<PAGE> 1
File Nos. 811-1136
2-19458
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Post-Effective Amendment No. 72 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 72 /X/
(Check appropriate box or boxes)
SECURITY EQUITY 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 Equity Fund Security Equity 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 June 1, 1995, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on June 1, 1995, pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on June 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
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940; accordingly, no fee is payable herewith. The Registrant filed the
Notice required by 24f-2 on November 29, 1994.
<PAGE> 2
SECURITY EQUITY 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 Objective and Policies of the Funds
5. Management of the Funds; Trading Practices and Brokerage
6. General Information; Dividends and Taxes; Foreign Taxes
7. How to Purchase Shares; Determination of Net Asset Value;
Shareholder Services; Appendix A
8. How to Redeem Shares
9. Not Applicable
Part B STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and Policies of the Funds; Investment
Policy Limitations
14. Officers and Directors
15. Remuneration of Directors and Others
16. Investment Management; Distributor; Custodian, Transfer
Agent and Dividend-Paying Agent
17. Allocation of Portfolio Brokerage
18. Organization
19. How to Purchase Shares; How Net Asset Value is Determined;
How to Redeem Shares; How to Exchange Shares; Systematic
Withdrawal Program; Accumulation Plan; Retirement Plans;
Individual Retirement Accounts (IRAs); Pension and Profit
Sharing Plans; 403(b) Retirement Plans; Simplified Employee
Pension Plans (SEPPs); Appendix B
20. Dividends and Taxes
21. Distributor
22. Performance Information
23. Financial Statements; Independent Auditors
<PAGE> 3
Part A and Part B are incorporated herein by reference to the Registrant's
Post-Effective Amendment Number 71 to Registration Statement Number 2-19458
(June 1, 1995).
<PAGE> 4
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Included in Part A of this Registration Statement:
Per Share Income and Capital Changes
Included in Part B of this Registration Statement:
The audited financial statements contained in the most
recent Annual Report to Stockholders of Security Equity Fund
are incorporated by reference in Part B of this Registration
Statement.(a)
b. Exhibits:
(1) Articles of Incorporation.(b)
(2) Corporate Bylaws of Registrant.
(3) Not applicable.
(4) Specimen copy of share certificates for Registrant's
shares of capital stock.(b)
(5) (a) Form of Investment Management and Services
Agreement.
(b) Sub-Advisory Contract.
(c) Form of Quantitative Research Agreement.
(d) Form of Consulting and Analytical Research
Agreement.
(6) (a) Distribution Agreement.
(b) Class B Distribution Agreement.
(7) Form of Non-Qualified Deferred Compensation Plan.
(8) (a) Form of Custodian Agreement - UMB Bank.
(b) Form of Custodian Agreement - Chase Manhattan
Bank.
(9) Not applicable.
(10) Opinion of counsel as to the legality of the
securities offered.(b)
(11) Consent of Independent Public Accountants.(b)
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan.
(16) Schedule of Computation of Performance.(a)
(a) Incorporated herein by reference to the Exhibits filed with the
Registrant's Post-Effective Amendment No. 70 to Registration Statement
2-19458 (January 27, 1995).
(b) Incorporated herein by reference to the Exhibits filed with the
Registrant's Post-Effective Amendment No. 71 to Registration Statement
2-19458 (June 1, 1995).
<PAGE> 5
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities as of May 1, 1995.
<TABLE>
<CAPTION>
(1) (2)
Number of Record
Title of Class Shareholders
-------------- ------------------
<S> <C>
Shares of Common Stock 28,191 Class A - Equity Series
1,573 Class B - Equity Series
1,944 Class A - Global Series
832 Class B - Global Series
</TABLE>
Item 27. Indemnification.
A policy of insurance covering Security Management Company, its
subsidiaries, including 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.
Article Tenth of Registrant's Articles of Incorporation provides
in relevant part as follows:
(5) Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation
against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he is
made a party by reason of his being or having been a director
or officer of the Corporation, except in relation to any
action, suit or proceeding in which he has been adjudged
liable because of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of his office. In the absence of an adjudication
which expressly absolves the director or officer of liability
to the Corporation or its stockholders for willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office, or in the event of a settlement, each director and
officer (and his heirs, executors and administrators) shall
be indemnified by the Corporation against payment made,
including reasonable costs and expenses, provided that such
indemnity shall be conditioned upon a written opinion of
independent counsel that the director or officer has no
liability by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of his office. The indemnity provided herein
shall, in the event of settlement of any such action, suit or
proceeding, not exceed the cost and expenses (including
attorneys' fees) which would reasonably have been incurred if
such action, suit or proceeding had been litigated to a final
conclusion. Such a determination by independent counsel and
the payment of amounts by the Corporation on the basis
thereof shall not prevent a
<PAGE> 6
stockholder from challenging such indemnification by
appropriate legal proceedings on the grounds that the officer
or director was liable because of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights
and indemnification shall not be exclusive of any other
rights to which the officers and directors may be entitled
according to law.
Article Sixteenth of Registrant's Articles of Incorporation, as
amended December 10, 1987, provides as follows:
"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 an 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."
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
Security Management Company also acts as investment manager to SBL
Fund, Security Cash Fund, Security Income Fund, Security Growth
and Income Fund, Security Tax-Exempt Fund, and Security Ultra Fund
and as administrator to The Parkstone Advantage Fund.
<PAGE> 7
Business* and Other Connections of the Executive
Name Officers and Directors of 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> 8
Business* and Other Connections of the Executive
Name Officers and Directors of 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> 9
Business* and Other Connections of the Executive
Name Officers and Directors of 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> 10
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
Andrew P. Mohn Vice President
Security Distributors, Inc.
Assistant Vice President, Mutual Fund Marketing
Administration
Security Management Company
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
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
<PAGE> 11
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
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.
LEXINGTON MANAGEMENT CORPORATION:
Lexington Management Corporation, sub-adviser to Global Series,
acts as investment adviser, sub-adviser and/or sponsor to 15
investment companies other than Registrant.
<PAGE> 12
Business* and Other Connections of the Executive
Name Officers and Directors of 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> 13
Business* and Other Connections of the Executive
Name Officers and Directors of 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, Saddlebrook, 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.
<PAGE> 14
TEMPLETON QUANTITATIVE ADVISORS, INC.
Templeton Quantitative Advisors, Inc. ("TQA") (aka The DAIS
Group), provides consulting and analytical research services to
the Registrant's Asset Allocation Series. TQA serves as adviser
to two investment companies other than the Registrant.
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
Robert E. Butman Director, President and Chief Executive Officer
Templeton Quantitative Advisors, Inc.
Charles E. Johnson Director
Templeton Quantitative Advisors, Inc.
Martin L. Flanagan Director
Templeton Quantitative Advisors, Inc.
Howard J. Leonard Director
Templeton Quantitative Advisors, Inc.
Gregory E. McGowan Director
Templeton Quantitative Advisors, Inc.
Jean W. Thomas Secretary and Director of Corporate Operations
Templeton Quantitative Advisors, Inc.
Bartholomew C. Tesoriero Chief Financial Officer
Templeton Quantitative Advisors, Inc.
Suzanne V. Montemurro Treasurer
Templeton Quantitative Advisors, Inc.
George J. Esser Senior Vice President
Templeton Quantitative Advisors, Inc.
Hans L. Erickson Senior Vice President
Templeton Quantitative Advisors, Inc.
*Located at 31 W. 52nd Street, Suite 10, New York, New York 10019
<PAGE> 15
MERIDIAN INVESTMENT MANAGEMENT CORPORATION
Meridian Investment Management Corporation provides quantitative
research services to the Registrant's Asset Allocation Series.
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
Michael J. Hart President and Director
Meridian Investment Management Corporation
President
Meridian Clearing Corporation
Craig T. Callahan Secretary/Treasurer
Meridian Investment Management Corporation
Vice President
Meridian Clearing Corporation
Deborah L. Zele Compliance Officer
Meridian Investment Management Corporation
Financial and Operations Principal
Meridian Clearing Corporation
*Located at 12835 East Arapahoe Road, TWR II - 7th Floor, Englewood,
Colorado 80112.
Item 29. Principal Underwriters
- -------- ----------------------
Security Ultra Fund
Security Income Fund
Security Tax-Exempt Fund
Variflex Variable Annuity Account
Varilife Variable Annuity Account
Parkstone Variable Annuity Account
The Parkstone Advantage Fund
Security Varilife Separate Account
Variflex LS Variable Annuity Account
<PAGE> 16
(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 and President and Director
Director
James W. Lammers National Sales Manager, None
Senior Vice President
and Director
James R. Schmank Vice President and Vice President
Director and Treasurer
Louis R. Jicha Vice President and None
Director
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
Anthony L. Hammock Regional Vice President None
Douglas J. Ikenberry Regional Vice President None
Robert L. Kirchner Regional Vice President None
Daniel L. 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.
