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THE SECURITY BENEFIT
GROUP OF COMPANIES
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SECURITY BENEFIT LIFE INSURANCE COMPANY 700 SW HARRISON ST.
SECURITY BENEFIT GROUP, INC. TOPEKA, KANSAS 66636-0001
SECURITY DISTRIBUTORS, INC. (785) 431-3000
SECURITY MANAGEMENT COMPANY, LLC
UNDERWRITER DEALER AGREEMENT
Dealer Name:
Security Distributors, Inc. ("we" or "us") invites you to participate in the
distribution of shares of the Security Mutual Funds (the "Funds") for which we
now or in the future serve as principal underwriter, subject to the terms of
this Agreement. We will notify you from time to time of the Funds which are
eligible for distribution and the terms of compensation under this Agreement.
This Agreement supersedes any prior underwriter dealer agreements between us, as
stated in paragraph 16 below.
1. LICENSING.
(a) You represent that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and are presently
licensed to the extent necessary by the appropriate regulatory agency
of each state in which you will offer and sell shares of the Funds.
You agree that termination or suspension of such membership with the
NASD, or of your license to do business by any state or federal
regulatory agency, at any time shall terminate or suspend this
Agreement forthwith and shall require you to notify us in writing of
such action. This Agreement is in all respects subject to the Conduct
Rules of the NASD which shall control any provision to the contrary in
this Agreement.
(b) You agree to notify us immediately in writing if at any time you are
not a member in good standing of the Securities Investor Protection
Corporation ("SIPC").
2. SALES OF FUND SHARES. You may offer and sell shares of each Fund and class
only at the public offering price which shall be applicable to, and in
effect at the time of, each transaction. The procedures relating to all
orders and the handling of them shall be subject to the terms of the then
current prospectus and statement of additional information (hereafter, the
"prospectus") and new account application, including amendments, for each
such Fund, and our written instructions from time to time. This Agreement
is not exclusive, and either party may enter into similar agreements with
third parties.
3. DUTIES OF DEALER: IN GENERAL. You agree:
(a) To act as principal, or as agent on behalf of your customers, in all
transactions in shares of the Funds. You shall not have any authority
to act as agent for the issuer (the Funds), for us, or for any other
dealer in any respect, nor will you represent to any third party that
you have such authority or are acting in such capacity.
(b) To purchase shares only from us or from your customers.
(c) To enter orders for the purchase of shares of the Funds only from us
and only for the purpose of covering purchase orders you have already
received from your customers or for your own bona fide investment.
(d) To maintain records of all sales and redemptions of shares made
through you and to furnish us with copies of such records on request.
(e) To distribute prospectuses and reports to your customers in compliance
with applicable legal requirements, except to the extent that we
expressly undertake to do so on your behalf.
(f) That you will not withhold placing customers' orders for shares so as
to profit yourself as a result of such withholding or place orders for
shares in amounts just below the point at which sales charges are
reduced so as to benefit from a higher sales charge applicable to an
amount below the breakpoint.
(g) That if any shares confirmed to you hereunder are repurchased or
redeemed by any of the Funds within seven business days after such
confirmation of your original order, you shall forthwith refund to us
the full concession allowed to you on such orders. We shall forthwith
pay to the appropriate Fund our share, if any, of the "charge" on the
original sale and shall also pay to such Fund the refund from you as
herein provided. We shall notify you of such repurchase or redemption
within a reasonable time after settlement. Termination or cancellation
of this Agreement shall not relieve you or us from the requirements of
this subparagraph.
(h) That if payment for the shares purchased is not received within the
time customary or the time required by law for such payment, the sale
may be canceled forthwith without any responsibility or liability on
our part or on the part of the Funds, or at our option, we may sell
the shares which you ordered back to the Funds, in which latter case
we may hold you responsible for any loss to the Funds or loss of
profit suffered by us resulting from your failure to make payment as
aforesaid. We shall have no liability for any check or other item
returned unpaid to you after you have paid us on behalf of a
purchaser. We may refuse to liquidate the investment unless we receive
the purchaser's signed authorization for the liquidation.
