Fund the services and facilities described in
this agreement, whether or not such expenses are billed to SMC
or the fund, except as otherwise provided herein.
B. Direct Expenses. Anything in this agreement to the contrary
notwithstanding, the Fund shall pay, or reimburse SMC for the
payment of, the following described expenses of the Fund
(hereinafter called "direct expenses") whether or not billed
to the Fund, SMC or any related entity:
<PAGE> 2
1. Fees and expenses of its independent directors and
the meetings thereof;
2. Fees and costs of investment advisory services;
3. Fees and costs of independent auditors and income tax
preparation;
4. Fees and costs of outside legal counsel and any legal
counsel directly employed by the Fund or its Board of
Directors;
5. Custodian and banking services, fees and costs;
6. Costs of printing and mailing prospectuses to
existing shareholders, proxy statements and other
reports to shareholders, where such costs are
incurred through the use of unaffiliated vendors or
mail services.
7. Fees and costs for the registration of its securities
with the Securities and Exchange Commission and the
jurisdictions in which it qualifies its share for
sale, including the fees and costs of registering and
bonding brokers, dealers and salesmen as required;
8. Dues and expenses associated with membership in the
Investment Company Institute;
9. Expenses of fidelity and liability insurance and
bonding covering Fund;
10. Organizational costs.
4. Insurance
The Fund and SMC agree to procure and maintain, separately or as joint
insureds with themselves, their directors, employees, agents and
others, and other investment companies for which SMC acts as
investment advisor and transfer agent, a policy or policies of
insurance against loss arising from breaches of trust, errors and
omissions, and a fidelity bond meeting the requirements of the
Investment Company Act of 1940, in the amounts and with such
deductibles as may be agreed upon from time to time, and to pay such
portions of the premiums therefor as amount of the coverage
attributable to each party is to the aggregate amount of the coverage
for all parties.
5. Registration and Compliance
A. SMC represents that as of the date of this agreement it is
registered as a transfer agency with the Securities and
Exchange Commission ("SEC") pursuant to Subsection 17A of the
Securities and Exchange Act of 1934 and the rules and
regulations thereunder, and agrees to maintain said
registration and comply with all
<PAGE> 3
of the requirements of said Act, rules and regulations so long
as this agreement remains in force.
B. The Fund represents that it is a diversified management
investment company registered with the SEC in accordance with
the Investment Company Act of 1940 and the rules and
regulations thereunder, and authorized to sell its shares
pursuant to said Act, the Securities Act of 1933 and the rules
and regulations thereunder.
6. Liabilities and Indemnification
SMC shall be liable for any actual losses, claims, damages or expenses
(including any reasonable counsel fees and expenses) resulting from
SMC's bad faith, willful misfeasance, reckless disregard of its
obligations and duties, negligence or failure to properly perform any
of its responsibilities or duties under this agreement. SMC shall not
be liable and shall be indemnified and held harmless by the Fund, for
any claim, demand or action brought against it arising out of, or in
connection with:
A. Bad faith, willful misfeasance, reckless disregard of its
duties or negligence of the Board of Directors of the Fund, or
SMC's acting upon any instructions properly executed and
authorized by the Board of Directors of the Fund;
B. SMC acting in reliance upon advice given by independent
counsel retained by the Board of Directors of the Fund.
In the event that SMC requests the Fund to indemnify or hold it
harmless hereunder, SMC shall use its best efforts to inform the Fund
of the relevant facts concerning the matter in question. SMC shall
use reasonable care to identify and promptly notify the Fund
concerning any matter which presents, or appears likely to present, a
claim for indemnification against the Fund.
The Fund shall have the election of defending SMC against any claim
which may be the subject of indemnification hereunder. In the event
the Fund so elects, it will so notify SMC and thereupon the Fund shall
take over defenses of the claim, and (if so requested by the Fund, SMC
shall incur no further legal or other claims related thereto for which
it would be entitled to indemnity hereunder provided, however, that
nothing herein contained shall prevent SMC from retaining, at its own
expense, counsel to defend any claim. Except with the Fund's prior
consent, SMC shall in no event confess any claim or make any
compromise in any matter in which the Fund will be asked to indemnify
or hold SMC harmless hereunder.
Punitive Damages. SMC shall not be liable to the Fund, or any
third party, for punitive, exemplary, indirect, special or
consequential damages (even if SMC has been advised of the
possibility of such damages) arising from its obligations and
the services provided under this agreement, including but not
limited to loss of profits,
<PAGE> 4
loss of use of the shareholder accounting system, cost of
capital and expenses of substitute facilities, programs or
services.
Force Majeure. Anything in this agreement to the contrary
notwithstanding, SMC shall not be liable for delays or errors
occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military
authority, national emergencies, work stoppages, fire, flood,
catastrophe, earthquake, acts of God, insurrection, war, riot,
failure of communication or interruption.
7. Delegation of Duties
SMC may, at its discretion, delegate, assign or subcontract any of the
duties, responsibilities and services governed by this agreement, to
its parent company, Security Benefit Group, Inc., whether or not by
formal written agreement. SMC shall, however, retain ultimate
responsibility to the Fund, and shall implement such reasonable
procedures as may be necessary, for assuring that any duties,
responsibilities or services so assigned, subcontracted or delegated
are performed in conformity with the terms and conditions of this
agreement.
8. Amendment
This agreement and the schedules forming a part hereof may be amended
at any time, without shareholder approval, by a writing signed by each
of the parties hereto. Any change in the Fund's registration
statements or other documents of compliance or in the forms relating
to any plan, program or service offered by its current prospectus
which would require a change in SMC's obligations hereunder shall be
subject to SMC's approval, which shall not be unreasonably withheld.
9. Termination
This agreement may be terminated by either party without cause upon
120 days' written notice to the other, and at any time for cause in
the event that such cause remains unremedied for more than 30 days
after receipt by the other party of written specification of such
cause.
In the event Fund designates a successor to any of SMC's obligations
hereunder, SMC shall, at the expense and pursuant to the direction of
the Fund, transfer to such successor all relevant books, records and
other data of Fund in the possession or under the control of SMC.
10. Severability
If any clause or provision of this agreement is determined to be
illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such
<PAGE> 5
clause or provision shall be considered severed herefrom and the
remainder of this agreement shall continue in full force and effect.
11. Term
This agreement initially shall become effective upon its approval by a
majority vote of the Board of Directors of the Fund, including a
majority vote of the Directors who are not "interested persons" of
Fund or SMC, as defined in the Investment Company Act of 1940, and
shall continue until terminated pursuant to its provisions.
12. Applicable Law
This agreement shall be subject to and construed in accordance with
the laws of the State of Kansas.