<PAGE> 17
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, NY 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) Upon the inclusion of Item 5A's required performance
information in the Registrant's annual report, the
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> 18
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 5th day of May,
1995.
SECURITY EQUITY FUND
(The Registrant)
By: John D. Cleland,
----------------------------------
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: May 5, 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> 19
EXHIBIT INDEX
(1) None
(2) Bylaws
(3) None
(4) None
(5) (a) Form of Investment Management and Services Agreement
(b) Sub-Advisory Agreement
(c) Form of Quantitative Research Agreement
(d) Form of Consulting and Analytical Research Agreement
(6) (a) Distribution Agreement
(b) Class B Distribution Agreement
(7) Form of Non-Qualified Deferred Compensation Plan
(8) (a) Custodian Agreement - UMB Bank
(b) Form of Custodian Agreement - Chase Manhattan Bank
(9) None
(10) None
(11) None
(12) None
(13) None
(14) None
(15) Distribution Plan
(16) None
<PAGE> 1
EXHIBIT (2) BYLAWS
BYLAWS
OF
SECURITY EQUITY 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 (s)he
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
holder 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 this
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, (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.
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 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.
3
<PAGE> 4
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 (s)he 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 (s)he 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 the inspection of any stockholder
present. The original or duplicate stock ledger shall be the only
evidence as to who are stockholders entitled to examine such lists, or
the books of the Corporation, or to vote in person or by
4
<PAGE> 5
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 of
such meeting shall be necessary to the newly elected Directors in order
legally to
5
<PAGE> 6
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 (s)he 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 the Articles of Incorporation or these
Bylaws, members of the Board of Directors of the Corporation, or any
committee designated by the board, may participate in a meeting of the
board or committee by means of conference telephone or
6
<PAGE> 7
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 (s)he 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 purpose in the office of the Corporation and shall report the same
to the Board of Directors
7
<PAGE> 8
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 (s)he 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 person 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 statement made or information furnished by Directors, officers,
employees or agents of the
8
<PAGE> 9
Corporation, or of such other corporation, which (s)he 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 law 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 six (6) nor
more than nine (9). 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 (s)he 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
elect a President, a Secretary and a Treasurer at its first
meeting after each annual
9
<PAGE> 10
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 (s)he enters upon the
duties of the office to which (s)he 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, (s)he
shall preside at all meetings of the stockholders and Directors at which
(s)he 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 (s)he 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.
(S)he shall, unless the Board otherwise provides, be ex officio a member
of all standing committees.
(S)he 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. (S)he 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, (s)he 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. (S)he 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.
(S)he 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, and account of all his/her
transactions as Treasurer and of those under his/her jurisdiction, and
of the financial condition of the Corporation.
(S)he 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
(S)he 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, (s)he 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 of in the event of his/her disability,
or inability of 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 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
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 met 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 one 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 on behalf of the Corporation,
and such authority may be general or confined to specific instances.
18
<PAGE> 19
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
<PAGE> 1
EXHIBIT (5)(a)
INVESTMENT MANAGEMENT AND SERVICES AGREEMENT
This Agreement, made and entered into this 8th day of December, 1988, by
and between SECURITY EQUITY FUND, a Kansas corporation (hereinafter referred to
as the "Fund"), and SECURITY MANAGEMENT COMPANY, a Kansas corporation
(hereinafter referred to as "SMC");
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end, management
investment company registered under the Investment Company Act of 1940 ("1940
Act"); and
WHERE, SMC is willing to provide investment research and advice, general
administrative, fund accounting, transfer agency, and dividend disbursing
services to the Fund on the terms and conditions hereinafter set forth and to
arrange for the provision of all other services (except for those services
specifically excluded in this Agreement) required by the Fund, including
custodial, legal, auditing and printing;
NOW, THEREFORE, in consideration of the premises and mutual agreements
made herein, the parties agree as follows:
1. EMPLOYMENT OF SMC. The Fund hereby employs SMC to (a) act as investment
adviser to the Fund with respect to the investment of its assets and to
supervise and arrange the purchase of securities for the Fund and the
sale of securities held in the portfolio of the Fund, subject always to
the supervision of the Board of Directors of the Fund (or a duly
appointed committee thereof), during the period and upon and subject to
the terms and conditions described herein; (b) to 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; and (c) to arrange for,
monitor, and bear the expense of, the provision to the Fund of all other
services required by the Fund, including but not limited to services of
independent accountants, legal counsel, custodial services and printing.
SMC may, in accordance with all applicable legal requirements, engage the
services of other persons or entities, regardless of any affiliation with
SMC, to provide services to the Fund under this Agreement. SMC agrees to
maintain sufficient trained personnel and equipment and supplies to
perform its responsibilities under this Agreement and 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 shall use
reasonable care in selecting and monitoring the performance of third
parties, who perform services for the Fund. SMC shall not guarantee the
performance of such persons.
SMC hereby accepts such employment and agrees to perform the services
required by this Agreement for the compensation herein provided.
<PAGE> 2
2. ALLOCATION OF EXPENSES AND CHARGES.
(A) EXPENSES OF SMC. SMC shall pay all expenses in connection with the
performance of its services under this Agreement, including all
fees and charges of third parties providing services to the Fund,
whether or not such expenses are billed to SMC or the Fund, except
as otherwise provided herein.
(B) EXPENSES OF THE FUND. 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 whether or
not billed to the Fund, SMC or any related entity;
(i) brokerage fees and commissions;
(ii) taxes;
(iii) interest expenses; and
(iv) any extraordinary expenses approved by the Board of
Directors of the Fund.
3. COMPENSATION OF SMC.
(a) In consideration of the services to be rendered by SMC pursuant to
this Agreement, the Fund shall pay SMC an annual fee equal to 2% of
the first $10 million of the average net assets of the Fund, and 1
1/2% of the next $20 million of the average net assets, and 1% of
the remaining average net assets of the Fund for any fiscal year,
determined and payable monthly. If this Agreement shall be
effective for only a portion of a year in which a fee is owed, then
SMC's compensation for the year shall be prorated for such portion.
For purposes of this Section 3, the value of the net assets of the
Fund 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.
(b) For each of the Fund's full fiscal years during which this
Agreement remains in force, SMC agrees that if the total annual
expenses of the Fund, exclusive of those expenses listed in
paragraph 2(b) of this Agreement, but inclusive of SMC'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, SMC will contribute to the Fund such
funds or waive that portion of its fee on a monthly basis as may be
necessary to insure that its total expenses will not exceed any
state limitation. If this paragraph of the Agreement shall be
effective for only a portion of one of the Fund's fiscal years,
then the maximum annual expenses shall be prorated for such
portion.
4. INVESTMENT ADVISORY DUTIES.
(A) INVESTMENT ADVICE. SMC shall regularly provide the Fund with
investment research, advice and supervision, continuously furnish
an investment program, recommend which securities shall be
purchased and sold and what portion of the assets of the Fund shall
be held uninvested and arrange for the purchase of securities
<PAGE> 3
and other investments for the Fund and the sale of securities and
other investments held in the portfolio of the Fund. All
investment advice furnished by SMC to the Fund under this
paragraph 4 shall at all times conform to any requirements imposed
by the provisions of the Fund's Articles of Incorporation and
Bylaws, the 1940 Act, the Investment Advisors Act of 1940 and the
rules and regulations promulgated thereunder, and other applicable
provisions of law, and the terms of the registration statements of
the Fund under the Securities Act of 1933 ("1933 Act") and/or the
1940 Act, as may be applicable at the time, all as from time to
time amended. SMC shall advise and assist the officers or other
agents of the Fund in taking such steps as are necessary or
appropriate to carry out the decisions of the Board of Directors of
the Fund (and any duly appointed committee thereof) with regard to
the foregoing matters and the general account of the Fund's
business.
(B) PORTFOLIO TRANSACTIONS AND BROKERAGE.
(i) Transactions in portfolio securities shall be effected by
SMC, through brokers or otherwise, in the manner permitted in
this paragraph 4 and in such manner as SMC shall deem to be
in the best interests of the Fund after consideration is
given to all relevant factors.
(ii) In reaching a judgment relative to the qualification of a
broker to obtain the best execution of a particular
transaction, SMC 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 of 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.
(iii) Subject to any statements concerning the allocation of
brokerage contained in the Fund's Prospectus or
Statement of Additional Information, SMC is authorized
to direct the execution of portfolio transactions for
the Fund to brokers who furnish investment information
or research service to the SMC. Such allocations shall
be in such amounts and proportions as SMC may
determine. If the transaction is directed to a broker
providing brokerage and research services to SMC, the
commission paid for such transactions may be in excess
of the commission another broker would have charged for
effecting that transaction, if SMC shall have
determined in good faith that the commission is
reasonable in relation to the value of the brokerage
and research services provided, viewed in terms of
either that particular transaction or the overall
responsibilities of SMC 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
<PAGE> 4
meaning generally given such terms or similar terms
under Section 28(e)(3) of the Securities Exchange Act
of 1934, as amended.