(i) That you shall assume responsibility for any loss to the Funds caused
by a correction made subsequent to trade date, provided such
correction was not based on any error, omission or negligence on our
part, and that you will immediately pay such loss to the Funds upon
notification.
(j) That if on a redemption which you have ordered, instructions in proper
form, including outstanding certificates, are not received within the
time customary or the time required by law, the redemption may be
canceled forthwith without any responsibility or liability on our part
or on the part of any Fund, or at our option, we may buy the shares
redeemed on behalf to the Fund, in which latter case we may hold you
responsible for any loss to the Fund or loss of profit suffered by us
resulting from your failure to settle the redemption.
4. CONDITIONAL ORDERS; CERTIFICATES. We will not accept from you any
conditional orders for shares of any of the Funds. Delivery of certificates
for shares purchased shall be made by the Funds only against constructive
receipt of the purchase price, subject to deduction for your concession and
our portion of the sales charges, if any, on such sale. No certificates
will be issued unless specifically requested.
5. DEALER COMPENSATION. On each purchase of shares by you from us, the total
sales charges and your dealer concessions shall be as stated in each Fund's
then current prospectus or SAI, subject to NASD rules and applicable state
and federal laws. Such sales charges and dealer concessions are subject to
reductions under a variety of circumstances as described in the Funds'
prospectuses. For an investor to obtain these reductions, we must be
notified at the time of the sale that the sale qualifies for the reduced
charges. If you fail to notify us of the applicability of a reduction in
the sales charge at the time the trade is placed, neither we nor any of the
Funds will be liable for amounts necessary to reimburse any investor for
the reduction which should have been effected.
6. REDEMPTIONS. Redemptions or repurchases of shares will be made at the net
asset value of such shares, less any applicable deferred sales or
redemption charges, in accordance with the applicable prospectuses. Except
as permitted by applicable law, you agree not to purchase any shares from
your customers at a price lower than the redemption or repurchase prices
then computed by the Funds. You shall, however, be permitted to sell shares
for the account of the record owner to the Funds at the repurchase price
then currently in effect for such shares and may charge the owner a fair
commission for handling the transaction.
7. EXCHANGES. Telephone exchange orders will be effective only for
uncertificated shares and may be subject to any fees or other restrictions
set forth in the applicable prospectuses. You may charge the shareholder a
fair commission for handling an exchange transaction. Exchanges from a Fund
sold with no sales charge to a Fund which carries a sales charge, and
exchanges from a Fund sold with a sales charge to a Fund which carries a
higher sales charge may be subject to a sales charge in accordance with the
terms of each Fund's prospectus. You will be obligated to comply with any
additional exchange policies described in each Fund's prospectus.
8. TRANSACTION PROCESSING. All orders are subject to acceptance by us and by
the Fund or its transfer agent, and become effective only upon confirmation
by us. If required by law, each transaction shall be confirmed in writing
on a fully disclosed basis and if confirmed by us, a copy of each
confirmation shall be sent simultaneously to you if you so request. All
sales are made subject to receipt of shares by us from the Funds. We
reserve the right in our discretion, without notice, to suspend the sale of
shares or withdraw the offering of shares entirely. Telephone orders will
be effected at the price(s) next computed on the day they are received from
you if, as set forth in each Fund's current prospectus, they are received
prior to the time the price of its shares is calculated. Orders received
after that time will be effected at the price(s) computed on the next
business day. All orders must be accompanied by payment in U.S. dollars.
Orders payable by check must be drawn payable in the U.S. dollars on a U.S.
bank, for the full amount of the investment.
9. MULTIPLE CLASSES. We may from time to time provide to you written
compliance guidelines or standards relating to the sale or distribution of
Funds offering multiple classes of shares with different sales charges and
distribution-related operating expenses. In addition, you will be bound by
an applicable rules or regulations of government agencies or
self-regulatory organizations generally affecting the sale or distribution
of mutual funds offering multiple classes of shares.
10. RULES 12B-1 PLANS. You are also invited to participate in all Plans adopted
by the Funds (the "Plan Funds") pursuant to Rule 12b-1 under the 1940 Act.
