EXHIBIT 99.B5A
INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made this 7th day of October, 1983, between SECURITY TAX-EXEMPT
FUND, a Kansas corporation (hereinafter referred to as the "Fund"), and SECURITY
MANAGEMENT COMPANY, a Kansas corporation (hereinafter referred to as the
"Management Company");
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end, management investment
company registered under the Federal Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Company is authorized to issue shares of capital stock in separate
Series, with each such Series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Company intends initially to offer shares in one series to be
designated Security Tax-Exempt Fund (the "Initial Series"), such series together
with all other series subsequently established by the Company with respect to
which the Company desires to retain the Management Company to render investment
advisory services hereunder and with respect to which the Management Company is
willing so to do, being herein collectively referred to as the "Series", and
WHEREAS, the Management Company is willing to provide investment research and
advice to the Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties hereto agree as follows:
1. EMPLOYMENT OF MANAGEMENT COMPANY. The Fund hereby employs the Management
Company to act as investment adviser to the Initial Series with respect
to the investment of its assets, and to supervise and arrange the
purchase of securities for the Initial Series and the sale of securities
held in the portfolio of the Initial Series, subject always to the
supervision of the board of directors of the Fund (or a duly appointed
committee thereof), during the period and upon and subject to the terms
and conditions herein set forth. The Management Company hereby accepts
such employment and agrees to perform the services required by this
Agreement for the compensation herein provided.
In the event the Company establishes one or more series other than the
Initial Series with respect to which it desires to retain the Management
Company to render investment advisory services hereunder, it shall notify
the Management Company in writing. If the Management Company is willing
to render such services it shall notify the Company in writing, whereupon
such series shall become a Series subject to the terms and conditions
hereunder, and to such amended or additional provisions as shall be
specifically agreed to by the Company and the Management Company in
accordance with applicable law.
2. INVESTMENT ADVISORY DUTIES. The Management Company shall regularly
provide each Series with investment research, advice and supervision,
continuously furnish an investment program and recommend which securities
shall be purchased and sold and what portion of the assets of each series
shall be held uninvested and arrange for the purchase of securities and
other investments held in the portfolio of each Series. All investment
advice furnished by the Management Company to each Series under this
Section 2 shall at all times conform to any requirements imposed by the
provisions of the Fund's Articles of Incorporation and Bylaws, the 1940
Act, the Investment Advisors Act of 1940 and the rules and regulations
promulgated thereunder, any other applicable provisions of law, and the
terms of the registration statements of the Fund under the Securities Act
of 1933 ("1933 Act") and the 1940 Act, all as from time to time amended.
The Management Company shall advise and assist the officers or other
agents of the Fund in taking such steps as are necessary or appropriate
to carry out the decisions of the board of directors of the Fund (and any
duly appointed committee thereof) with regard to the foregoing matters
and the general conduct of the Fund's business.
3. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) Transactions in portfolio securities shall be effected by the
Management Company, through brokers or otherwise, in the manner
permitted in this Section 3 and in such manner as the Management
Company shall deem to be in the best interests of the Fund after
consideration is given to all relevant factors.
(b) In reaching a judgment relative to the qualification of a broker
to obtain the best execution of a particular transaction, the
Management Company may take into account all relevant factors and
circumstances, including the size of any contemporaneous market in
such securities; the importance to the Fund of speed and
efficiency of execution; whether the particular transaction is
part of a larger intended change in portfolio position in the same
securities; the execution capabilities required by the
circumstances of the particular transaction; the capital required
by the transaction; the overall capital strength of the broker;
the broker's apparent knowledge of or familiarity with sources
from or to whom such securities may be purchased or sold; as well
as the efficiency, reliability and confidentiality with which the
broker has handled the execution of prior similar transactions.
(c) Subject to any statements concerning the allocation of brokerage
contained in the Fund's prospectus, the Management Company is
authorized to direct the execution of portfolio transactions for
the Fund to brokers who furnish investment information or research
services to the Management Company. Such allocation shall be in
such amounts and proportions as the Management Company may
determine. If a transaction is directed to a broker providing
brokerage and research services to the Management Company, the
commission paid for such transaction may be in excess of the
commission another broker would have charged for effecting that
transaction, if the Management Company shall have determined in
good faith that the commission is reasonable in relation to the
value of the brokerage and research services provided,
viewed in terms of either that particular transaction or the
overall responsibilities of the Management Company with respect to
all accounts as to which it now or hereafter exercises investment
discretion. For purposes of the immediately preceding sentence,
"providing brokerage and research services" shall have the meaning
generally given such terms or similar terms under Section 28(e)(3)
of the Securities Exchange Act of 1934, as amended.