(iv) In the selection of a broker for the execution of any
transaction not subject to fixed commission rates, SMC 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.
(v) 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 SMC, better price or
execution can be obtained by utilizing the services of a
broker.
(C) SMC NOT TO RECEIVE COMMISSIONS. In connection with the purchase or
sale of portfolio securities for the account of the Fund, neither
SMC nor any officer or director of SMC shall act as principal or
receive any compensation from the Fund other than its compensation
as provided for in Section 3 above. If SMC, or any "affiliated
person" (as defined in the 1940 Act) receives any cash, credits,
commissions or tender fees from any person in connection with
transactions in portfolio securities of the Fund (including but not
limited to the tender or delivery of any securities held in such
portfolio), SMC 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 SMC.
(D) LIMITATION OF LIABILITY OF SMC WITH RESPECT TO RENDERING INVESTMENT
ADVISORY SERVICES. So long as SMC shall give the Fund the benefit
of its best judgment and effort in rendering investment advisory
services hereunder, SMC 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 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 SMC against any liability to the Fund or its
shareholders 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
paragraph 4. As used in this paragraph 4, "SMC" shall include
directors, officers and employees of SMC, as well as that
corporation itself.
5. ADMINISTRATIVE AND TRANSFER AGENCY SERVICES.
(A) RESPONSIBILITIES OF SMC. SMC will provide the Fund with general
administrative, fund accounting, transfer agency, and dividend
disbursing services described and set
<PAGE> 5
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 perform such services in an accurate,
timely, and efficient manner.
(B) 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 adviser 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 1940 Act, in the amounts and with such
deductibles as may be agreed upon from time to time. SMC shall be
solely responsible for the payment of premiums due for such
policies.
(C) REGISTRATION AND COMPLIANCE.
(i) SMC represents that as of the date of this Agreement it is
registered as a transfer agent 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 of the requirements of said
Act, rules and regulations so long as this Agreement remains
in force.
(ii) The Fund represents that it is a diversified management
investment company registered with the SEC in accordance with
the 1940 Act and the rules and regulations thereunder, and
authorized to sell its shares pursuant to said Act, the 1933
Act and the rules and regulations thereunder.
(D) LIABILITY AND INDEMNIFICATION WITH RESPECT TO RENDERING
ADMINISTRATIVE AND TRANSFER AGENCY SERVICES. 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 Section 5. 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:
(i) The bad faith, willful misfeasance, reckless disregard of its
duties or negligence by the Board of Directors of the Fund,
or SMC's acting upon any instructions properly executed or
and authorized by the Board of Directors of the Fund;
(ii) SMC acting in reliance upon advice given by independent
counsel retained by the Board of Directors of the Fund.
<PAGE> 6
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 damage) arising from its obligations and
the services provided under this paragraph 5, including but
not limited to loss of profits, loss of use of the
shareholder accounting system, cost of capital and expenses
of substitute facilities, programs or services.
FORCE MAJEURE. Anything in this paragraph 5 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.
(E) DELEGATION OF DUTIES. SMC may, at its discretion, delegate,
assign, or subcontract any of the duties, responsibilities and
services governed by this paragraph 5, to its parent company,
Security Benefit Group, Inc. or any of its affiliates, 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.
6. OTHER ACTIVITIES NOT RESTRICTED. Nothing in this Agreement shall prevent
SMC or any officer thereof from acting as investment adviser,
administrator or transfer agent for any other person, firm or
corporation, nor shall it in any way limit or restrict SMC 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 other
for whom it may be acting; provided, however, that SMC expressly
represents that it will undertake no activities
<PAGE> 7
which, in its judgment, will conflict with the performance of its
obligations to the Fund under this Agreement. The Fund acknowledges that
SMC acts as investment adviser, administrator and transfer agent to other
investment companies, and it expressly consents to SMC acting as such;
provided, however, that if in the opinion of SMC, particular securities
are consistent with the investment objectives of, and desirable purchases
or sales for the portfolios of 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.
7. AMENDMENT. This Agreement and the schedules forming a part hereof may be
amended at any time, without shareholder approval to the extent permitted
by applicable law, 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.
8. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become
effective on January 31, 1989, provided that on December 8, 1988, it is
approved by a majority of the holders of the outstanding voting
securities of the Fund. This Agreement shall continue in effect until
January 1, 1990, and for successive 12-month periods thereafter, unless
terminated, provided that 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 the majority of those directors
who are not parties to this Agreement or interested persons (as such
terms are defined in the 1940 Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval, or (b) by the
vote of a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act).
Upon this Agreement becoming effective, any previous Agreement between
the Fund and SMC providing for investment advisory, administrative or
transfer agency services shall concurrently terminate, except that such
termination shall not affect any fees accrued and guarantees of expenses
with respect to any period prior to termination.
This Agreement may be terminated at any time without payment of any
penalty, by the Fund upon the vote of a majority of the Fund's Board of
Directors or, by a majority of the outstanding voting securities of the
Fund, or by SMC, in each case on sixty (60) days' written notice to the
other party. This Agreement shall automatically terminate in the event
of its assignment (as such term is defined in the 1940 Act).
9. 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 clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall
continue in full force and effect.
10. APPLICABLE LAW. This Agreement shall be subject to and construed in
accordance with the laws of the State of Kansas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereto duly authorized on the day,
month and year first above written.
SECURITY EQUITY FUND
By Michael J. Provines
President
(Corporate Seal)
ATTEST:
Amy J. Lee
Secretary
SECURITY MANAGEMENT COMPANY
By Michael J. Provines
President
(Corporate Seal)
ATTEST:
Amy J. Lee
Secretary
<PAGE> 8
SCHEDULE A
INVESTMENT ADVISORY, 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 any 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.
n. Reports 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.
<PAGE> 9
d. Prepare proxy statements and oversee proxy tabulation for annual
meetings.
e. Prepare Board materials and maintain minutes of the Board meetings.
f. Draft, review and maintain contractual agreements between Fund and
Investment Adviser, Custodian, Distributor and Transfer Agent.
g. Oversee printing of proxy statements, financial reports to
shareholders, prospectus 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.
SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES
Security Management Company agrees to provide the Fund the following
transfer agency and dividend disbursing service.
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.
<PAGE> 10
4. Monitor fiduciary processing, insuring accuracy and deduction of fees.
5. Prepare daily reconciliation's 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.
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.
<PAGE> 11
d. Submit pending requests to correspondence.
e. Monitor on-line 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.
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 an affidavit of mailing.
c. Furnish certified list of shareholders (hard copy or microfilm) and
inspectors of elections.
15. Report and remit as necessary for state escheat requirements.
Approved: Fund M. J. Provines SMC M. J. Provines
<PAGE> 12
AMENDMENT TO INVESTMENT MANAGEMENT AND SERVICES AGREEMENT
WHEREAS, Security Equity Fund (the "Fund") and Security Management Company
("SMC") are parties to an Investment Management and Services Agreement dated
December 8, 1988 (the "Agreement"), under which SMC agrees to provide
investment research and advice, general administrative, fund accounting,
transfer agency and dividend disbursing services to the Fund in return for the
compensation specified in the Agreement;
WHEREAS, on July 23, 1993, the Board of Directors of the Fund authorized the
Fund to offer shares of the Fund in two separate series, the Equity Series and
the Global Series, with each series representing separate interests in a
separate portfolio of securities and other assets;
WHEREAS, on July 23, 1993, the Board of Directors of the Fund further
authorized the Fund to offer its shares in two classes, Class A shares and
Class B shares;
WHEREAS, the Fund had previously issued shares, now designated as Class A
shares of the Equity Series, with respect to which SMC had previously provided
the services set forth in this Agreement;
WHEREAS, on July 23, 1993, the Board of Directors of the Fund voted to amend
this Agreement to provide that SMC would provide services to the Global Series
of the Fund pursuant to this Agreement;
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, the changes to the Agreement which are contemplated by this Amendment
do not affect the interests of Class A shareholders of the Equity Series; and
WHEREAS, on October 1, 1993, the initial shareholder of Class B shares of the
Equity Series and Class A and Class B shares of the Global Series approved such
amendment to this Agreement;
NOW, THEREFORE, the Fund and SMC hereby amend the Investment Management and
Services Agreement, dated December 8, 1988, effective October 1, 1993, as
follows:
A. SMC agrees to provide investment research and advice, general
administrative, fund accounting, transfer agency and dividend disbursing
services to the Global Series of the Fund pursuant to the terms and
conditions set forth in the Agreement, as amended in sections B and C
below.
<PAGE> 13
B. Paragraph 2(b) shall be deleted in its entirety and the following
paragraph inserted in lieu thereof:
(b) EXPENSES OF THE FUND. 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 whether or
not billed to the Fund, SMC or any related entity;
(i) brokerage fees and commissions;
(ii) taxes;
(iii) interest expenses;
(iv) any extraordinary expenses approved by the Board of
Directors of the Fund; and
(v) distribution fees paid under the Fund's Class B
Distribution Plan.