SECURITY MANAGEMENT COMPANY
BY: Everett S. Gille, President
ATTEST:
Barbara W. Rankin, Secretary
SECURITY INCOME FUND
BY: Everett S. Gille, President
ATTEST:
Barbara W. Rankin, Secretary
<PAGE> 6
SCHEDULE A
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule of Administrative and Fund Accounting
Facilities and Services
Security Management Company agrees to provide the Fund the following
Administrative facilities and services:
1. Fund and Portfolio Accounting
A. Maintenance of Fund General Ledger and Journal.
B. Preparing and recording disbursements for direct fund expenses.
C. Preparing daily money transfers.
D. Reconciliation of all Fund bank and custodian accounts.
E. Assisting Fund independent auditors as appropriate.
F. Prepare daily projection of available cash balances.
G. Record trading activity for purposes of determining net asset
values and daily dividend.
H. Prepare daily portfolio evaluation report to value portfolio
securities and determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine the daily, monthly, quarterly, semiannual or annual
dividend per share.
K. Prepare monthly, quarterly, semiannual and annual financial
statements.
L. Provide financial information for reports to the securities and
exchange commission in compliance with the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933, the
Internal Revenue Service and other regulatory agencies as required.
M. Provide financial, yield, net asset value, etc. information to NASD
and other survey and statistical agencies as instructed by the
Fund.
<PAGE> 7
N. Report to the Audit Committee of the Board of Directors, if
applicable.
2. Legal
A. Provide registration and other administrative services necessary to
qualify the shares of the Fund for sale in those jurisdictions
determined from time to time by the Fund's Board of Directors
(commonly known as "Blue Sky Registration").
B. Provide registration with and reports to the Securities and
Exchange Commission in compliance with the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933.
C. Prepare and review Fund prospectus and Statement of Additional
Information.
D. Prepare proxy statements and oversee proxy tabulation for annual
meetings.
E. Prepare Board materials and maintain minutes of Board meetings.
F. Draft, review and maintain contractual agreements between Fund and
Investment Advisor, Custodian, Distributor and Transfer Agent.
G. Oversee printing of proxy statements, financial reports to
shareholders, prospectuses and Statements of Additional Information.
H. Provide legal advice and oversight regarding shareholder
transactions, administrative services, compliance with contractual
agreements and the provisions of the 1940 and 1933 Acts.
(Notwithstanding the above, outside counsel for the Funds may provide the
services listed above as a direct Fund expense or at the option of the
Funds, the Funds may employ their own counsel to perform any of these
services.)
<PAGE> 8
SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES
Security Management Company agrees to provide the Fund the following transfer
agency and dividend disbursing services:
1. Maintenance of shareholder accounts, including processing of new
accounts.
2. Posting address changes and other file maintenance for shareholder
accounts.
3. Posting all transactions to the shareholder file, including:
A. Direct purchases
B. Wire order purchases
C. Direct redemptions
D. Wire order redemptions
E. Draft redemptions
F. Direct exchanges
G. Transfers
H. Certificate issuances
I. Certificate deposits
4. Monitor fiduciary processing, insuring accuracy and deduction of fees.
5. Prepare daily reconciliations of shareholder processing to money movement
instructions.
6. Handle bounced check collections. Immediately liquidate shares purchased
and return to the shareholder the check and confirmation of the
transaction.
7. Issuing all checks and stopping and replacing lost checks.
8. Draft clearing services.
A. Maintenance of signature cards and appropriate corporate
resolutions.
B. Comparison of the signature on the check to the signatures on the
signature card for the purpose of paying the face amount of the
check only.
<PAGE> 9
C. Receiving checks presented for payment and liquidating shares after
verifying account balance.
D. Ordering checks in quantity specified by the Fund for the
shareholder.
9. Mailing confirmations, checks and/or certificates resulting from
transaction requests to shareholders.
10. Performing all of the Fund's other mailings, including:
A. Dividend and capital gain distributions.
B. Semiannual and annual reports.
C. 1099/year-end shareholder reporting.
D. Systematic withdrawal plan payments.
E. Daily confirmations.
11. Answering all service related telephone inquiries from shareholders and
others, including:
A. General and policy inquiries (research and resolve problems).
B. Fund yield inquiries.
C. Taking shareholder processing requests and account maintenance
changes by telephone as described above.
D. Submit pending requests to correspondence.
E. Monitor online statistical performance of unit.
F. Develop reports on telephone activity.
12. Respond to written inquiries (research and resolve problems); including:
A. Initiate shareholder account reconciliation proceeding when
appropriate.
B. Notify shareholder of bounced investment checks.
C. Respond to financial institutions regarding verification of deposit.
D. Initiate proceedings regarding lost certificates.
<PAGE> 10
E. Respond to complaints and log activities.
F. Correspondence control.
13. Maintaining and retrieving all required past history for shareholders and
provide research capabilities as follows:
A. Daily monitoring of all processing activity to verify back-up
documentation.
B. Provide exception reports.
C. Microfilming.
D. Storage, retrieval and archive.
14. Prepare materials for annual meetings.
A. Address and mail annual proxy and related material.
B. Prepare and submit to Fund and affidavit of mailing.
C. Furnish certified list of shareholders (hard copy or microfilm) and
inspectors of election.
15. Report and remit as necessary for state escheat requirements.
Approved: Fund _____________________________________ SMC Everette S. Gille
<PAGE> 11
<TABLE>
<CAPTION>
MODEL: MONTHLY FUNDS
-------------
<S> <C>
MAINTENANCE FEE . . . . . . . . . . . . . . . . . . . $8.00
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . $1.00
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . $0.50
ADMINISTRATION FEE . . . . . . . . . . . . . . . . . 0.00045
(BASED ON DAILY NET ASSET VALUE)
</TABLE>
<TABLE>
<CAPTION>
MASTER WORKSHEET BOND GOV HIGH YIELD
------------------------------------------------------------
<S> <C> <C> <C>
1986:
TRANSACTIONS - 6,897 603 260
DIVIDENDS - 23,264 2,195 314
SHAREHOLDER ACCTS - 3,574 226 258
AVERAGE NET ASSETS - 45,164,242.34 2,260,755.40 2,948,233.60
INCOME - 4,804,113.27 207,258.25 223,104.47
EXPENSES - 449,036.13 21,101.91 17,675.96
SERVICE FEES - 50,806.27 962.23 1,118.94
</TABLE>
<TABLE>
<CAPTION>
1986 1986
SERVICE TRANSFER & EXPENSE EXPENSE
FEES ADMINISTRATION PERCENT RATIO RATIO
ACTUAL MODEL INCREASE ACTUAL MODEL
<S> <C> <C> <C> <C> <C>
BOND 50,806.27 67,444.91 32.75% 0.994% 1.031%
GOVERNMENT 962.23 4,525.84 370.35% 0.933% 1.091%
HIGH YIELD 1,118.94 2,603.71 132.69% 0.600% 0.862%
</TABLE>
<PAGE> 12
SCHEDULE B
AMENDMENT TO SECURITY INCOME FUND
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule of Fees
<TABLE>
<S> <C>
Annual Maintenance Fee . . . . . . . . . . . . . . . . . . . . . $8.00 per account
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . $1.00 per transaction
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . 0.09% of the average net assets of the Fund (calculated
daily and payable monthly).