(d) In the selection of a broker for the execution of any transaction
not subject to fixed commission rates, the Management Company
shall have no duty or obligation to seek advance competitive
bidding for the most favorable negotiated commission rate to be
applicable to such transaction, or to select any broker solely on
the basis of its purported or "posted" commission rates.
(e) In connection with transactions on markets other than national or
regional securities exchanges, the Fund will deal directly with
the selling principal or market maker without incurring charges
for the services of a broker on its behalf unless, in the best
judgment of the Management Company, better price or execution can
be obtained in utilizing the services of a broker.
4. ALLOCATION OF EXPENSES AND CHARGES. The Management Company shall provide
investment advisory, statistical and research facilities and all clerical
services relating to research, statistical and investment work, and shall
provide for the compilation and maintenance of such records relating to
these functions as shall be required under applicable law and the rules
and regulations of the Securities and Exchange Commission. Other than as
specifically indicated in the preceding sentence, the Management Company
shall not be required to pay any expenses of the Fund, and in particular,
but without limiting the generality of the foregoing, the Management
Company shall not be required to pay office rental or general
administrative expenses; board of directors' fees; legal, auditing and
accounting expenses; insurance premiums; broker's commissions; taxes and
governmental fees; membership dues; fees of custodian, transfer agent,
registrar and dividend disbursing agent (if any); expenses of obtaining
quotations on the Series' portfolio securities and pricing of the Series'
shares; expenses (including clerical expenses) of issue, sale or
redemption of shares of the Fund's capital stock; costs and expenses in
connection with the registration of such capital stock under the 1933 Act
and qualification of the Fund's capital stock under the Blue Sky laws of
the states where such stock is offered; costs and expenses in connection
with the registration of the Fund under the 1940 Act and all periodic and
other reports required thereunder; expenses of preparing reports, proxy
statements, prospectuses and notices to stockholders and of printing and
distributing reports, proxies, prospectuses and notices to existing
stockholders; costs of stationery; costs of stockholder and other
meetings; expenses of maintaining the Fund's corporate existence; and
such nonrecurring expenses as may arise including litigation affecting
the Fund and the legal obligations the Fund may have to indemnify its
officers and directors.
5. COMPENSATION OF MANAGEMENT COMPANY.
(a) As compensation for the services rendered by the Management
Company as provided herein, for each of the years this agreement
is in effect, the Fund shall pay the Management Company an annual
fee equal to 0.5 of 1% of the average daily closing value of the
net assets of the Initial Series computed on a daily basis. Such
fee shall be adjusted and payable monthly. If this Agreement shall
be effective for only a portion of a year, then the Management
Company's compensation for said year shall be prorated for such
portion. For purposes of this Section 5, the value of the net
assets of the Initial Series shall be computed in the same manner
on each business day as of the normal close of the New York Stock
Exchange as the value of such net assets is computed in connection
with the determination of the net asset value of the shares of the
Initial Series as described in the Fund's prospectus.
(b) For each of the Fund's full fiscal years during the term of this
Agreement, the Management Company guarantees that the aggregate
annual expenses of every character, exclusive of interest and
taxes and extraordinary expenses (such as litigation), but
inclusive of the Management Company's compensation, incurred by
the Series shall not exceed an amount equal to one percent of the
average net assets of the Series for the year, such net assets to
be calculated on a daily basis. The Management Company agrees, on
a monthly basis, to contribute to the Fund such funds or to waive
such portion of its fee as may be necessary to insure that such
aggregate annual expenses will not exceed said amount. If this
Agreement shall be effective for only a portion of one of the
Fund's fiscal years, then the maximum annual expenses shall be
prorated for such portion. Brokerage fees and commissions incurred
in connection with the purchase or sale of any securities by the
Fund shall not be deemed to be expenses within the meaning of this
Paragraph (b).
6. MANAGEMENT COMPANY NOT TO RECEIVE COMMISSIONS. In connection with the
purchase or sale of portfolio securities for the account of the Fund,
neither the Management Company nor any officer or director of the
Management Company shall act as principal or receive any compensation
from the Fund other than its compensation as provided for in Section 5
above. If the Management Company, or any "affiliated person" (as defined
in the Investment Company Act of 1940) receives any cash credits,
commissions or tender fees from any person in connection with
transactions in the portfolio securities of the Fund (including but not
limited to the tender or delivery of any securities held in such
portfolio), the Management Company shall immediately pay such amount to
the Fund in cash or as a credit against any then earned but unpaid
management fees due by the Fund to the Management Company.
7. LIMITATION OF LIABILITY OF MANAGEMENT COMPANY. So long as the Management
Company shall give the Fund the benefit of its best judgment and effort
in rendering services hereunder, the Management Company shall not be
liable for any errors of judgment or mistake of law, or for any loss
sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security on its recommendation,
whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any
other individual, firm or corporation, if such recommendation shall have
been made and such other individual, firm or corporation shall have been
selected with due care and in good faith. Nothing herein contained shall,
however, be construed to protect the Management Company against any
liability to the Fund or its contract owners by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement. As used in this Section 7, "Management
Company" shall include directors, officers and employees of the
Management Company, as well as that corporation itself.