C. Paragraph 3(a) and (b) shall be deleted in their entirety and the
following paragraphs inserted in lieu thereof:
3. Compensation of SMC
(a) As compensation for the services to be rendered by SMC as
provided for herein, for each of the years this Agreement is
in effect, the Fund shall pay SMC an annual fee equal to 2
percent of the first $10 million of the average net assets,
1 1/2 percent of the next $20 million of the average net
assets, and 1 percent of the remaining average net assets of
the Equity Series of the Fund for any fiscal year, and
2 percent of the first $70 million of the average net assets
and 1 1/2 percent of the remaining average net assets of the
Global Series of the Fund for any fiscal year. Such fees
shall be determined and payable monthly. If this Agreement
shall be effective for only a portion of a year, then SMC's
compensation for said year shall be prorated for such
portion. For purposes of this Section 3, 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.
(b) For each of the Fund's fiscal years this Agreement remains in
force, SMC agrees that if total annual expenses of any 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
SMC's compensation, exceed any expense limitation imposed by
state securities law or regulation in any state in which
shares of such Series of the Fund are then qualified for
sale, as such regulations may be amended from time to time,
SMC 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 Agreement shall be effective for only a
portion of any Series' fiscal years, then the maximum annual
expenses shall be prorated for such
<PAGE> 14
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 within the meaning
of this paragraph (b).
D. Paragraph 5(e) shall be deleted in its entirety and the following
inserted in lieu thereof:
5. (e) 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, or
to any third party, provided that such arrangement with a
third party has been approved by the Board of Directors of
the Fund. 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.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Investment Management and Services Agreement this 1st day of October 1993.
SECURITY EQUITY FUND
By: M. J. Provines
ATTEST:
Amy J. Lee, Secretary
SECURITY MANAGEMENT COMPANY
By: M. J. Provines
ATTEST:
Amy J. Lee, Secretary
<PAGE> 15
AMENDMENT TO
INVESTMENT MANAGEMENT AND SERVICES AGREEMENT
WHEREAS, Security Equity Fund (the "Fund") and Security Management Company
("SMC") are parties to an Investment Management and Services Agreement, dated
December 8, 1988, as amended (the "Agreement"), under which SMC agrees to
provide investment research and advice, general administrative, fund
accounting, transfer agency and dividend disbursing services to the Fund in
return for the compensation specified in the Agreement;
WHEREAS, on April 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Asset
Allocation Series, in addition to its presently offered series of common stock
of Equity Series and Global Series, with each series representing separate
interests in a separate portfolio of securities and other assets;
WHEREAS, on April 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Asset Allocation Series in two
classes, designated Class A shares and Class B shares;
WHEREAS, on April 3, 1995, the Board of Directors of the Fund approved the
amendment of the Agreement to provide that SMC would provide investment
advisory and business management services to each class of common stock of the
Asset Allocation Series of the Fund under the terms and conditions of the
Agreement; and
WHEREAS, on April 18, 1995, the initial shareholder of the Asset Allocation
Series approved such amendment to the Agreement;
<PAGE> 16
NOW, THEREFORE BE IT RESOLVED, that the Fund and SMC hereby amend the
Agreement, effective June 1, 1995, to provide that SMC shall provide all
investment advisory services, general administrative, fund accounting, transfer
agency and dividend disbursing services to the Asset Allocation Series of the
Fund pursuant to the terms set forth in the Agreement, as amended on October 1,
1993 and as follows.
Paragraph 1 is deleted in its entirety and the following paragraph inserted in
lieu thereof:
1. EMPLOYMENT OF SMC.
The Fund hereby employs SMC to (a) act as investment adviser to the
Fund with respect to the investment of its assets and to supervise
and arrange the purchase of securities for the Fund and the sales
of securities held in the portfolio of the Fund, subject always to
the supervision of the Board of Directors of the Fund (or a duly
appointed committee thereof), during the period and upon and
subject to the terms and conditions described herein; (b) to
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; and (c) to arrange for, and monitor, the
provision to the Fund of all other services required by the Fund,
including but not limited to services of independent accountants,
legal counsel, custodial services and printing. SMC may, in
accordance with all applicable legal requirements, engage the
services of other persons or entities, regardless of any
affiliation with SMC, to provide services to the Fund under this
Agreement. SMC shall bear the expense of providing such other
services to the Equity and Global Series. Asset Allocation Series
shall bear the expense of such other services and all other
expenses of the Series. SMC agrees to maintain sufficient trained
personnel and equipment and supplies to perform its
responsibilities under this Agreement and 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 shall
use reasonable care in
<PAGE> 17
selecting and monitoring the performance of third parties, who
perform services for the Fund. SMC shall not guarantee the
performance of such persons.
Paragraphs 2(a) and (b) shall be deleted in their entirety and the following
paragraphs shall be inserted in lieu thereof:
(a) EXPENSES OF SMC. SMC shall pay all expenses in
connection with the performance of its services under
this Agreement, including with respect to the Equity
and Global Series, all fees and charges of third
parties providing services to the Fund, whether or not
such expenses are billed to SMC or the Fund, except as
provided otherwise herein.
(b) EXPENSES OF THE FUND. 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 whether or not billed to
the Fund, SMC or any related entity:
(i) brokerage fees and commissions;
(ii) taxes;
(iii) interest expenses;
(iv) any extraordinary expenses approved by the
Board of Directors of the Fund; and
(v) distribution fees paid under the Fund's
Class B Distribution Plan;
and, in addition to those expenses set
forth above, Asset Allocation Series shall pay all
expenses of the Series whether or not billed to the
Fund, SMC or any related entity, including, but not
limited to the following: 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;
expenses of obtaining quotations on
<PAGE> 18
the Fund's portfolio securities and pricing of the
Fund's shares; 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 of additional
information, notices and distributions to stockholders;
costs of stockholder and other meetings; and expenses
of maintaining the Fund's corporate existence.
Paragraph 3(a) shall be deleted in its entirety and the following paragraph
inserted in lieu thereof:
3. COMPENSATION OF SMC.
(a) As compensation for the services to be rendered by
SMC to Equity Series and Global Series as provided for
herein, for each of the years this Agreement is in
effect, the Fund shall pay SMC an annual fee equal to
(1) 2 percent of the first $10 million of the average
net assets, 1 1/2 percent of the next $20 million of
the average net assets, and 1 percent of the remaining
average net assets of the Equity Series of the Fund for
any fiscal year, and (2) 2 percent of the first $70
million of the average net assets and 1 1/2 percent of
the remaining average net assets of the Global Series
of the Fund for any fiscal year. Such fees shall be
determined and payable monthly. As compensation for
the investment advisory services to be rendered by SMC
to Asset Allocation Series, for each of the years this
agreement is in effect, the Asset Allocation Series
shall pay SMC an annual
<PAGE> 19
fee equal to 1% of the average daily net assets of the
Asset Allocation Series. As compensation for the
administrative services to be rendered by SMC to Asset
Allocation Series, the Asset Allocation Series shall
pay SMC an annual fee equal to .045% of the average
daily net assets of Asset Allocation Series, plus the
greater of .10% 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. Such fees shall be
calculated daily and payable monthly. If this
Agreement shall be effective for only a portion of a
year, then SMC's compensation for said year shall be
prorated for such portion. For purposes of this
Section 3, the value of the net assets of each 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.
For transfer agency services provided by SMC to Asset
Allocation Series, Asset Allocation Series shall pay a
Maintenance Fee of $8.00 per account, a Transaction Fee
of $1.00 per account and a Dividend Fee of $1.00 per
account.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Management and Services Agreement this ____ day of April, 1995.
SECURITY EQUITY 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 27th day of September 1993, 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 Equity 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 Series of the Fund (the
"Series"), on the terms and conditions hereinafter set forth.
1
<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 be 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 at all times conform to:
(a) all applicable provisions of the 1940 Act, including any applicable
recordkeeping requirements;
(b) the provisions of the Registration Statement of the Fund, as
amended, under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Fund's Articles of Incorporation, as amended;
(d) the provisions of the Bylaws of the Fund, as amended; and
(e) 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 paragraph 3 hereof to
place orders for the purchase and sale of portfolio securities for
the Series.
4
<PAGE> 5
(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. COMPENSATION. For the services to be rendered and the facilities
furnished hereunder, the Adviser shall pay the Sub-Adviser an annual fee
equal to .50 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 Section 10, 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
5
<PAGE> 6
compensation for the preceding month shall be made as promptly as
possible after the end of each month.
11. 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.
12. 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 Section 13 hereof for one year from the date hereof.
13. 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.
14. 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.
15. 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
6
<PAGE> 7
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.
16. 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.
17. 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.