To the extent you provide administrative and other services, including, but
not limited to, furnishing personal and other services and assistance to
your customers who own shares of a Plan Fund, answering routine inquiries
regarding a Fund, assisting in changing account designations and addresses,
maintaining such accounts or such other services as a Fund may require, to
the extent permitted by applicable statutes, rules or regulations, we shall
pay you a Rule 12b-1 servicing fee. To the extent that you participate in
the distribution of Fund shares which are eligible for a Rule 12b-1
distribution fee, we shall also pay you a Rule 12b-1 distribution fee. All
Rule 12b-1 servicing and distribution fees shall be based on the value of
shares attributable to customers of your firm and eligible for such
payment, and shall be calculated on the basis and at the rates set forth in
the Fund's then current prospectus or SAI. Without prior approval by a
majority of the outstanding shares of a Fund, the aggregate annual fees
paid to you pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in each Fund's prospectus, which amount shall be a
specified percent of the value of the Fund's net assets held in your
customers' accounts which are eligible for payment pursuant to this
Agreement (determined in the same manner as each Fund uses to compute its
net assets as set forth in its effective Prospectus).
We shall furnish to the Boards of Directors of the Plan Funds, for their
review on a quarterly basis, a written report of the amounts expended under
the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Plan Funds' Directors, including such
persons who are not interested persons of the Plan Funds and who have no
financial interest in the Plans or any related agreement ("Rule 12b-1
Directors"). The Plans or the provisions of this Agreement relating to such
Plans may be terminated at any time by the vote of a majority of the Plan
Funds' Boards of Directors, including Rule 12b-1 Directors, or by a vote of
a majority of the outstanding shares of the Plan Funds, on sixty (60) days'
written notice, without payment of any penalty. The Plans or the provisions
of this Agreement may also be terminated by any act that terminates the
Distribution Agreement between us and the Plan Funds. In the event of the
termination of the Plans for any reason, the provisions of this Agreement
relating to the Plans will also terminate.
Continuation of the Plans and provisions of this Agreement relating to such
Plans are conditioned on Rule 12b-1 Directors being ultimately responsible
for selecting and nominating any new Rule 12b-1 Directors. Under Rule
12b-1, Directors of any of the Plan Funds have a duty to request and
evaluate, and persons who are party to any agreement related to a Plan have
a duty to furnish, such information as may reasonably be necessary to an
informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, Plan Funds are permitted to
implement or continue Plans or the provisions of this Agreement relating to
such Plans from year-to-year only if, based on certain legal
considerations, the Boards of Directors are able to conclude that the Plans
will benefit the Plan Funds. Absent such yearly determination the Plans and
the provisions of this Agreement relating to the Plans must be terminated
as set forth above. In addition, any obligation assumed by a Fund pursuant
to this Agreement shall be limited in all cases to the assets of such Fund
and no person shall seek satisfaction thereof from shareholders of a Fund.
You agree to waive payment of any amounts payable to you by us under a
Fund's Plan of Distribution pursuant to Rule 12b-1 until such time as we
are in receipt of such fee from the Fund.
The provisions of the Rule 12b-1 Plans between the Plan Funds and us,
insofar as they relate to Plans, shall control over the provisions of this
Agreement in the event of any inconsistency.
11. REGISTRATION OF SHARES. Upon request, we shall notify you of the states or
other jurisdictions in which each Fund's shares are currently registered or
qualified for sale to the public. We shall have no obligation to register
or qualify, or to maintain registration or qualification of, Fund shares in
any state or other jurisdiction. We shall have no responsibility, under the
laws regulating the sale of securities in any U.S. or foreign jurisdiction,
for the qualification or status of persons selling Fund shares or for the
manner of sale of Fund shares. Except as stated in this paragraph, we shall
not, in any event, be liable or responsible for the issue, form, validity,
enforceability and value of such shares or for any matter in connection
therewith, and no obligation not expressly assumed by us in this Agreement
shall be implied. Nothing in this Agreement, however, shall be deemed to be
a condition, stipulation or provision binding any person acquiring any
security to waive compliance with any provision of the Securities Act of
1933, or of the rules and regulations of the Securities and Exchange
Commission, or to relieve the parties hereto from any liability arising
under the Securities Act of 1933.