</TABLE>
This amendment shall take effect as of April 28, 1989.
In witness thereof, the parties hereto have caused this amendment to be
executed on the date indicated.
Security Income Fund
By: Michael J. Provines, President
Date: January 27, 1989
Attest:
Amy J. Lee, Secretary
Security Management Company
By: Michael J. Provines, President
Date: January 27, 1989
Attest:
Amy J. Lee, Secretary
<PAGE> 13
AMENDMENT TO ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Income Fund (hereinafter referred to as the "Fund") and
Security Management Company (hereinafter referred to as "SMC") are parties to
an Administrative Services and Transfer Agency Agreement dated April 1, 1987,
(the "Administrative Services Agreement") under which SMC agrees to provide
general administrative, fund accounting, transfer agency, and dividend
disbursing services to the Fund in return for the compensation specified in the
Administrative Services Agreement; and
WHEREAS, on July 7, 1989, the Board of Directors of the Fund voted to amend the
Administrative Services Agreement to provide for payment by the Fund of the
fees of all directors;
NOW THEREFORE, the Fund and the Management Company hereby amend the
Administrative Services Agreement, dated April 1, 1987, effective July 7, 1989,
as follows:
Paragraph 3.B.1. shall be deleted in its entirety and the following
paragraph inserted in lieu thereof:
3. Expenses
B. Direct Expenses
1. Fees and expenses of its directors (including the fees
of those directors who are deemed to be "interested
persons" of the Fund as that term is defined in the
Investment Company Act of 1940) and the meetings
thereof;
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Administrative Services Agreement this 7th day of July, 1989.
SECURITY INCOME FUND
By: Michael J. Provines, President
Attest:
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: Michael J. Provines, President
Attest:
Amy J. Lee, Secretary
<PAGE> 14
AMENDMENT TO ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Income Fund (hereinafter referred to as the "Fund") and
Security Management Company (hereinafter referred to as "SMC") are parties to
an Administrative Services and Transfer Agency Agreement dated April 1, 1987,
as amended January 27, 1989, and July 7, 1989, (the "Administrative Services
Agreement") under which SMC agrees to provide general administrative, fund
accounting, transfer agency, and dividend disbursing services to the Fund in
return for the compensation specified in the Administrative Services Agreement;
and
WHEREAS, on July 27, 1990, the Board of Directors of the Fund voted to amend
the Administrative Services Agreement to provide for payment by the Fund of the
fees of only those directors who are not "interested persons" of the Fund;
NOW THEREFORE, the Fund and SMC hereby amend the Administrative Services
Agreement, dated April 1, 1987, effective July 27, 1990, as follows:
Paragraph 3.B.1. shall be deleted in its entirety and the following
paragraph inserted in lieu thereof:
3. Expenses
B. Direct Expenses
1. Fees and expenses of its directors (including the fees
of those directors who are deemed to be "interested
persons" of the Fund as that term is defined in the
Investment Company Act of 1940) and the meetings
thereof;
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Administrative Services Agreement this 27th day of July, 1990.
SECURITY INCOME FUND
By: Michael J. Provines, President
Attest:
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: Michael J. Provines, President
Attest:
Amy J. Lee, Secretary
<PAGE> 15
AMENDMENT TO ADMINISTRATIVE
SERVICES AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Administrative Services and Transfer
Agency Agreement dated April 1, 1987, as amended (the "Administrative
Agreement"), under which the Management Company provides general
administrative, fund accounting, transfer agency and dividend disbursing
services to the Fund in return for the compensation specified in the
Administrative Agreement;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Limited
Maturity Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series and U.S. Government Series;
WHEREAS, on October 21, 1994, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Limited Maturity Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on October 21, 1994, the Board of Directors approved the amendment of
the Administrative Agreement to provide that the Management Company would
provide general administrative, fund accounting, transfer agency, and dividend
disbursing services to each class of the Limited Maturity Bond Series under the
terms and conditions of the Administrative Agreement;
NOW, THEREFORE BE IT RESOLVED, that the Fund and Management Company hereby
amend the Administrative Agreement, to provide that the Management Company
shall provide those administrative and other services described in the
Administrative Contract, and each of the Management Company and the Fund shall
fulfill all of their respective obligations under the
<PAGE> 16
Administrative Contract, as to each of the Series of the Fund, including the
Limited Maturity Bond Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Administrative Agreement this 30th day of December 1994.
SECURITY INCOME FUND
By: John D. Cleland
-----------------------------------
John D. Cleland, President
ATTEST:
Amy J. Lee
- -------------------------------
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: Jeffrey B. Pantages
-----------------------------------
Jeffrey B. Pantages, President
ATTEST:
Amy J. Lee
- -------------------------------
Amy J. Lee, Secretary
<PAGE> 17
AMENDMENT TO
ADMINISTRATIVE SERVICES AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Income Fund (the "Fund") and Security Management Company (the
"Management Company") are parties to an Administrative Services and Transfer
Agency Agreement dated April 1, 1987, as amended (the "Administrative
Agreement"), under which the Management Company provides general
administrative, fund accounting, transfer agency and dividend disbursing
services to the Fund in return for the compensation specified in the
Administrative Agreement;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Global
Aggressive Bond Series, in addition to its presently offered series of common
stock of Corporate Bond Series, Limited Maturity Bond Series and
U.S. Government Series;
WHEREAS, on February 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Global Aggressive Bond Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on February 3, 1995, the Board of Directors approved the amendment of
the Administrative Agreement to provide that the Management Company would
provide general administrative, fund accounting, transfer agency, and dividend
disbursing services to each class of the Global Aggressive Bond Series under
the terms and conditions of the Administrative Agreement;
<PAGE> 18
NOW, THEREFORE BE IT RESOLVED, that the Fund and Management Company hereby
amend the Administrative Agreement, dated April 1, 1987, as follows, effective
May 1, 1995,
1. Schedule B shall be deleted in its entirety and the attached
Schedule B inserted in lieu thereof.
2. The Administrative Agreement is hereby amended to cover the Global
Aggressive Bond Series of the Fund.