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
Amy J. Lee By: James R. Schmank
Title: Senior Vice President
ATTEST: LEXINGTON MANAGEMENT
CORPORATION
Richard M. Hisey By: Lawrence Kantor
Title: Managing Director/CFO
7
<PAGE> 1
EXHIBIT (5)(c)
QUANTITATIVE RESEARCH AGREEMENT
THIS AGREEMENT is made this ______ day of ____________________, 1995, by and
between SECURITY MANAGEMENT COMPANY, a Kansas Corporation (the "Adviser"), and
Meridian Investment Management Corporation, a Colorado corporation
("Meridian").
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, Meridian 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 Equity 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 Meridian as the Adviser's agent to
furnish certain research services for the benefit of the Asset Allocation
Series of the Fund (the "Series"), on the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual convenants 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 Meridian to provide certain quantitative
research services to the Adviser on behalf of the Series for the period
and on the terms set forth in this Agreement. Meridian accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. QUANTITATIVE RESEARCH.
(a) Meridian agrees to provide the Adviser with an asset allocation
strategy whose objective is to maximize total return through a
quantitative investment process, within the restrictions
<PAGE> 2
on investment category concentrations and any other investment
restrictions set forth in the Series prospectus and statement of
additional information. The strategy will indicate where, and in what
percentage (in Meridian's opinion) assets should be allocated among the
following investment categories in order to achieve this objective.
1. Sectors within the domestic equity market, consisting of
sub-categories of the general domestic equity market where
companies are grouped by the type of business in which they engage
(e.g. pharmaceuticals, biotechnology, hotels, etc.) as identified
by the S&P 500.
2. Domestic fixed income securities.
3. International equity securities, to include the specific countries
to which assets are to be allocated. The countries eligible for
recommendation under this section are those countries followed by
the Morgan Stanley Capital International World Index (the "MSCI").
4. International fixed income securities, to include the specific
countries to which assets are to be allocated.
5. Gold stocks.
6. Real estate investments made through exchange traded real estate
investment trusts.
7. Cash.
In addition to providing allocations among the identified investment
categories, Meridian shall also provide the Adviser with the underlying
analytical research which supports the recommendations made with respect
to each investment category. Other investment categories may be added by
the mutual agreement of the parties.
(b) An initial asset allocation strategy portfolio will be provided to
the Adviser, and/or its designee, simultaneous with the execution of this
Agreement. Thereafter, Meridian shall continuously review the strategy
established for the Series and continuously update said strategy.
Changes in the strategy will be provided to the Adviser, and/or its
designee, at such times as Meridian's research indicates that changes are
necessary in order to achieve the objective set forth above. However,
regardless of whether there are changes in the strategy or not, Meridian
will report at least weekly to the Adviser in order to discuss the
performance of the strategy and any recommended changes thereto.
Meridian will give the Adviser the benefit of its best judgment, efforts
and facilities in rendering its services under this Agreement.
<PAGE> 3
3. RECORDS.
Meridian 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/or Rule 204-2 under the Investment
Advisers Act of 1940 (the "Advisers Act") and agrees to preserve such
records for the periods prescribed by Rule 31a-2 under the 1940 Act
and/or Rule 204-2 under the Advisers Act, as applicable.
4. EXPENSES.
The expenses connected with the services provided hereunder shall be
borne by Meridian as follows:
(a) Meridian shall pay any expenses associated with carrying out its
obligation under paragraph 2 hereof and in preparing reports to the
Adviser and the expenses of any reasonable travel in connection with its
participation in Board meetings of the Fund or in delivering reports to
the Adviser.
(b) Meridian 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.
5. COMPENSATION.
For the services to be rendered and the facilities furnished hereunder,
the Adviser shall pay Meridian an annual fee equal to .20% of the average
daily closing value of the net assets of the Series, computed on a daily
basis, payable quarterly for the preceding quarter on or before the 25th
day after the end of each calendar quarter. If this Agreement shall be
effective for only a portion of a year, then Meridian's compensation for
said year shall be prorated for such portion. For purposes of this
paragraph 5, 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.
6. NON-EXCLUSIVITY.
The services of Meridian to the Adviser are not to be deemed to be
exclusive, and Meridian shall be free to render research or other
services to others (including other investment Advisers) and to engage in
other activities, so long as its services under the Agreement are not
impaired thereby.
<PAGE> 4
7. NON-DISCLOSURE.
The asset allocation strategy and all information and services relating
thereto which are provided by Meridian to the Adviser shall be used only
in connection with the management and distribution of the Series. The
strategy and information and services shall not be sold or offered for
sale by the Adviser to any other registered investment adviser, regulated
investment company or broker/dealer. However, nothing herein shall be
deemed to restrict the Adviser, or any of its affiliates, from discussing
the asset allocation strategy, or specific recommendations made by
Meridian, in connection with (i) the management and distribution of the
Series, and (ii) the education of registered representatives of
broker/dealers who sell interests in the Series, or as may otherwise be
required by law.
8. 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 9 hereof for one year from the date hereof.
9. 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.
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 Series' outstanding voting securities (as defined in
Section 2 (a)(42) of the 1940 Act), or by the Adviser or by Meridian 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.
11. LIABILITY OF MERIDIAN.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of Meridian or its officers, directors or employees, or reckless
disregard by Meridian of its duties under
<PAGE> 5
this Agreement, Meridian 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.
12. INDEMNIFICATION.
The Adviser and Meridian 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.
13. REPRESENTATIONS AND WARRANTIES OF MERIDIAN.
Meridian represents and warrants that: (i) it is registered as an
investment adviser under the Advisers Act and will continue to be so
registered for so long as this Agreement remains in effect; and (ii) it
is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement.
14. RIGHT TO USE NAME.
During the term of this Agreement, the Adviser (or any of its
subsidiaries or affiliates) shall be entitled to use the Meridian
Investment Management Corporation name in all prospectuses, proxy
statements, reports to shareholders, sales literature or other material
prepared for distribution to shareholders of the Fund.
15. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Kansas. To the extent that the
applicable laws of the State of Kansas conflict with the applicable
provisions of the 1940 Act, and/or the Advisers Act, the latter two
shall control.
B. CAPTIONS. The captions contained 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.
C. ENTIRE AGREEMENT. This Agreement represents the entire agreement
and understanding of the parties hereto and shall supersede any
prior agreements between the parties relating to the subject matter
hereof, and all such prior agreements shall be deemed terminated
upon the effectiveness of this Agreement.
16. 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
<PAGE> 6
receipt of such notice. Until further notice to the other party, it is
agreed that the address of Meridian for this purpose shall be 12835 East
Arapahoe Road, Tower II, 7th Floor, Englewood, Colorado 80012 and the
address of the Adviser 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
_______________________ By: _____________________________
Title: Senior Vice President
ATTEST: MERIDIAN INVESTMENT MANAGEMENT
CORPORATION
_______________________ By: _____________________________
Title: Secretary President
<PAGE> 1
EXHIBIT (5)(d)
FORM OF CONSULTING AND ANALYTICAL RESEARCH AGREEMENT
AGREEMENT, made as of the ______ day of __________________, 1995, between
Templeton Quantitative Advisors, Inc. ("Investment Analytics Provider" or
"IPA") and (Security Management Company)("Adviser").
WHEREAS, Templeton Quantitative Advisors, Inc., is a wholly owned
subsidiary of Templeton Worldwide, Inc., which in turn is a wholly owned
subsidiary of Franklin Resources, Inc.;
WHEREAS, The Investment Analytics Provider is a technology based
investment advisory firm which specializes in structured investment strategies;
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 Equity
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 authorized to issue shares in separate series, with
each series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Adviser's responsibilities with respect to the Asset
Allocation Series of the Fund (the "Series") includes determining the sectors
of the domestic and international economy in which to invest the Series'
assets;
WHEREAS, the Adviser desires to retain the services of Investment
Analytics Provider to provide certain consulting and analytical research
services to the Adviser with respect to its responsibilities to the Series.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
Investment Analytics Provider and the Adviser agree as follows:
1. The Investment Analytics Provider, agrees to provide the Adviser with
research and data on domestic and international equity securities
("Turn-Key Portfolio Plan") consistent with the investment policies set
forth in the prospectus and statement of additional information of the
Fund. The Adviser, or its designee, will identify for IPA (i) the Sectors
of the domestic equity market for which it seeks research and (ii) the
countries in the international equity market for which it seeks research.
