RECORDKEEPING AND INVESTMENT
ACCOUNTING AGREEMENT
The parties to this Agreement are Security Management Company, LLC,
("Security Management"), a Kansas limited liability company, having its
principal place of business at 000 XX Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000, and
Bankers Trust Company ("Bankers"), a New York banking corporation, having its
principal place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
This Agreement is made effective as of May 4, 1999.
WITNESS
WHEREAS, Security Management provides general administrative, fund
accounting, dividend disbursing and transfer agency services to the Capital
Preservation Series (the "Fund") of Security Income Fund (the "Company")
pursuant to an Administrative Services and Transfer Agency Agreement dated April
1, 1987, as amended April 30, 1999; and
WHEREAS, under the terms of said agreement, Security Management is
authorized to delegate, assign or subcontract any of its duties under the
agreement to a third party provided that such arrangement is approved by the
board of directors of the Company; and
WHEREAS, the board of directors of the Company approved the form of this
Recordkeeping and Investment Accounting Agreement at a meeting held February 10,
1999; and
WHEREAS, the Company is registered as an "investment company" under the
Investment Company Act of 1940 (the "1940 Act") and the Fund is a duly
authorized series of the Company; and
WHEREAS, Bankers performs certain investment accounting and recordkeeping
services on a computerized accounting system (the "Portfolio Accounting System")
in connection with maintaining certain accounting records of the Fund;
WHEREAS, Security Management desires to appoint Bankers as recordkeeping
and investment accounting sub-agent for the Fund, and Bankers is willing to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF INVESTMENT ACCOUNTING AND RECORDKEEPING SUB-AGENT. Security
Management hereby constitutes and appoints Bankers as investment accounting
and recordkeeping sub-agent for the Fund to perform accounting and
recordkeeping functions related to portfolio transactions required of the
Fund under Rule 31a-1 under the 1940 Act and to calculate the net asset
value of the Fund.
2. REPRESENTATIONS AND WARRANTIES OF SECURITY MANAGEMENT. Security Management
hereby represents, warrants and acknowledges to Bankers:
(a) That it is a limited liability company duly organized and existing and
in good standing under the laws of Kansas;
(b) That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into this Agreement; that it has
taken all requisite action necessary to appoint Bankers as investment
accounting and recordkeeping sub-agent for Fund; that this Agreement
has been duly executed and delivered by Security Management; and that
this Agreement constitutes a legal, valid and binding obligation of
Security Management, enforceable in accordance with its terms; and
(c) That it has determined to its satisfaction that the Portfolio
Accounting System is appropriate and suitable for its needs.
3. REPRESENTATIONS AND WARRANTIES OF BANKERS. Bankers hereby represents,
warrants and acknowledges to Security Management:
(a) That it is a New York banking corporation duly organized and existing
and in good standing under the laws of the State of New York;
(b) That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into and perform this Agreement;
that this Agreement has been duly executed and delivered by Bankers;
and that this Agreement constitutes a legal, valid and binding
obligation of Bankers, enforceable in accordance with its terms; and
(c) That the accounts and records maintained and preserved by Bankers
shall be the property of the Fund and that it will not use any
information made available to it under the terms hereof for any
purpose other than complying with its duties and responsibilities
hereunder or as specifically authorized by Security Management in
writing.
(d) YEAR 2000 PREPAREDNESS. Bankers has taken steps reasonably designed to
assure that the software and operating systems it uses (and those of
its vendors) to perform its obligations hereunder are able properly to
distinguish dates before January 1, 2000 from dates on or after
January 1, 2000.
4. Duties and Responsibilities of Security Management.
(a) Security Management shall turn over to Bankers all of Fund's accounts
and records previously maintained, if any.
(b) Security Management shall provide to Bankers the information
reasonably necessary to perform Bankers` duties and responsibilities
hereunder prior to the close of the New York Stock Exchange on each
day on which Bankers prices the Funds' securities. Security Management
will provide information requested as necessary in a written or
printed instrument, or in an electronic format mutually agreed upon
with Bankers, prior to the close of the New York Stock Exchange on
each day on which Bankers prices the Funds' securities.
(c) Security Management shall pay to Bankers such compensation at such
time as may from time to time be agreed upon in writing by Bankers and
Security Management. The initial compensation schedule is attached as
Exhibit A.
(d) Security Management shall provide to Bankers, as conclusive proof of
any fact or matter required to be ascertained from Security Management
as reasonably determined by Bankers, a certificate signed by Security
Management's president or other officer of Security Management, or
other authorized individual, as reasonably requested by Bankers.