3. Paragraph 7 shall be deleted in its entirety and the following
paragraph inserted in lieu thereof:
Delegation of Duties
The Management Company may, at its discretion, delegate, assign or
subcontract any of the duties, responsibilities and services
governed by this agreement, to its parent company, Security Benefit
Group, Inc., whether or not by formal written agreement, or to any
third party, provided that such arrangement with a third party has
been approved by the Board of Directors of the Fund. The
Management Company shall, however, retain ultimate responsibility
to the Fund and shall implement such reasonable procedures as may
be necessary for assuring that any duties, responsibilities or
services so assigned, subcontracted or delegated are performed in
conformity with the terms and conditions of this agreement.
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Administrative Agreement this ____ day of April, 1995.
SECURITY INCOME FUND
By: _______________________________
John D. Cleland, President
ATTEST:
__________________________
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: _______________________________
Jeffrey B. Pantages, President
ATTEST:
___________________________
Amy J. Lee, Secretary
<PAGE> 20
SECURITY INCOME FUND ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
SCHEDULE B
The following charges apply to all Series of Security Income Fund:
<TABLE>
<S> <C>
Maintenance Fee: $8.00 per account
Transaction Fee: $1.00
Dividend Fee: $1.00
Annual Administration Fee: 0.45% (based on daily net asset value)
</TABLE>
The following charges apply only to Global Aggressive Bond Series of the
Security Income Fund: Global Administration Fee: In addition to the above
fees, Global Aggressive Bond Series shall pay an annual fee equal to the
greater of .10 percent of its average net assets or (i) $30,000 in the year
ending April 29, 1996; (ii) $45,000 in the year ending April 29, 1997; and
(iii) $60,000 thereafter. If this Agreement shall terminate before the last
day of a month, compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees set forth above.
<PAGE> 1
EXHIBIT 9(b)
SUB-ADMINISTRATIVE AGREEMENT
THIS AGREEMENT is made this 10th day of September 1993, by and between SECURITY
MANAGEMENT COMPANY, a Kansas corporation, (the "Administrator") and LEXINGTON
MANAGEMENT CORPORATION, a Delaware corporation, (the "Sub-Administrator").
WITNESSETH:
WHEREAS, the Administrator and Sub-Administrator are parties to a
Sub-Administrative Agreement dated April 26, 1991, whereby the
Sub-Administrator provides administrative services on behalf of the
Administrator to Series D of SBL Fund;
WHEREAS, the Administrator desires to retain Sub-Administrator as its agent to
provide administrative services to certain other accounts of the Administrator
in addition to Series D of SBL Fund;
WHEREAS, the parties hereto agree that the Sub-Administrative Agreement dated
April 26, 1991, shall be terminated and superseded by the execution of this
Agreement;
WHEREAS, the Administrator is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser to the Security Equity Fund and SBL Fund and
also provides administrative services to the Security Equity Fund, SBL Fund and
the Parkstone Advantage Fund (collectively referred to as the "Funds");
WHEREAS, the Administrator provides general administrative, fund accounting,
transfer agency and dividend disbursing services to the Funds;
<PAGE> 2
WHEREAS, the Funds are registered as diversified, open-end management
investment companies under the Investment Company Act of 1940 (the "1940 Act"),
and the rules and regulations promulgated thereunder;
WHEREAS, each Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Sub-Administrator is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser and provider of administrative services; and
WHEREAS, the Administrator desires to retain the Sub-Administrator as the
Administrator's agent to furnish certain administrative services to the Global
Series (both Class A and Class B Shares) of the Security Equity Fund, Series D
of SBL Fund and the International Discovery Series of the Parkstone Advantage
Fund (collectively referred to as the "Series") on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Administrator hereby appoints Sub-Administrator to
provide certain sub-administrative services to the Series under the terms
set forth in this Agreement. Sub-Administrator accepts such appointment
and agrees to furnish the services herein set forth for the compensation
herein provided.
2. Administrative Services. The Sub-Administrator shall furnish the Series
administrative services as set forth below, subject at all times to the
policies and control of each of the
<PAGE> 3
Fund's Board of Directors and the supervision of the Administrator. The
Sub-Administrator shall give the Series the benefit of its best judgment,
efforts and facilities in rendering its services as Sub-Administrator and
agrees to maintain sufficient trained personnel, equipment and supplies
to perform such services in conformity with the current prospectus of the
Funds and in an accurate and timely manner. The Sub-Administrator shall,
for all purposes herein, be deemed an independent contractor and shall
have, unless otherwise expressly provided or authorized, no authority to
act for or represent the Series in any way or otherwise be deemed an
agent of the Series.
The Sub-Administrator agrees to provide to each of the Series the following
administrative facilities and services:
a. Maintenance of Series' General Ledgers and Journals.
b. Preparing and recording disbursements for custodian related expenses.
c. Preparing daily money transfers from the custodian account.
d. Reconciliation of Series' custodian account.
e. Assisting the Fund's independent auditors as appropriate.
f. Recording trading activity for purposes of determining net asset
value.
g. Preparing daily portfolio evaluation report to value portfolio
securities and determine daily accrued income.
h. Determining the daily net asset value per share and providing daily
price to Administrator no later than 4:15 p.m. Central time each day
on a best efforts basis, provided that if the Sub-Administrator is
not able to provide the price by 4:15 p.m. it will so notify the
Administrator in a timely manner.
i. Assisting in the determination of the annual dividend per share.
<PAGE> 4
j. Preparing monthly financial statements.
k. Providing financial information for inclusion in reports to the
Securities and Exchange Commission in compliance with the provisions
of the 1940 Act, the Securities Act of 1933 and any other regulatory
agencies as required.
l. Providing financial information to Administrator to assure
compliance with all pertinent provisions of the Internal Revenue
Code and regulations thereunder as they apply to regulated
investment companies.
m. Providing financial, yield, net asset value, etc. information to the
Administrator to be provided to the NASD and other survey and
statistical agencies as instructed by the Funds.
n. Reporting by telephone to the audit committee of the Funds' Boards
of Directors.
The facilities and services outlined above shall be provided separately for
Class A and Class B Shares of the Global Series of Security Equity Fund where
appropriate, including but not limited to items c, h, i, and j as set forth
above.
3. Administrator's Duties. In order that Sub-Administrator may fulfill its
obligations hereunder, the Administrator shall furnish to
Sub-Administrator, on a daily basis, certain accounting entries and
information, including Series expense information and daily shareholder
transaction data. Administrator shall furnish this information in a
timely and accurate manner.
4. Compliance With Applicable Requirements. In carrying out its obligations
under this Agreement, the Sub-Administrator shall at all times conform
to: a) all applicable requirements of the 1940 Act, as amended; b) the
provisions of the current Registration Statement of the Funds under the
Securities Act of 1933 and the 1940 Act; c) the provisions of the Funds'
Articles of Incorporation and Bylaws or Declaration of Trust as
applicable, all as amended; and d) any other applicable provisions of
state and federal law.