With respect to each particular sector or country identified by the
Adviser or its designee, IPA will (i) determine which equity securities
shall be represented in the Series' portfolio and regularly report thereon
to the Fund's Board of Directors and the Adviser; (ii)
<PAGE> 2
formulate and implement continuing programs for the purchase and sale of
such equity securities; (iii) continuously review the Series' equity
security holdings and the investment program and the investment policies
of the Series; and (iv) 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 equity
securities for the Series. IPA shall send the Adviser a daily list of all
recommended purchases and sales for the Series
2. With respect to the recommendations made by IPA, IPA is hereby authorized
to select broker/dealers for execution of the trades and to negotiate
brokerage commissions in connection therewith. IPA'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, IPA 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, IPA
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 effective portfolio investment
transactions in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if IPA 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 IPA's
overall responsibilities with respect to the Series and to its other
clients as to which it exercises investment discretion. IPA 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 IPA. Such allocation shall be in such amounts and
proportions as IPA shall determine and IPA will report on said allocations
regularly to the Board of Directors of the Fund and the Adviser indicating
the broker to whom such allocations have been made and the basis therefor.
Notwithstanding the foregoing, IPA will execute all portfolio transactions
on behalf of the Series in accordance with the Series' brokerage policies
as set forth in its registrations statement, as amended from time to time
(a copy of which shall be provided by the Adviser to IPA, including any
amendments thereto).
3. As compensation for the services rendered to the Adviser, the Adviser
agrees to pay IPA a Turn-Key portfolio research fee of .30%, on an annual
basis of the first $50 million of the Series average daily net equity
securities assets, and .25%, on an annual basis of the Series average
daily net equity securities assets in excess of $50 million. Such fee
shall be calculated daily and payable monthly.
<PAGE> 3
4. It is understood that the services provided by the Investment Analytics
Provider are not to be deemed exclusive and nothing in this Agreement
shall preclude the Investment Analytics Provider from providing similar
services to banking institutions, investment companies, insurance
companies and other clients, including clients which may invest in the
same type of securities as the Fund, so long as its services under this
Agreement are not impaired thereby.
Nothing in this Agreement shall be deemed to impose upon IPA any
obligation to purchase or sell for the Series' account any security or
related instrument which IPA may purchase for itself for its own accounts
or the account of any other client, if in the sole discretion of IPA such
transaction or investment appears unsuitable, unpracticable or
undesirable, or is inconsistent with the policies referred to in Section 2
above.
5. During the term of this Agreement, the Investment Analytics Provider will
pay all expenses incurred by it, its staff and their activities, in
connection with the services to be provided by it under this Agreement.
6. Nothing herein shall be construed as constituting the Investment Analytics
Provider or the Adviser as agent of the other.
7. During the term of this Agreement, the Adviser (or any of its subsidiaries
or affiliates) shall be entitled to use the Templeton Quantitative
Advisors, Inc., name in all prospectuses, proxy statements, reports to
shareholders, sales literature or other material prepared for distribution
to shareholders of the Fund.
8. IPA represents and warrants to the Adviser that (i) it is a validly
existing corporation under the laws of the State of Delaware; (ii) no
provision of any contract, agreement or understanding to which IPA, or any
of its subsidiaries or affiliates is a party, prevents it from providing
the services contemplated by this Agreement; (iii) it has full power and
authority to enter into and perform the services contemplated by this
Agreement; and (iv) it will meet (and will continue to meet for the
duration of this Agreement) all applicable federal or state requirements,
or the applicable requirements of any self regulatory organization,
necessary to be met in order to perform the services contemplated by this
Agreement.
The Adviser represents and warrants to IPA that (i) it is a validly
existing corporation under the laws of the State of Kansas; (ii) no
provision of any contract, agreement or understanding to which the
Adviser, or any of its subsidiaries or affiliates is a party, prevents it
from providing the services contemplated by this Agreement; (iii) it has
full power and authority (including authorization from the Fund) to enter
into and perform the services contemplated by this Agreement; and (iv) it
will meet (and will continue to meet for the duration of this Agreement)
all applicable federal or state requirements, or the applicable
requirements of any self regulatory organization, necessary to be met in
order to perform the services contemplated by this Agreement.
<PAGE> 4
9. IPA 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. IPA 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.
10. This Agreement shall become effective on ____________________, 1995, and
shall continue in effect for one year from that date. If not sooner
terminated, this Agreement shall continue in effect for successive periods
of 12 months each thereafter, provided that each such renewal shall be
specifically approved annually by the vote of a majority of the Fund's
Board of Directors who are not parties to this Agreement or "interested
persons" as defined in the 1940 Act of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and either the
vote of (a) a majority of the outstanding voting securities of the Fund,
as defined in the 1940 Act, or (b) a majority of the Fund's Board of
Directors as a whole.
11. Notwithstanding the foregoing, this Agreement may be terminated by either
party at any time, without the payment of any penalty, on sixty (60) days'
written notice to the other party. In addition, this Agreement may be
terminated by the Fund on sixty (60) days' written notice to the
Investment Analytics Provider, provided that such termination by the Fund
is approved by the vote of a majority of the Fund's Board of Directors in
office at the time or by vote of a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act. This Agreement shall
automatically terminate in the event that the investment advisory
contracts between the Advisers and the Fund is terminated, assigned or not
renewed.
12. This Agreement will terminate automatically in the event of its assignment
(as that term is defined in the 1940 Act).
13. This Agreement shall be construed in accordance with the laws of the State
of New York without regard to principles of conflicts of laws.
14. IPA may rely on information reasonably believed by it to be accurate and
reliable. The Investment Analytics Provider nor its officers, directors,
employees or agents shall be subject to any liability for an error of
judgment, mistake of law, or any loss arising out of any investment or
other act or omission in the performance by the Investment Analytics
Provider of its duties under this Agreement or for any loss or damage
resulting from the imposition by any government or exchange control
restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of custodians or securities depositories, or from
any war or political act of any foreign government to which such assets
might be exposed, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the part or by
reason of IPA's reckless disregard of its duties under this Agreement.
<PAGE> 5
15. The Adviser and IPA 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.
16. Notice required to be given under this Agreement by either party shall be
in writing by personal delivery or certified mail, return receipt
requested or by confirmed telecopy. Notice shall be to the addresses set
forth on the signature page hereto.
17. This Agreement sets forth the entire Agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
between the parties concerning such subject matter. This Agreement may
not be amended except by a writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized corporate officers as of the day and year
first above written.
TEMPLETON QUANTITATIVE ADVISORS, INC.
By: Robert E. Butman
President
Address: 31 West 52nd Street, 10th Floor
New York, New York 10019
Attest:
__________________________
Jean W. Thomas
Secretary
SECURITY MANAGEMENT COMPANY
By: James R. Schmank
Senior Vice President
Address: 700 Harrison Street
Topeka, Kansas 66636
Attest:
__________________________
Amy J. Lee
Secretary
<PAGE> 1
EXHIBIT (6)(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT, dated as of January 1964, between Security Equity Fund, Inc., a
Kansas corporation with offices in Topeka, Kansas, Party of the First Part
(hereinafter sometimes called the "Company"), and Security Distributors, Inc.,
a Kansas corporation with offices in Topeka, Kansas, Party of the Second Party
(hereinafter sometimes called the "Distributor"),
WITNESSETH:
1. The Company hereby covenants and 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 of capital stock
issued or to be issued by the Company.
2. The Distributor hereby covenants and agrees to act as the distributor of
the 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 governmental law or regulation.
3. 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 prospectus of the Company, 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 of the Company 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.
4. The Distributor agrees that, during the period this Agreement is in effect
and to the extent hereinafter in this Section 4 provided, it will
reimburse the Company for or pay:
(a) All costs, expenses and fees incurred in connection with the
registration and qualification of the Company's shares under the
Federal Securities Act of 1933 and under the applicable "Blue Sky"
laws of the states in which the Company wishes to distribute its
shares;
(b) All costs and expenses of all prospectuses, advertising material,
sales literature, circulars and other material used or to be used in
connection with the offering for sale of the shares of the Company;
<PAGE> 2
(c) All costs, expenses and fees in connection with the printing of
application and confirmation forms; and
(d) All clerical and administrative costs in processing the applications
for and in connection with the sale of shares of the Company.
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 the Company's shares.
5. 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(e) of said statute and the Rules and
Regulations of the Securities and Exchange Commission promulgated
thereunder.
6. 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.
7. This Agreement shall become effective on January 1, 1964, or as soon
thereafter as an amendment to the Company's prospectus, reflecting the
underwriting arrangements provided by this Agreement, shall become
effective under the Securities Act of 1933.
8. Upon becoming effective as provided in the preceding Section 7, this
Agreement shall continue in effect until the close of business on
December 31, 1964, and thereafter from year to year, provided that such
continuance for each successive year after December 31, 1964, is
specifically approved in advance at least annually by the board of
directors (including approval by a majority of the directors who are not
parties to the 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.
9. 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.
<PAGE> 3
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.
10. 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.
11. 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.
12. 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.
13. Any notice required or permitted to be given hereunder to either of the
parties hereto shall be deemed to have been given if mailed by certified
mail in a postage prepaid envelope addressed to the respective party as
follows, unless any such party has notified the other party hereto that
notices thereafter intended for such party shall be mailed to some other
address, in which event notices thereafter shall be addressed to such
party at the address designated in such request:
Security Equity Fund, Inc.