8. OTHER ACTIVITIES NOT RESTRICTED. Nothing in this Agreement shall prevent
the Management Company or any officer thereof from acting as investment
adviser for any other person, firm, or corporation, nor shall it in any
way limit or restrict the Management Company or any of its directors,
officers, stockholders or employees from buying, selling, or trading any
securities for its own accounts or for the accounts of others for whom it
may be acting; provided, however, that the Management Company expressly
represents that it will undertake no activities which, in its judgment,
will conflict with the performance of its obligations to the Fund under
this Agreement. The Fund acknowledges that the Management Company acts as
investment adviser to other investment companies, and it expressly
consents to the Management Company acting as such; provided, however,
that if in the opinion of the Management Company, particular securities
are consistent with the investment objectives of, and desirable purchases
or sales for the portfolios of, one or more Series and one or more of
such other investment companies or series of such companies at
approximately the same time, such purchases or sales will be made on a
proportionate basis if feasible, and if not feasible, then on a rotating
or other equitable basis.
9. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become
effective on the date hereof, provided that on or before that date it has
been approved by a majority of the holders of the outstanding voting
securities of the Fund, and shall remain in force, unless sooner
terminated as provided herein, until the first regular or special meeting
of the Fund stockholders following the date shares of capital stock of
the Fund are first offered to the public. This Agreement shall be
presented to each Series of the Fund's stockholders at such meeting for
their approval and shall continue in effect for successive 12-month
periods, unless terminated, provided that each such continuance is
specifically approved at such meeting and at least annually thereafter by
(a) the vote of a majority of the entire board of directors of the Fund,
or, with respect to each Series, by the vote of a majority of the
outstanding voting securities of such Series (as defined in the 1940 Act,
and (b) the vote of a majority of those directors who are not parties to
this Agreement or interested persons (as such term is defined in the 0000
Xxx) of any such party cast in person at a meeting called for
the purpose of voting on such approval. In the event that this Agreement
is approved by such vote of the outstanding voting securities of one or
more Series but not of one or more others, this Agreement shall continue
in effect with respect to the former Series and, with respect to the
latter may continue in effect until such approval by the latter Series of
this Agreement or of a new agreement with the Management Company or with
another party is obtained, provided that compensation paid with respect
to such Series pending such approval is no greater than the lesser of the
Management Company's actual costs incurred hereunder or the amount due
pursuant to Section 5 hereof. This Agreement may be terminated at any
time without payment of any penalty, by the Fund upon the vote of a
majority of the Fund's board of directors or, with respect to any Series,
by a majority of the outstanding voting securities of such Series, or by
the Management Company, .in each case on sixty (60) days' written notice
to the other party. This Agreement shall automatically terminate in the
event of its assignment (as such term is defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective corporate officers thereto duly authorized on the
day, month and year first above written.
SECURITY TAX-EXEMPT FUND
(Corporate Seal)
ATTEST: By: Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Secretary
SECURITY MANAGEMENT COMPANY
(Corporate Seal)
ATTEST: By: Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx, Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company
(the "Management Company") are parties to an Investment Advisory Contract dated
October 7, 1983 (the "Agreement"), under which the Management Company agrees to
provide investment research and advice to the Fund in return for the
compensation specified in the Agreement;
WHEREAS, effective October 19, 1993, the Fund will offer its shares in two
Classes, Class A shares, which are currently being offered, and a new class,
Class B shares;
WHEREAS, the Fund has adopted a Distribution Plan with respect to its Class B
shares and, as a result, such shares are subject to distribution fees to which
Class A shares are not subject;
WHEREAS, the distribution fees associated with Class B shares require the
amendment of the Agreement relative to that class of shares;
WHEREAS, on October 1, 1993, the initial Class B shareholder of the Fund
approved such amendment to this Agreement; and
WHEREAS, the changes to the Agreement which are contemplated by this Amendment
do not affect the interests of Class A shareholders of the Fund;
NOW, THEREFORE, the Fund and the Management Company hereby amend the Investment
Advisory Contract, dated October 7, 1983, effective October 1, 1993, as follows:
A. The Management Company agrees to provide investment research and advice,
to the Fund pursuant to the terms and conditions set forth in the
Agreement, as amended in section B below.