<PAGE> 5
5. Records. The Sub-Administrator hereby agrees to maintain all records
relating to its activities and obligations under this Agreement which are
required to be maintained by Rule 31a-1 under the 1940 Act and agrees to
preserve such records for the periods prescribed by Rule 31a-2 under the
Act. The Sub-Administrator further agrees that all such records are the
property of the Fund and agrees to surrender promptly to the Fund any
such records upon the Fund's request.
6. Expenses. The expenses connected with the Series shall be borne by the
Sub-Administrator as follows:
a. Sub-Administrator shall pay the Series' expenses for office rent,
utilities, telephone, furniture, equipment and supplies utilized at
the Sub-Administrator's office.
b. Sub-Administrator shall pay the salaries and payroll expenses of
persons providing administrative services to the Series who are
employees of the Sub-Administrator or any of its affiliates.
c. Sub-Administrator shall pay the expenses of any pricing service or
any other source utilized in the daily pricing of the Series
portfolio which the Sub-Administrator engages. Sub-Administrator
will not be liable; however, for the expense of any pricing service
which it is specifically directed by the Administrator to utilize in
pricing the Series portfolios.
d. Sub-Administrator shall pay any expenses that it may incur in
communicating with the Administrator in connection with its
obligations under this Agreement, including the expenses of
telephone calls, special mail services and telecopier charges.
7. Delegation of Responsibilities. Upon request of the Administrator and
with the approval of the Funds' Board of Directors, the Sub-Administrator
may perform services on behalf of the Series which are not required by
this Agreement. Such services will be performed on behalf of the Series
and the Sub-Administrator's cost in rendering such services may be billed
monthly to the Administrator subject to examination by the Funds'
independent accountants.
<PAGE> 6
Payment or assumption by the Sub-Administrator of any Series' expense
that the Sub-Administrator is not required to pay or assume under this
Agreement shall not relieve the Sub-Administrator of any of its
obligations to the Series or obligate the Sub-Administrator to pay or
assume any similar Series expense on any subsequent occasion.
8. Compensation. For the services to be rendered to the Series and the
facilities furnished hereunder, the Administrator shall pay the
Sub-Administrator annual compensation at the following rates:
<TABLE>
<CAPTION>
Average Daily Net Assets of the Series Compensation
-------------------------------------- ------------
<S> <C>
Less than $100 million .17%, plus
$100 million but less than $200 million .10%, plus
$200 million but less than $300 million .08%, plus
$300 million but less than $400 million .05%, plus
$400 million or more .025%
</TABLE>
The schedule above is subject, however, to the following minimums:
(i) $125,000 in the first contract year,
(ii) $145,000 in the second contract year,
(iii) $165,00 in the third contract year and each year thereafter.
A contract year shall be deemed to be that 12-month period starting from
the date of this Agreement.
Such compensation shall be computed daily and payable monthly. If this
Agreement shall be effective for only a portion of a year, then the
Sub-Administrator's compensation for said year shall be prorated for such
portion, including any minimum fees. Payment of the
<PAGE> 7
Sub-Administrator's compensation for the preceding month shall be made as
promptly as possible after the end of each month.
9. Non-Exclusivity. The services of the Sub-Administrator to the Series are
not to be deemed to be exclusive, and the Sub-Administrator shall be free
to render similar services to others (including other investment
companies) and to engage in other activities, so long as its services
under this Agreement are not impaired thereby.
10. Amendment. This Agreement may be amended at any time by a writing signed
by each of the parties hereto.
11. Termination. This Agreement may be terminated at any time by the
Administrator or the Sub-Administrator on ninety (90) days' written
notice to the other party. However, if the Administrator terminates this
Agreement within fifteen (15) months of the date of this Agreement, the
Sub-Administrator shall be entitled to a cancellation fee as set forth in
Exhibit 1 to this Agreement. Notwithstanding the foregoing provision,
this Agreement shall automatically terminate without the payment of any
cancellation fee, in the event of its assignment as that term is defined
in Section 2(a)(4) of the 1940 Act, in the event of formal proceedings
being instituted against the Sub-Administrator by the SEC or any state
Securities Department or any other regulatory body that materially relate
to or are likely to materially affect the Sub-Administrator's duties
under this Agreement, in the event of the commencement of bankruptcy,
liquidation or similar proceedings respecting the Sub-Administrator, or
in the event of a material breach in performing the duties specified
under this Agreement (such termination to be at the option of the
non-breaching party).
12. Liability of the Sub-Administrator. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Sub-Administrator or its officers, directors or employees, or reckless
disregard by the Sub-Administrator of its duties under this Agreement,
the
<PAGE> 8
Sub-Administrator, its officers, directors or employees shall not be
liable to the Administrator, the Funds or to any shareholder of the Funds
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security, provided that the
Sub-Administrator has acted in good faith.
13. Indemnification. The Administrator and the Sub-Administrator each agree
to indemnify the other against any claim against loss, or liability to,
such other party (including reasonable attorneys' fees) arising out of
any action on the part of the indemnifying party which constitutes
willful misfeasance, bad faith or gross negligence.
14. Notices. Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage-paid to the other party at such address
as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the
Sub-Administrator for this purpose shall be Park 80 West, Plaza Two,
Saddle Brook, New Jersey 07662, and the address of the Administrator for
this purpose shall be 700 Harrison Street, Topeka, Kansas 66636-0001.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
ATTEST: SECURITY MANAGEMENT COMPANY
Brenda M. Luthi By: James R. Schmank
Title: Assistant Treasurer Senior Vice President
ATTEST: LEXINGTON MANAGEMENT
CORPORATION
Siobhan Gilfillan Richard M. Hisey
Title: Assistant Treasurer Managing Director/Chief
Financial Officer
<PAGE> 9
EXHIBIT 1
CANCELLATION FEE
The parties hereto agree that the Sub-Administrator shall be entitled to
$161,250, over a fifteen (15) month period, as the minimum compensation under
the terms of this Agreement. Therefore, if the Administrator terminates this
Agreement before the expiration of such fifteen month period (except for
termination under any one of the automatic termination provisions set forth in
Section 11 of the Agreement), the Sub-Administrator shall be entitled to a
cancellation fee which equals the difference between the amount previously paid
by the Administrator under this Agreement (as of the effective date of the
termination) and the minimum compensation of $161,250.