Security Management shall also provide to Bankers instructions with
respect to any matter concerning this Agreement requested by Bankers.
Bankers may rely upon any instruction or information furnished by any
person reasonably believed by it to be an officer or agent of Security
Management, and shall not be held to have notice of any change of
authority of any such person until receipt of written notice thereof
from Security Management.
(e) Security Management shall preserve the confidentiality of the
Portfolio Accounting System and the tapes, books, reference manuals,
instructions, records, programs, documentation and information of, and
other materials relevant to, the Portfolio Accounting System and the
business of Bankers (collectively, "Confidential Information").
Security Management shall not voluntarily disclose such Confidential
Information to any other person other than its own employees or agents
who reasonably have a need to know such information pursuant to this
Agreement, or as may be required by applicable law. Security
Management shall return all such Confidential Information to Bankers
upon termination or expiration of this Agreement.
(f) If Bankers shall provide Security Management direct access to the
computerized recordkeeping and reporting system used hereunder or if
Bankers and Security Management shall agree to utilize any electronic
system of communication, Security Management shall be fully
responsible for any and all consequences of the use or misuse of the
terminal device, passwords, access instructions and other means of
access to such system(s) which are utilized by, assigned to or
otherwise made available to Security Management. Security Management
agrees to implement and enforce appropriate security policies and
procedures to prevent unauthorized or improper access to or use of
such system(s). Bankers shall be fully protected in acting hereunder
upon any instructions, communications, data or other information
received by Bankers by such means as fully and to the same effect as
if delivered to Bankers by written instrument signed by the requisite
authorized representative(s) of Security Management.
5. Duties and Responsibilities of Bankers.
(a) Bankers shall calculate Fund's net asset value in accordance with
Fund's registration statement and applicable regulations.
(b) Bankers shall prepare and maintain, in complete, accurate, and current
form, all accounts and records necessary as a basis for calculation of
Fund's net asset value, and shall preserve such records in the manner
and for the periods required by law or for such longer period as the
parties may agree upon in writing.
(c) Bankers shall make available to Security Management and Fund for
inspection or reproduction within a reasonable time, upon demand, all
accounts and records of Fund maintained and preserved by Bankers.
(d) Bankers shall be entitled to rely conclusively on the completeness and
correctness of any and all accounts and records turned over to it by
Security Management.
(e) Bankers shall assist Fund's independent accountants, or upon approval
of Security Management or Fund or upon demand, any regulatory body, in
any requested review of Fund's accounts and records maintained by
Bankers but shall be reimbursed by Security Management for all
expenses and employee time invested in any such review outside of
routine and normal periodic reviews. Inspections conducted by the
Securities and Exchange Commission shall be considered routine.
(f) Bankers shall respond to reasonable requests for information from Fund
or Security Management for books and records maintained by Bankers.
Reasonable requests include information necessary for Security
Management or Fund to prepare tax returns, questionnaires, periodic
reports to shareholders and other such other reports as Security
Management and Bankers shall agree upon from time to time.
(g) Bankers shall not have any responsibility hereunder to Fund, Fund's
shareowners or any other person or entity for moneys or securities of
Fund, whether held by Fund or Fund's custodians.
6. INDEMNIFICATION.
(a) Security Management shall indemnify and hold Bankers harmless from and
against any and all costs, expenses, losses, damages (including
consequential, special and punitive damages), charges, reasonable
counsel fees, payments and liabilities (including amounts paid in
settlement, provided that Security Management shall have approved such
settlement) which may be asserted against or incurred by Bankers, or
for which it may be liable, arising out of or attributable to:
1. Security Management's refusal or failure to substantially comply
with the terms of this Agreement.
2. Security Management's negligent or willful misconduct in
connection with the performance of its duties under this
Agreement, or the failure of any representation or warranty of
Security Management hereunder to be and remain materially true
and correct at all times.
3. The failure of Security Management to comply with applicable law
in connection with the performance of its duties under this
Agreement.
4. Any error, omission, inaccuracy or other deficiency in Fund's
accounts and records or other information provided by or on
behalf of Security Management to Bankers, or the failure of
Security Management to provide, or provide in a timely manner,
the information needed by Bankers to perform its functions.
5. Payment of money by Bankers at the request of Security
Management, or the taking of any action by Bankers at the request
of Security Management which might make Bankers liable for
payment of money; provided, however, that notwithstanding this
indemnification, Bankers shall not be obligated to expend its own
moneys or to take any action to pay money except in Bankers' sole
discretion.