B. Section 5(b) of the Agreement shall be amended by deleting it in its
entirety and replacing it with the following:
(b) For each of the Fund's full fiscal years during the term of this
Agreement, the Management Company guarantees that the aggregate
annual expenses of every character, exclusive of interest and
taxes, extraordinary expenses (such as litigation), and
distribution fees paid under the Fund's Class B Distribution Plan,
but inclusive of the Management Company's compensation, incurred
by the Fund shall not exceed an amount equal to one percent of the
average net assets of the Fund for the year, such net assets to be
calculated on a daily basis. The Management Company agrees, on a
monthly basis, to contribute to the Fund such funds or to waive
such portion of its fee as may be necessary to insure that such
aggregate annual expenses will not exceed said amount. If this
Agreement shall be effective for only a portion of one of the
Fund's fiscal years, then the maximum annual expenses shall be
prorated for such portion. Brokerage fees and commissions incurred
in connection with the purchase or sale of
any securities by the Fund shall not be deemed to be expenses
within the meaning of this paragraph (b).
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Investment Advisory Contract this 1st day of October 1993.
ATTEST: SECURITY INCOME FUND
Xxx X. Xxx By: Xxxxxxx X. Xxxxxxxx
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Xxx X. Xxx, Secretary
ATTEST: SECURITY MANAGEMENT COMPANY
Xxx X. Xxx By: Xxxxxxx X. Xxxxxxxx
------------------------------ -----------------------------------------
Xxx X. Xxx, Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company
(the "Management Company") are parties to an Investment Advisory Contract, dated
October 7, 1983, as amended (the "Agreement"), under which the Management
Company agrees to provide investment research and advice to the Fund in return
for the compensation specified in the Agreement;
WHEREAS, on October 31, 1996, the operations of the Management Company, a Kansas
corporation, will be transferred to Security Management Company, LLC ("SMC,
LLC"), a Kansas limited liability company; and
WHEREAS, SMC, LLC desires to assume all rights, duties and obligations of the
Management Company under the Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties hereto agree as follows:
1. The Agreement is hereby amended to substitute SMC, LLC for Security
Management Company, with the same effect as though SMC, LLC were the
originally named management company, effective November 1, 1996;
2. SMC, LLC agrees to assume the rights, duties and obligations of Security
Management Company pursuant to the terms of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Investment Advisory Contract this 1st day of November 1996.
SECURITY TAX-EXEMPT FUND SECURITY MANAGEMENT COMPANY, LLC
By: Xxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxx
--------------------------------- --------------------------------------
Xxxx X. Xxxxxxx, President Xxxxx X. Xxxxxxx, President
ATTEST: ATTEST:
Xxx X. Xxx Xxx X. Xxx
--------------------------------- --------------------------------------
Xxx X. Xxx, Secretary Xxx X. Xxx, Secretary
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
WHEREAS, Security Tax-Exempt Fund (the "Fund") and Security Management Company,
LLC (the "Management Company") are parties to an Investment Advisory Contract,
dated October 7, 1983, as amended (the "Agreement"), under which the Management
Company agrees to provide investment research and advice to the Fund in return
for the compensation specified in the Agreement; and
WHEREAS, on February 6, 1998, in connection with adopting a Class A Distribution
Plan for the Fund, the Board of Directors of the Fund approved amendment of the
Agreement to exclude the Class A distribution fee from aggregate annual expenses
for the purpose of calculating the one percent limit on of annual expenses.
NOW, THEREFORE BE IT RESOLVED, that the Fund and the Management Company hereby
amend the Agreement, effective May 1, 1998, by deleting Paragraph 5(b) in its
entirety and replacing it with the following:
(b) For each of the Fund's full fiscal years during the term of this
Agreement, the Management Company guarantees that the aggregate
annual expenses of every character, exclusive of interest and taxes,
extraordinary expenses (such as litigation), and distribution fees
paid under the Fund's Class A and Class B Distribution Plans, but
inclusive of the Management Company's compensation, incurred by the
Fund shall not exceed an amount equal to one percent of the average
net assets of the Fund for the year, such net assets to be calculated
on a daily basis. The Management Company agrees, on a monthly basis,
to contribute to the Fund such funds or to waive such portion of its
fee as may be necessary to insure that such aggregate annual expenses
will not exceed said amount. If this Agreement shall be effective for
only a portion of one of the Fund's fiscal years, then the maximum
annual expenses shall be prorated for such portion. Brokerage fees
and commissions incurred in connection with the purchase or sale of
any securities by the Fund shall not be deemed to be expenses within
the meaning of this paragraph (b).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Investment Advisory Contract this 24th day of April, 1998.
SECURITY TAX-EXEMPT FUND SECURITY MANAGEMENT COMPANY, LLC
By: XXXX X. XXXXXXX By: XXXXX X. XXXXXXX
------------------------------------- ---------------------------------
Xxxx X. Xxxxxxx, President Xxxxx X. Xxxxxxx, President
ATTEST: ATTEST:
XXX X. XXX XXX X. XXX
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