DISTRIBUTION AGREEMENT
THIS AGREEMENT, dated as of January 9, 1969, and amended and restated effective
as of the 3rd day of February, 2002, between Security Ultra Fund, a Kansas
corporation (hereinafter referred to as the "Fund"), and Security Distributors,
Inc., a Kansas corporation (hereinafter referred to as the "Distributor").
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 Distributor is willing to act as principal underwriter for the Fund
to offer for sale, sell and deliver after sale, the Class A Shares of the Fund's
$0.50 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 Fund hereby employs the Distributor to act
as principal underwriter for the Fund with respect to its Class A Shares and
hereby agrees that during the term of this Agreement, and any renewal or
extension hereof, or until any prior termination hereof, the Distributor shall
have the exclusive right to offer for sale and to distribute any and all of the
Fund's Class A Shares issued or to be issued by the Fund. The Distributor hereby
accepts such employment and agrees to act as the distributor of the Class A
Shares issued or to be issued by the Fund 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
Fund 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 Fund 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 Fund 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 Fund 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 Fund 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.
The Fund shall 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 Fund 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 Fund 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 COMMISSIONS. The Distributor shall be entitled to charge a
commission on each sale of Shares in the amount set forth in the prospectus of
the Fund, 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 Fund. All
shares of the Fund shall be sold to the public only at their public offering
price at the time of such sale, and the Fund shall receive not less than the
full net asset value thereof.
6. CLASS A DISTRIBUTION PLAN. Pursuant to a Class A Distribution Plan adopted
by the Fund, the Fund agrees to make monthly payments to the Distributor in an
amount computed at an annual rate of 0.25% of the Fund's average daily net
assets, to finance activities undertaken by the Distributor for the purpose of
distributing the Fund's shares to investors and/or providing shareholder
services to the Fund's shareholders. All payments to the Distributor pursuant to
this paragraph are subject to the following conditions being met by the
Distributor. The Distributor shall furnish the Fund with quarterly reports of
its expenditures and such other information relating to 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.
7. SHAREHOLDER SERVICE FEES. The Shareholder Service Fees paid by the
Distributor to securities dealers and other entities that have executed an
Agreement with the Distributor shall permit such payments only in accordance
with the provisions of this paragraph and shall have the approval of the
majority of the Board of Directors of the Fund including a majority of the
directors who are not interested persons of the Fund as required by the Rule.
The Distributor may pay to the other party to an Agreement a fee (a "Shareholder
Service Fee") for Shareholder Services provided by such other party. Such
quarterly fee shall be payable in arrears in an amount equal to such percentage
of the aggregate net asset value of the Fund's 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 Shareholder Services contemplated hereby shall
include fees for account maintenance and personal service to shareholders,
including, but not limited to, answering routine customer inquiries regarding
the Fund, assisting customers in changing dividend options, account designations
and addresses, and in enrolling into any of several special investment plans
offered in connection with the purchase of the Fund's Class A shares, assisting
in the establishment and maintenance of customer accounts and records and in the
processing of purchase and redemption transactions, investing dividends and
capital gains distributions automatically in shares, providing
sub-administration and/or sub-transfer agency services for the benefit of the
Fund and providing such other services as the Fund or the customer may
reasonably request.
8. 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 Fund, 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.
9. BROKERAGE PLAN. The Fund may direct the Distributor to take appropriate
actions to effect the purposes of the Fund's Brokerage Plan, as it may be
amended from time to time, and the Distributor, when so directed by the Fund,
shall take such actions, which may include, but are not necessarily limited to,
directing, on behalf of the Fund, and subject to the standards described in the
Brokerage Plan, Security Management Company, LLC or a Sub-Advisor to allocate
transactions for the purchase or sale of portfolio securities in a manner
intended to increase the distribution of the Fund's shares.
In accordance with the terms of the Brokerage Plan, the Fund shall make
available to the Distributor, amounts derived from brokerage commissions paid by
the Fund in connection with its portfolio transactions. Such amounts shall be
expended by SDI to finance the distribution-related activities described in the
Plan. The Fund shall also make available to the Distributor, the brokerage
credits, benefits or other services received from broker-dealers executing
portfolio transactions on behalf of the Fund. Such credits, benefits or other
services shall be used by the Distributor to finance the distribution-related
activities described in the Plan. The Distributor shall prepare reports for the
Board of Directors of the Fund on a quarterly basis showing such information as
shall be reasonably requested by the Board from time to time.
10. AGREEMENTS SUBJECT TO APPLICABLE LAW AND REGULATIONS. The parties hereto
agree that all provisions of this Agreement will be performed in strict
accordance with the requirements of: the 1940 Act, the 1933 Act, the Securities
Exchange Act of 1934, the rules and regulations of the Securities and Exchange
Commission under said statutes, all applicable state Blue Sky laws and the rules
and regulations thereunder, the rules of the National Association of Securities
Dealers, Inc., and, in strict accordance with, the provisions of the Articles of
Incorporation and Bylaws of the Fund.
11. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become
effective at the date and time that the Fund'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 0000 Xxx) of the outstanding voting securities of
the Fund and, in either event, by the vote of a majority of the directors of the
Fund 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 Fund 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 Fund 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 Fund 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.
12. CONSTRUCTION OF AGREEMENT. No provision of this Agreement is intended to
or shall be construed as protecting the Distributor against any liability to the
Fund or to the Fund'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 Fund, shall have the same meaning herein as given
to such terms or words in the Articles of Incorporation or Bylaws of the Fund.
13. DISTRIBUTOR AN INDEPENDENT CONTRACTOR. The Distributor shall be deemed to
be an independent contractor and, except as expressly provided or authorized by
the Fund, shall have no authority to act for or represent the Fund.
14. NOTICE. Any notice required or permitted to be given hereunder to either
of the parties hereto shall be deemed to have been given if mailed by certified
mail in a postage-prepaid envelope addressed to the respective party as follows,
unless any such party has notified the other party hereto that notices
thereafter intended for such party shall be mailed to some other address, in
which event notices thereafter shall be addressed to such party at the address
designated in such request:
Security Ultra Fund
Security Benefit Group Building
000 XX Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000-0000
Security Distributors, Inc.
Security Benefit Group Building
000 XX Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000-0000
15. AMENDMENT OF AGREEMENT. No amendment to this Agreement shall be effective
until approved by (a) a majority of the Board of Directors of the Fund and a
majority of the directors of the Fund 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 Fund.
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 ULTRA FUND
By: XXXXX X. XXXXXXX
------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
XXX X. XXX
------------------------------
Xxx X. Xxx, Secretary
SECURITY DISTRIBUTORS, INC.
By: XXXX XXXXXX
------------------------------
Xxxx Xxxxxx, President
ATTEST:
XXX X. XXX
------------------------------
Xxx X. Xxx, Secretary