Security Benefit Life Building
700 Harrison Street
Topeka, Kansas
Security Distributors, Inc.
Security Benefit Life Building
700 Harrison Street
Topeka, Kansas
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
SECURITY EQUITY FUND, INC.
By: Dean L. Smith, President
ATTEST:
Will J. Miller, Jr., Secretary
(SEAL) SECURITY DISTRIBUTORS, INC.
By: Robert E. Jacoby, President
ATTEST:
Will J. Miller, Jr., Secretary
(SEAL)
<PAGE> 4
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Equity Fund, Inc. (the "Company") and Security Distributors,
Inc. (the "Distributor") are parties to a Distribution Agreement dated as of
January 1, 1964, (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 8 of the Distribution Agreement is amended to provide as follows:
"8. Upon becoming effective as provided in the preceding Section 7, this
Agreement shall continue in effect until the close of business on
December 31, 1964, and thereafter from year to year, provided that
such continuance for each successive year after December 31, 1964, 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."
2. The second paragraph of Section 9 of the Distribution Agreement is amended
to provide as follows:
"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."
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 9th day of December, 1971.
SECURITY EQUITY FUND, INC.
(Corporate Seal)
By: Dean L. Smith, President
Attest:
Will J. Miller, Jr., Secretary
SECURITY DISTRIBUTORS, INC.
(Corporate Seal)
By: Dave E. Davidson, President
Attest:
Will J. Miller, Jr., Secretary
<PAGE> 5
AMENDMENT NO. 2 TO DISTRIBUTION AGREEMENT
WHEREAS, Security Equity Fund, Inc., a Kansas corporation (the "Company"), and
Security Distributors, Inc., a Kansas corporation (the "Distributor"), are
parties to a Distribution Agreement dated as of January 1, 1964, under which
the Distributor has agreed to act as principal underwriter in connection with
sales of shares of the Company's stock, which Distribution Agreement has
heretofore been amended on December 9, 1971; and
WHEREAS, the Company and the Distributor wish to further amend the Distribution
Agreement to omit the provision that the Distributor shall reimburse the
Company for or pay all costs, expenses and fees incurred in connection with the
registration of the Company's shares under the Securities Act of 1933;
NOW, THEREFORE, the Company and the Distributor hereby amend Section 4(a) of
the Distribution Agreement as follows:
"4. The Distributor agrees that, during the period this Agreement is in
effect and to the extent hereinafter in this Section 4 provided, it
will reimburse the Company for or pay:
(a) All costs, expenses and fees incurred in connection with the
registration and qualification of the Company's shares under the
applicable "Blue Sky" laws of the states in which the Company
wishes to distribute its shares;"
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to the
Distribution Agreement to be duly executed this 9th day of October, 1974.
SECURITY EQUITY FUND, INC.
(Corporate Seal)
By: Dean L. Smith, President
Attest:
Will J. Miller, Jr., Secretary
SECURITY DISTRIBUTORS, INC.
(Corporate Seal)
By: Dave E. Davidson, President
Attest:
Will J. Miller, Jr., Secretary
<PAGE> 6
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Equity Fund (the "Company") and Security Distributors, Inc.
(the "Distributor") are parties to a Distribution Agreement dated as of
January 1, 1964, and amended as of December 9, 1971, and October 9, 1974 (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, The Company and the Distributor wish to amend Section 4 of the
Distribution Agreement pertaining to the allocation of expenses and charges.
NOW, THEREFORE, The Company and Distributor hereby amend said Section 4 of the
Distribution Agreement, effective as of January 31, 1984, as follows:
4. 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.
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 application
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.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 31st day of January, 1984.
SECURITY EQUITY FUND
(Corporate Seal)
By: Everett S. Gille, President
Attest:
Tad Patton, Assistant Secretary
SECURITY DISTRIBUTORS, INC.
(Corporate Seal)
By: Gordon Evans, President
Attest:
Tad Patton, Assistant Secretary
<PAGE> 7
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Equity Fund (the "Company") and Security Distributors, Inc.
(the "Distributor") are parties to a Distribution Agreement dated January 1,
1964, 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 Equity Series and Global 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 $.25 par value stock.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Distribution Agreement this 1st day of October 1993.
SECURITY EQUITY FUND
By: M. J. Provines
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
SECURITY DISTRIBUTORS, INC.
By: Howard R. Fricke
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
<PAGE> 8
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, Security Equity Fund (the "Fund") and Security Distributors, Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964,
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 April 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Asset
Allocation Series, in addition to its presently offered series of common stock
of Equity Series and Global Series;
WHEREAS, on April 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Asset Allocation Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on April 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 Asset Allocation 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 Asset
Allocation Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Distribution Agreement this 18th day of April, 1995.
SECURITY EQUITY FUND
By: James R. Schmank
Vice President and Treasurer
ATTEST:
By: Amy J. Lee
Secretary
SECURITY DISTRIBUTORS, INC.
By: Richard K Ryan
President
ATTEST:
By: Amy J. Lee
Secretary
<PAGE> 1
EXHIBIT (6)(b)
CLASS B
DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 1st day of October 1993, between Security Equity
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 $.25 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.
<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
<PAGE> 3
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.
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
<PAGE> 4
party hereto that notices thereafter intended for such party shall be mailed to
some other address, in which event notices thereafter shall be addressed to
such party at the address designated in such request:
Security Equity Fund
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 EQUITY FUND
BY: M. J. Provines
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
SECURITY DISTRIBUTORS, INC.
BY: Howard R. Fricke
President
ATTEST:
Amy J. Lee
Secretary
(SEAL)
<PAGE> 5
AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT
WHEREAS, Security Equity 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 April 3, 1995, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series designated as the Asset
Allocation Series, in addition to its presently offered series of common stock
of Equity Series and Global Series;
WHEREAS, on April 3, 1995, the Board of Directors of the Fund further
authorized the Fund to offer shares of the Asset Allocation Series in two
classes, designated Class A shares and Class B shares; and
WHEREAS, on April 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 Asset Allocation
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
Asset Allocation 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.
SECURITY EQUITY FUND
By: James R. Schmank
Vice President and Treasurer
ATTEST:
By: Amy J. Lee
Secretary
SECURITY DISTRIBUTORS, INC.
By: Richard K Ryan
President
ATTEST:
By: Amy J. Lee
Secretary
<PAGE> 1
EXHIBIT 7
SECURITY EQUITY FUND
Non-Qualified Deferred Compensation
Plan for Outside Directors
This is the Non-Qualified Deferred Compensation Plan for Outside Directors of
the Security Equity Fund (the "Fund"), covering the eligible directors of the
Fund and effective as to directors' fees payable after September 30, 1993.
1. Eligible Directors: The directors of the Fund who are eligible to
make the election to defer compensation permitted pursuant to this
Plan shall be those Directors who are designated by the full Board of
Directors of the Fund. No Director of the Fund who is an "interested
person" of the Fund, as such term is defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended, shall be eligible to
make an election under this Plan.
2. Deferrable Compensation: An eligible Director may elect to defer all
or any part of the compensation payable to him or her by the Fund for
services rendered as a director ("Directors' Fees") prior to
performing such services, provided such election complies with the
requirements of Paragraph 3, below.
3. Election to Defer:
(a) Elections - General Rule: An eligible Director may elect to
defer payment of his or her Directors' Fees in any calendar
year by notifying the Fund's Secretary in writing, in the form
designated by the Secretary of this Paragraph 3 on or before
December 15 of the preceding year, stating how much of his or
her Directors' Fees shall be deferred.
(b) Special Rule for Elections in Year of Initial Eligibility: An
eligible Director may elect to defer payment of his or her
Directors' Fees for that portion of the calendar year that
remains after the date the Director first becomes eligible to
make a deferral election under the Plan by notifying the
Secretary of the Fund in writing, in the form designated by
the Secretary, no later than 30 days after the date the
Director is notified of his or her eligibility and, in any
event, before he performs the services for which the
Directors' Fees subject to his or her election are payable.
(c) Irrevocability of Election: Any election made pursuant to
Subparagraph (a) or (b) of this Paragraph 3 shall be
irrevocable as to the calendar year to which it applies.
(d) Continued Effectiveness of Election: An election made
pursuant to Subparagraph (a) or (b) of this Paragraph 3 shall
continue in effect each calendar year after the initial
election is made until the Director shall, on or before any
December 15, notify the Fund's Secretary in writing that a
different election shall apply to the following calendar
years, which election shall likewise continue in effect until
similarly changed.
<PAGE> 2
4. Non-Deferred Compensation: Any Directors' Fees that are not deferred
under this Plan shall be paid in accordance with the normal policy and
procedure of the Fund.
5. Deferred Compensation Accounts:
(a) Credits: The Fund shall establish deferred compensation
accounts ("Accounts") on the books of the Fund for each
eligible Director. All Directors' Fees that are deferred
pursuant to an election under Paragraph 3, above, shall be
credited to the Account of the Director who has made such
election as of the date such Directors' Fees would otherwise
be paid to the Director.