12. FUND INFORMATION. No person is authorized to give any information or make
any representations concerning shares of any Fund except those contained in
the Fund's current prospectus or in materials issued by us as information
supplemental to such prospectus. We will supply prospectuses, reasonable
quantities of supplemental sale literature, sales bulletins, and additional
information as issued. You agree not to use other advertising or sales
material relating to the Funds except that which (a) conforms to the
requirements of any applicable laws or regulations of any government or
authorized agency in the U.S. or any other country, having jurisdiction
over the offering or sale of shares of the Funds, and (b) is approved in
writing by us in advance of such use. Such approval may be withdrawn by us
in whole or in part upon notice to you, and you shall, upon receipt of such
notice, immediately discontinue the use of such sales literature, sales
material and advertising. You are not authorized to modify or translate any
such materials without our prior written consent.
13. INDEMNIFICATION. You further agree to indemnify, defend and hold harmless
us, the Funds, their officers, directors and employees from any and all
losses, claims, liabilities and expenses arising out of (1) any alleged
violation of any statute or regulations (including without limitation the
securities laws and regulations of the United States or any state or
foreign country) or any alleged tort or breach of contract, in or related
to the offer and sale by you of shares of the Funds pursuant to this
Agreement (except to the extent that our negligence or failure to follow
correct instructions received from you is the cause of such loss, claim,
liability or expense), (2) any redemption or exchange pursuant to telephone
instructions received from you or your agents or employees, or (3) the
breach by you of any of the terms and conditions of this Agreement.
14. TERMINATION; SUCCESSION; AMENDMENT. Each party to this Agreement may cancel
its participation in this Agreement by giving written notice to the other
party. Such notice shall be deemed to have been given and to be effective
on the date on which it was either delivered personally to the other party
or any officer or member thereof, or was mailed postpaid or delivered to a
telegraph office for transmission to the other party's Chief Legal Officers
at the addresses shown herein or in the most recent NASD Manual. This
Agreement shall terminate immediately upon the appointment of a Trustee
under the Securities Investor Protection Act or any other act of insolvency
by you. The termination of this Agreement by any of the foregoing means
shall have no effect upon transactions entered into prior to the effective
date of termination. A trade placed by you subsequent to your voluntary
termination of this Agreement will not serve to reinstate the Agreement.
Reinstatement, except in the case of a temporary suspension of a dealer,
will only be effective upon written notification by us. Unless terminated,
this Agreement shall be binding upon each party's successors or assigns.
This Agreement may be amended by us at any time by written notice to you
and your placing of an order or acceptance of payments of any kind after
the effective date and receipt of notice of any such Amendment shall
constitute your acceptance of such Amendment.
15. SETOFF; DISPUTE RESOLUTION. Should any of your concession accounts with us
have debit balance, we may offset and recover the amount owed from any
other account you have with us, without notice or demand to you. In the
event of a dispute concerning any provision of this Agreement, either party
may require the dispute to be submitted to binding arbitration under the
commercial arbitration rules of the NASD or the American Arbitration
Association. Judgment upon any arbitration award may be entered by any
state or federal court having jurisdiction. This Agreement shall be
construed in accordance with the laws of the State of Kansas, not including
any provision which would require the general application of the law of
another jurisdiction.
16. ACCEPTANCE; CUMULATIVE EFFECTIVE. This Agreement is cumulative and
supersedes any agreement previously in effect. It shall be binding upon the
parties hereto when signed by us and accepted by you. If you have a current
dealer agreement with us, your first trade or acceptance of payments from
us after receipt of this Agreement, as it may be amended pursuant to
paragraph 14, above, shall constitute your acceptance of its terms.
Otherwise, your signature below shall constitute your acceptance of its
terms.
SECURITY DISTRIBUTORS, INC.
By: _______________________________________
Gregory J. Garvin, President
700 Harrison, Topeka, Kansas 66636-0001
Attention: Chief Legal Officer (for legal notices only) (785) 431-3000
Dealer: Please complete and sign this section and return the original to us.
Dealer:______________________________ NASD CRD #____________________________
By: ______________________________ ______________________________________
Street
Name: ______________________________
______________________________________
Title: ______________________________ City State Zip
Date: ______________________________ Telephone_____________________________
SMC 52B (R8-00)