<PAGE> 10
AMENDMENT TO SUB-ADMINISTRATIVE AGREEMENT
WHEREAS, Security Management Company (hereafter "SMC" or the "Administrator")
and Lexington Management Corporation (hereafter "LMC" or the
"Sub-Administrator") are parties to a Sub-Administrative Agreement dated
September 10, 1993 (the "Agreement") under which LMC, as Sub-Administrator,
agrees to provide certain administrative services, as specified in section 2 of
the Agreement, to certain identified mutual funds or series of mutual funds for
which SMC serves as Administrator; and
WHEREAS, SMC desires to retain the services of LMC to provide the same
administrative services as outlined in the Agreement to certain other mutual
funds;
NOW THEREFORE, SMC and LMC hereby amend the Sub-Administrative Agreement dated
September 10, 1993, effective ______________, 1995, as follows:
Notwithstanding any other provision of the Agreement to the contrary, LMC
agrees to provide the services identified in section 2 of the Agreement to the
following mutual funds, or series thereof: the Global Series (both Class A and
Class B shares) of Security Equity Fund, the Global Aggressive Bond Series
(both Class A and Class B shares) of Security Income Fund, Series D and K of
the SBL Fund and the International Discovery Series of the Parkstone Advantage
Fund (collectively referred to as the "Series").
Notwithstanding any other provision of the Agreement to the contrary, the
facilities and services outlined in section 2 of the Agreement shall be
provided separately, where appropriate, for Class A and Class B shares of the
Global Series of Security Equity Fund and for the Global Income Series of
Security Income Fund, including but not limited to items c, h, i, and j of
section 2.
Section 8 of the Agreement shall be deleted in its entirety and the following
section inserted in lieu thereof:
8. Compensation. For the services to be rendered to the Series and the
facilities furnished hereunder, the Administrator shall pay the
Sub-Administrator annual compensation which shall consist of an Annual Base Fee
of $9,000 per Series per contract year, plus the greater of (i) the Minimum
Fund Fee of $47,000 per Series per contract year or (ii) the Aggregate Asset
Fee below. However, if the Sub-Administrator is instructed by the
Administrator to discontinue providing services to the International Discovery
Series of the Parkstone Advantage Fund, there will be a corresponding reduction
in the Annual Base Fee and the Minimum Fund Fee. If such instruction relative
to the International Discovery Series is received by the Sub-Administrator
prior to the end of a contract year, the reduction in the Annual Base Fee and
the Minimum Fund Fee shall be prorated.
<PAGE> 11
Aggregate Asset Fee
<TABLE>
<CAPTION>
Average Daily Net Assets of the Series Compensation
- -------------------------------------- ------------
<S> <C>
Less than $500 million .07%, plus
$500 million but less than $1 billion .045%, plus
$1 billion or more .025%
</TABLE>
The Annual Base Fee for each Series shall be paid monthly at 1/12th of the
annual rate stated. The greater of (i) or (ii) above will be paid monthly at
1/12th of the annual rate stated for the Minimum Fund Fee or at 1/12th of the
annual rate for the Aggregate Asset Fee based on annual average net assets, as
applicable.
A contract year shall be deemed to be that 12-month period starting from the
date of this Amendment. If this Agreement shall be effective for only a
portion of a year, then the Sub-Administrator's annual compensation for said
year shall be prorated for such portion. Payment of the Sub-Administrator's
compensation for the preceding month shall be made as promptly as possible
after the end of each month.
The compensation provided for in this Section 8 does not include out-of-pocket
expenses incurred by LMC on behalf of the Series. Example's of out-of-pocket
expenses include but are not limited to disaster recovery, pricing services
(except pricing services already provided as part of LMC's in-house quote
system or as part of the DST software services) and overnight mailing services.
Out-of-pocket expenses will be billed by LMC on a monthly basis and will be
billed separately from service fees. However, out-of-pocket expenses incurred
by LMC for converting Series D of SBL Fund to the DST system, will be borne by
LMC.
Section 11 of the Agreement (including Exhibit 1 to the Agreement) shall be
deleted in its entirety and the following section inserted in lieu thereof:
11. Termination. The term of this Agreement shall be two years and shall
begin on the date of this Amendment. Thereafter, the Agreement shall continue
at the will of the parties and may be canceled without the payment of any
penalty upon ninety (90) days written notice to the other party.
Notwithstanding any of the foregoing, this Agreement shall automatically
terminate without the payment of any penalty (i) in the event of its assignment
as that term is defined in Section 2(a)(4) of the 1940 Act, (ii) in the event
of formal proceedings being instituted against the Sub-Administrator by the SEC
or any state Securities Department or any other regulatory body that materially
relate to or are likely to materially affect the Sub-Administrator's duties
under this Agreement, (iii) in the event of the commencement of bankruptcy,
liquidation or similar proceedings respecting the Sub-Administrator, or (iv) in
the event of a material breach in performing the duties specified under this
Agreement (such termination to be at the option of the non-breaching party).
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Sub-Administrative Agreement this ___ day of _______________, 1995.
ATTEST: SECURITY MANAGEMENT COMPANY
________________________ By:_________________________________
Title: Title:
ATTEST: LEXINGTON MANAGEMENT CORPORATION
_______________________ By:____________________________________
Title: Title:
<PAGE> 1
EXHIBIT 15(a)
As amended November 26, 1990
DISTRIBUTION PLAN
1. The Plan. This Distribution Plan (the "Plan") provides for the
financing by Security Income Fund (the "Fund") of activities which are, or may
be deemed to be, primarily intended to result in the sale of shares of the Fund
(hereinafter called "distribution-related activities"). The principal purpose
of this Plan is to enable the Fund to supplement expenditures by Security
Distributors, Inc., the Distributor of its shares (the "Distributor") for
distribution-related activities. This Plan is intended to comply with the
requirements of Rule 12b-1 (the "Rule") under the Investment Company Act of
1940 (the "1940 Act).
2. Covered Expenses.
(a) The Fund may make payments under this Plan to the Distributor in
connection with the following distribution-related activities:
(i) Preparation, printing and distribution of the Prospectus
and Statement of Additional Information and any supplement thereto used in
connection with the offering of shares to the public;
(ii) Printing of additional copies for use by the Distributor
as sales literature, of reports and other communications which were prepared by
the Fund for distribution to existing shareholders;
(iii) Preparation, printing and distribution of any other
sales literature used in connection with the offering of shares to the public;
(iv) Expenses incurred in advertising, promoting and selling
shares of the Fund to the public;
(v) Any fees paid by the distributor to securities dealers as
distribution or service fees who have executed a Dealer's Distribution
Agreement with the Distributor; and
(vi) Expenses incurred in promoting sales of shares of the
Fund by securities dealers, including the costs of preparation of materials for
presentations, travel expenses, costs of entertainment, and other expenses
incurred in connection with promoting sales of Fund shares by dealers.
(Amended 11-26-90.)