(b) Earnings: The Account established on behalf of a Director
shall be credited or debited following the date of this
Agreement as follows: interest on the account shall be
computed on the first day of each quarter, based on the
balance of the Account as of the first day of the preceding
quarter. The interest rate used shall be equal to the
prevailing rate on 90-day U.S. Treasury Bills at the
beginning of the preceding quarter, and shall be used for the
entire succeeding quarter.
6. Payment of Deferred Compensation:
(a) Benefit Amount: The balance in a Director's Account shall be
determined as of the first day of the first calendar quarter
following the date on which he or she ceases to be a Director
of the Fund, whether by reason of death, resignation, removal,
failure of re-election, or otherwise ("Determination Date").
The balance in a Director's Account shall be the dollar amount
credited to such Account as of the Determination Date.
(b) Payment Schedule: The balance in a Director's Account as
determined in Subparagraph (a) of this Paragraph 6 shall be
paid to him or her in cash in a number of equal quarterly
installments, as elected by the Director, beginning on the
Determination Date or as soon as administratively feasible
thereafter. Subsequent installments shall be paid on the
first day of each calendar quarter thereafter, until all
installments are paid. Such installments shall be increased
by the earnings that are credited to the Account pursuant to
Subparagraph (a) of Paragraph 5.
7. Death Benefits:
(a) Death After Payments Begin: If a Director dies before
receiving the entire balance of his or her Account, but after
ceasing to be a Director, the balance of his or her Account
shall be paid to the Director's Beneficiary in a cash lump sum
determined as of the first day of the calendar quarter
following the date of death.
(b) Death Before Payments Begin: If a Director dies while still a
Director of the Fund and before beginning to receive benefits
under the Plan, the balance of his or her Account shall be
paid to his or her Beneficiary in a cash lump sum in the
amount determined under Subparagraph (a) of Paragraph 6 as of
the Determination Date.
<PAGE> 3
(c) Beneficiary Designation: A Director shall designate a
Beneficiary in writing to the Fund's Secretary, upon
commencing participation in the Plan. If the Director has not
made a valid beneficiary designation, or his or her designated
beneficiary has predeceased the Director, the Beneficiary
shall be the Director's estate. Any designation of
Beneficiary may be revoked or modified at any time by the
Director.
8. Unsecured Obligation of the Fund: The Fund's obligations to establish
and maintain Accounts for each eligible electing Director and to make
payments of deferred compensation to him or her under this Plan shall
be the general unsecured obligations of the Fund. The Fund shall not
establish any separate fund, purchase any annuity contract, or in any
other way make special provision or specifically earmark any funds for
the payment of any amounts called for under this Plan, nor shall this
Plan or any actions taken under or pursuant to this Plan be construed
to create a trust of any kind, or a fiduciary relationship between the
Fund and any eligible Director, his designated beneficiary, executors
or administrators, or any other person or entity. All payments due
under the Plan shall be payable solely from the Fund's general assets
and property.
9. Assignability: No portion of a Director's Account may be assigned or
transferred in any manner, nor shall any benefits under the Plan be
subject to anticipation, or to voluntary or involuntary alienation.
10. Withholding of Taxes: The rights of a Director to payments under this
Plan shall be subject to the Fund's obligations at any time to
withhold from such payments for any income or other tax on such
payments.
11. Limited Purpose of Plan: The establishment or existence of the Plan
shall not confer upon any Director the right to be retained as a
Director, nor does it obligate the Fund to pay any Directors' Fees, or
any particular level of Directors' Fees to any Director. The Fund
expressly reserves the right to discharge any Director, or alter the
level of Directors' Fees payable to any Director, whenever in its
judgment its best interests so require.
12. Amendments and Termination: This Plan may be amended by a committee
of the Board of Directors consisting only of Directors not eligible to
defer Directors' Fees under this Plan. This Plan may be terminated at
any time by the Board of Directors. No amendment or termination may
affect a Director's Account existing on the date such amendment or
termination is made, nor any election previously made under the Plan
as to Directors' Fees for the calendar year in which the amendment or
termination occurs.
13. Governing Law: This Plan shall be governed by the laws of the State
of Kansas.
Adopted: October ________, 1993
<PAGE> 4
SECURITY EQUITY FUND
Non-Qualified Deferred Compensation Plan
For Outside Directors
ELECTION FORM
Pursuant to the Security Equity Fund Non-Qualified Deferred Compensation Plan
for Outside Directors (the "Plan"), I hereby make the following elections:
1. Election to Defer: I hereby elect to defer ________ percent of the
compensation payable to me by the Fund for services rendered as a
director ("Directors' Fees") after the date I deliver this form to the
Secretary of the Fund. I understand that the election under this
paragraph 1 is irrevocable with respect to Directors' Fees payable to
me for the remainder of calendar year 1993, and that it shall apply to
each calendar year thereafter until I, on or before any December 15,
notify the Fund's Secretary in writing that a different election shall
apply to the following calendar years. I further understand that any
Directors' Fees that are not deferred under this Plan shall be paid in
accordance with normal Fund policy.
[2. Election of Form of Payment: I hereby elect to have my benefit paid
in quarterly installments over a period of ________ years. I
understand that the election under this Paragraph 2 may not be changed
at any time with respect to amounts deferred in accordance with
Paragraph 1 of this Election Form.]
3. Designation of Beneficiary: I understand that I may designate a
beneficiary who, in the event of my death before all amounts due to me
under the Plan have been distributed, will receive such amounts. I
hereby designate as my beneficiary:
Name Relationship
1.
If a person is named above as beneficiary and such person does not survive me,
I hereby designate as my contingent beneficiary:
Name Relationship
2.
If no beneficiary has been designated under this Paragraph 3, or all
beneficiary designations are ineffective, then benefits payable hereunder shall
be paid to my estate. Any benefits which may be payable to my beneficiary
shall be paid in installments pursuant to the schedule elected under Paragraph
2, should I die after ceasing to be a Director, or in a lump sum, should I die
while still engaged as a Director of the Fund.
<PAGE> 5
I reserve the right to revoke or amend this designation of beneficiary by
written notice to the Fund's Secretary.
4. Acknowledgment of Plan Terms: I have received a copy of the Security
Equity Fund Non-Qualified Deferred Compensation Plan for Outside
Directors, and having read and understood the terms and conditions of
the Plan, agree to be bound thereby. I further understand that all
amounts I elect to defer pursuant to the Plan, in accordance with
Paragraph 1 of this Election Form, are subject to the claims of the
creditors of the Fund.
Date:
----------------------- -------------------------------------
Signature - Director
Social Security Number:
-------------
Received By: Security Equity Fund
Date: By:
----------------------- ----------------------------------
Secretary
<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> <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> <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.
<TABLE>
<S> <C>
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
</TABLE>
26
<PAGE> 30
<TABLE>
<S> <C>
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
</TABLE>
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
<TABLE>
<CAPTION>
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
--------- --------------------- -----------------
Euroclear
<S> <C>
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
</TABLE>
28
<PAGE> 1
EXHIBIT (8)(b)
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective _____, 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, advice's
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 the following 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 _____ 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
<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
basis)
MARKET VALUE FEES 1 (SEE FOOTNOTE)
$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)
$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 2 $25,000
16
<PAGE> 18
III. MISCELLANEOUS FEES
Out of pocket expenses (i.e., scrip fees, As incurred
stamp taxes, transaction
costs, etc.)
Transfer to successor custodian Refer to country bands
(1) DOMESTIC MARKET VALUE FEES WOULD BE CAPPED AT A MAXIMUM AMOUNT OF
$5,000 FOR THE FIRST YEAR AND THEN AT $10,000 FOR THE SECOND YEAR. AFTER
TWO YEARS THE CAP WOULD BE LIFTED. MARKET VALUE FEES FOR EACH OF THE FUNDS
WOULD BE ADDED TOGETHER FOR PURPOSES OF APPLYING THE CAP AMOUNT.
(2) MINIMUM FEE WOULD BE APPLIED ON A RELATIONSHIP BASIS (NOT ON AN
INDIVIDUAL FUND BASIS).
THE CHASE MANHATTAN BANK, N.A. SECURITY MANAGEMENT COMPANY
Matthew D. Goad 5/9/95
* AS OF JUNE 1, 1995 THIS FEE SCHEDULE APPLIES TO THE FOLLOWING FUNDS:
SBL FUND - SERIES M
SBL FUND - SERIES N
SBL FUND - SERIES O
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
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
Israel Taiwan
18
<PAGE> 1
EXHIBIT 15
SECURITY EQUITY FUND
CLASS B
DISTRIBUTION PLAN
1. The Plan. This Distribution Plan (the "Plan"), provides for the financing
by Security Equity 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;
<PAGE> 2
(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");
(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
<PAGE> 3
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.
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
<PAGE> 4
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