(b) Any payments to the Distributor for distribution-related
activities shall be made pursuant to the agreement between the Fund and the
Distributor contemplated by Section 3 of this Plan. As required by the Rule,
each agreement relating to the implementation of this Plan shall be in writing
and subject to approval and termination pursuant to the provisions of Section 8
of this Plan. However, this Plan shall not obligate the Fund or any other
party to enter into such agreement.
(c) No payments received by the Distributor pursuant to this section
are to be used to compensate the Distributor for its overhead costs, or to
reimburse the Distributor for interest, financing or other carrying costs which
it may incur in financing distribution-related activities for the Fund.
(Amended 10-17-86.)
<PAGE> 2
3. Agreement with Distributor. All payments to the Distributor
pursuant to this Plan shall be subject to and be made in compliance with a
written agreement between the Fund and the Distributor containing provisions to
the following effect.
(i) For the fiscal year of the Fund during which this Plan becomes
effective and for each subsequent fiscal year of the Fund during which this
Plan remains in effect, the Distributor shall submit to the Fund a budget
setting forth in reasonable detail the distribution-related activities to which
the Distributor proposes to apply payments made by the Fund hereunder.
(ii) Before any payment is made to the Distributor in respect of any
fiscal year, the budget relating thereto shall be approved by vote of the
Fund's Directors, including the affirmative vote of a majority of the
Independent Directors.
(iii) The Distributor shall furnish the Fund with quarterly reports
of its expenditures pursuant to each budget so approved, together with receipts
or other appropriate written evidence of the amounts expended, and such other
information relating to such budget or expenditures or to the other
distribution-related activities undertaken or proposed to be undertaken by the
Distributor during such fiscal year under its Distribution Agreement with the
Fund as the Fund may reasonably request.
4. Distribution Agreement. The Dealer's Distribution Agreement (the
"Agreement") contemplated by paragraph 2(v) above shall permit payments to
securities dealers by the Distributor 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 (those directors who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan or any agreement related to the Plan) as required by the
Rule. The Distributor may pay to the other party to any Agreement a quarterly
fee for distribution and marketing services provided by such other party. Such
quarterly fee shall be payable in arrears in an amount equal to such percentage
( not in excess of .000685% per day or .25 annually) of the aggregate net asset
value of the 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 distribution and marketing services contemplated hereby shall include, but
are not limited to, answering inquiries regarding the Fund, account
designations and addresses, maintaining the investment of such other party's
customers or clients in the Fund and similar services. In determining the
extent of such other party's assistance in maintaining such investment by its
customers or clients, the Distributor may take into account the possibility
that the shares held by such customer or client would be redeemed in the
absence of such quarterly fee. (Amended 10-17-86.)
5. Limitations on Covered Expenses. The basic limitation on the
expenses incurred by the Fund under Section 2 of this Plan in any fiscal year
of the fund shall be one-quarter of one percent (.25%) of the Fund's average
daily net assets for such fiscal year. The payments to be paid to the
Distributor pursuant to this Plan shall be prorated and charged to each Series
of the Fund in proportion to the relative net assets of each Series. (Amended
10-17-86.)
6. Disinterested Directors. While this Plan is in effect, the
selection and nomination of Disinterested Directors of the Fund shall be
committed to the discretion of the Disinterested Directors. Nothing herein
shall prevent the involvement of others in such selection and
<PAGE> 3
nomination if the final decision on any such selection and nomination is
approved by a majority of the Disinterested Directors. (Amended 10-17-86.)
7. Reports. While this Plan is in effect each person (other than the
Distributor) entering an agreement with the Fund as contemplated by Section
2(c) of this Plan shall provide to the Fund, at such intervals no less often
than quarterly as it may require written reports setting forth in reasonable
detail:
(i) Information concerning the expenses incurred and payments made by
such person for the distribution-related activities during the last preceding
fiscal quarter or, if the Fund requires reports more frequently than quarterly,
during such shorter interval most recently ended, and
(ii) Such other information as may be called for by the agreement
between the Fund and such person.
8. Effectiveness, Continuation, Termination and Amendment. This Plan
and each agreement relating to the implementation of this Plan shall go into
effect when approved.
(i) By vote of the Fund's directors, including the affirmative vote
of a majority of the independent directors, cast in person at a meeting called
for the purpose of voting on the Plan or the agreement, and
(ii) In the case of this Plan, also b a vote of holders of at least a
majority of the outstanding voting securities of each Series, however, in the
event that this plan is approved by such vote of the outstanding voting
securities of one or more Series but not of one or more others, this Plan shall
be in effect with respect to the former such Series but not with respect to the
latter such Series; and
(iii) Upon the effectiveness of an amendment to the Fund's
registration statement, reflecting this Plan, filed with the Securities and
Exchange Commission under the Securities Act of 1933. (Amended 10-17-86.)
This Plan and any agreements relating to the implementation of this Plan shall,
unless terminated as hereinafter provided, continue in effect from year to year
only so long as such continuance is specifically approved at least annually by
vote of the Fund's Directors, including the affirmative vote of a majority of
its independent directors, cast in person at a meeting called for the purpose
of voting on such continuance. This Plan and any agreements relating to the
implementation of this Plan may be terminated, in the case of the plan, at any
time or, in the case of any agreements, upon not more than sixty days' written
notice by vote of a majority of the independent directors or by the vote of the
holders of a majority of the outstanding voting securities of the Funds. Any
agreement relating to the implementation of this Plan shall terminate
automatically in the event it is assigned. Any material amendment to this Plan
shall require approval by vote of the Fund's directors, cast in person at a
meeting called for the purpose of voting on such amendment and, if such
amendment materially increases the limitations on expenses payable under the
Plan, it shall also require approval by a vote of holders of at least a
majority of the outstanding voting securities of the Fund. As applied to the
Fund the phrase "majority of the outstanding voting securities" shall have the
meaning specified in Section 2(a) of the 1940 Act.
In the event this Plan should be terminated by the shareholders or directors of
the Fund, the payments paid to the Distributor pursuant to the Plan up to the
date of termination shall be retained by the Distributor. Any expenses
incurred by the Distributor in excess of those payments will be the sole
responsibility of the Distributor.
<PAGE> 1
EXHIBIT 15(b)
SECURITY EQUITY FUND
CLASS B
DISTRIBUTION PLAN
1. The Plan. This Distribution Plan (the "Plan"), provides for the
financing by Security Income Fund (the "Fund") of activities which are,
or may be deemed to be, primarily intended to result in the sale of class
B shares of the Fund (hereinafter called "distribution-related
activities"). The principal purpose of this Plan is to enable the Fund
to supplement expenditures by Security Distributors, Inc., the
Distributor of its shares (the "Distributor") for distribution-related
activities. This Plan is intended to comply with the requirements of
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act").
The Board of Directors, in considering whether the Fund should implement
the Plan, has requested and evaluated such information as it deemed
necessary to make an informed determination as to whether the Plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of the Fund for
such purposes.
In voting to approve the implementation of the Plan, the Directors have
concluded, in the exercise of their reasonable business judgment and in
light of their respective fiduciary duties, that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
2. Covered Expenses.
(a) The Fund may make payments under this Plan, or any agreement
relating to the implementation of this Plan, in connection with
any activities or expenses primarily intended to result in the
sale of class B shares of the Fund, including, but not limited to,
the following distribution-related activities:
(i) Preparation, printing and distribution of the
Prospectus and Statement of Additional Information
and any supplement thereto used in connection with
the offering of shares to the public;
(ii) Printing of additional copies for use by the
Distributor as sales literature, of reports and other
communications which were prepared by the Fund for
distribution to existing shareholders;
(iii) Preparation, printing and distribution of any other
sales literature used in connection with the offering
of shares to the public;
(iv) Expenses incurred in advertising, promoting and
selling shares of the Fund to the public;
(v) Any fees paid by the Distributor to securities
dealers who have executed a Dealer's Distribution
Agreement with the Distributor for account
maintenance and personal service to shareholders (a
"Service Fee");
<PAGE> 2
(vi) Commissions to sales personnel for selling shares of
the Fund and interest expenses related thereto; and
(vii) Expenses incurred in promoting sales of shares of the
Fund by securities dealers, including the costs of
preparation of materials for presentations, travel
expenses, costs of entertainment, and other expenses
incurred in connection with promoting sales of Fund
shares by dealers.
(b) Any payments for distribution-related activities shall be made
pursuant to an agreement. As required by the Rule, each agreement
relating to the implementation of this Plan shall be in writing
and subject to approval and termination pursuant to the provisions
of Section 7 of this Plan. However, this Plan shall not obligate
the Fund or any other party to enter into such agreement.
3. Agreement with Distributor. All payments to the Distributor pursuant to
this Plan shall be subject to and be made in compliance with a written
agreement between the Fund and the Distributor containing a provision
that the Distributor shall furnish the Fund with quarterly written
reports of the amounts expended and the purposes for which such
expenditures were made, and such other information relating to such
expenditures or to the other distribution-related activities undertaken
or proposed to be undertaken by the Distributor during such fiscal year
under its Distribution Agreement with the Fund as the Fund may reasonably
request.
4. Dealer's Distribution Agreement. The Dealer's Distribution Agreement
(the "Agreement") contemplated by Section 2(a)(v) above shall permit
payment of Service Fees to securities dealers by the Distributor 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
the affirmative vote of a majority of those Directors who are not
interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related
to the Plan ("Independent Directors"), as required by the Rule. The
Distributor may pay to the other party to any Agreement a Service Fee for
distribution and marketing services provided by such other party. Such
Service Fee shall be payable (a) for the first year, initially, in any
amount equal to .25 percent annually of the aggregate net asset value of
the shares purchased by such other party's customers or clients, and
(b) for each year thereafter, quarterly, in arrears in an amount equal to
such percentage (not in excess of .000685 percent per day or .25 percent
annually) of the aggregate net asset value of the 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 distribution and
marketing services contemplated hereby shall include, but are not limited
to, answering inquiries regarding the Fund, account designations and
addresses, maintaining the investment of such other party's customers or
clients in the Fund and similar services. In determining the extent of
such other party's assistance in maintaining such investment by its
customers or clients, the Distributor may take into account the
possibility that the shares held by such customer or client would be
redeemed in the absence of such fee.
<PAGE> 3
5. Limitations on Covered Expenses. The basic limitation on the expenses
incurred by the Fund under Section 2 of this Plan (including Service
Fees) in any fiscal year of the Fund shall be one percent (1.00%) of the
Fund's average daily net assets for such fiscal year. The payments to be
paid pursuant to this Plan shall be calculated and accrued daily and paid
monthly or at such other intervals as the Directors shall determine,
subject to any applicable restriction imposed by rules of the National
Association of Securities Dealers, Inc.
6. Independent Directors. While this Plan is in effect, the selection and
nomination of Independent Directors of the Fund shall be committed to the
discretion of the Independent Directors. Nothing herein shall prevent
the involvement of others in such selection and nomination if the final
decision on any such selection and nomination is approved by a majority
of the Independent Directors.
7. Effectiveness, Continuation, Termination and Amendment. This Plan and
each Agreement relating to the implementation of this Plan shall go into
effect when approved.
(a) By vote of the Fund's Directors, including the affirmative vote of
a majority of the Independent Directors, cast in person at a
meeting called for the purpose of voting on the Plan or the
Agreement;
(b) By a vote of holders of at least a majority of the outstanding
voting securities of the Fund; and
(c) Upon the effectiveness of an amendment to the Fund's registration
statement, reflecting this Plan, filed with the Securities and
Exchange Commission under the Securities Act of 1933.
This Plan and any Agreements relating to the implementation of this Plan
shall, unless terminated as hereinafter provided, continue in effect from
year to year only so long as such continuance is specifically approved at
least annually by vote of the Fund's Directors, including the affirmative
vote of a majority of its Independent Directors, cast in person at a
meeting called for the purpose of voting on such continuance. This Plan
and any Agreements relating to the implementation of this Plan may be
terminated, in the case of the plan, at any time or, in the case of any
agreements upon not more than sixty (60) days' written notice to any
other party to the Agreement by vote of a majority of the Independent
Directors or by the vote of the holders of a majority of the outstanding
voting securities of the Fund. Any Agreement relating to the
implementation of this Plan shall terminate automatically in the event it
is assigned. Any material amendment to this Plan shall require approval
by vote of the Fund's Directors, including the affirmative vote of a
majority of the Independent Directors, cast in person at a meeting called
for the purpose of voting on such amendment and, if such amendment
materially increases the limitations on expenses payable under the Plan,
it shall also require approval by a vote of holders of at least a
majority of the outstanding voting securities of the Fund. As applied to
the Fund the phrase "majority of the outstanding voting securities" shall
have the meaning specified in Section 2(a) of the 1940 Act.
In the event this Plan should be terminated by the shareholders or
Directors of the Fund, the payments paid to the Distributor pursuant to
the Plan up to the date of termination shall be retained by the
Distributor. Any expenses incurred by the Distributor in excess of those
payments will be the sole responsibility of the Distributor.
8. Records. The Fund shall preserve copies of this Plan and any related
Agreements and all reports made pursuant to Section 3 hereof, for a
period of not less than six (6) years from the date of this Plan, any
such Agreement or any such report, as the case may be, the first two
years in an easily accessible place.
SECURITY EQUITY FUND
Date: September 24, 1993 By: Amy J. Lee