6. The legality of the issue, sale or purchase of any shares of the
Fund, the sufficiency of the purchase or sale price, or the
declaration of any dividend by the Fund, whether paid in cash or
stock.
7. The misuse, whether authorized or unauthorized, of the Portfolio
Accounting System or other computerized recordkeeping and
reporting system to which Bankers provides Security Management
direct access hereunder or by any person who acquires access to
such system(s) through the terminal device, passwords, access
instruction or other means of access to such system(s) which are
utilized by, assigned to or otherwise made available to Security
Management, except to the extent attributable to any negligence
or willful misconduct by Bankers.
8. Bankers' action or omission to act under this Agreement upon any
instructions, advice, notice, request, consent, certificate or
other instrument or paper which it reasonably believes to have
originated from Security Management, the Fund, the Fund's
custodian, or the Fund's independent public accountant and which
it reasonably believes to be genuine and to have been properly
executed.
9. Bankers' action or omission to act under this Agreement in good
faith reliance on the advice or opinion of counsel acceptable to
both Security Management and Bankers concerning the subject
matter of this Agreement.
10. Banker's action or omission to act under this Agreement in good
faith reliance on statements of counsel to the Fund, the Fund's
independent accountants, and the Fund's officers or other
authorized individuals provided by Fund resolution concerning the
subject matter of this Agreement.
(b) Bankers shall indemnify and hold Security Management and Fund harmless
from and against any and all costs, expenses, losses, damages
(including consequential, special and punitive damages), charges,
reasonable counsel fees, payments and liabilities (including amounts
paid in settlement, provided that Bankers shall have approved such
settlement) which may be asserted against or incurred by Security
Management or Fund, or for which it may be liable, arising out of or
attributable to:
1. Bankers' refusal or failure to substantially comply with the
terms of this Agreement.
2. Bankers' negligent or willful misconduct in connection with the
performance of its duties under this Agreement or the failure of
any representation or warranty of Bankers hereunder to be and
remain materially true and correct at all times.
3. The failure of Bankers to comply with applicable law in
connection with the performance of its duties under this
Agreement.
4. Any error, omission, inaccuracy or other deficiency in Fund's
accounts and records or other information provided by or on
behalf of Bankers to Security Management, or the failure of
Bankers to provide, or provide in a timely manner, the
information needed by Security Management to perform its
functions.
5. Security Management's action or omission to act under this
Agreement upon any instructions, advice, notice, request,
consent, certificate or other instrument or paper which it
reasonably believes to have originated from Bankers or Bankers'
independent public accountant and which it reasonably believes to
be genuine and to have been properly executed.
6. Security Management's action or omission to act under this
Agreement in good faith reliance on the advice or opinion of
counsel acceptable to both Security Management and Bankers
concerning the subject matter of this Agreement.
7. Security Management's action or omission to act under this
Agreement in good faith reliance on statements of counsel to
Bankers, Bankers' independent accountants, and Bankers' officers
or Bankers' authorized employees.
(c) A party shall not be liable under this Section 6 with respect to any
claim made against an otherwise indemnified party unless the party
seeking indemnification shall have notified the indemnifying party in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have
been served upon the party seeking indemnification. Failure to provide
notice as provided above shall relieve a party from liability only to
the extent that the party is actually harmed or disadvantaged by the
failure to provide timely notice, and shall not relieve a party from
any liability that it may otherwise have without regard to Section 6.
An indemnifying party shall be entitled to:
1. participate, at its own expense, in the defense of an action for
which indemnity may be had against that party hereunder, and
2. to assume control of the defense of an action for which the
indemnifying party may be liable hereunder if the indemnifying
party engages counsel agreeable to the indemnified party to
prosecute the defense; agreement to the selection of counsel not
to be unreasonably withheld.
(d) In the event of losses occasioned by the negligent error of Bankers in
calculating the Fund's net asset value, Security Management shall
accept Bankers' offer to minimize or eliminate any resulting monetary
damages by employing such alternatives as reprocessing fund shareowner
transactions. Bankers shall bear the reasonable costs of reprocessing
such transactions.
7. FORCE MAJEURE. Bankers shall not be responsible or liable for its failure
or delay in performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its
reasonable control or ability to minimize or redress, including, without
limitation: any interruption, loss or malfunction of any utility,
transportation, computer (hardware or software) or communication service;
inability to obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute, ordinance,
rulings, regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes, freezes,
floods, fires, tornadoes, acts of God or public enemy, revolutions, or
insurrection.
8. PROCEDURES. Bankers and Security Management may from time to time adopt
procedures as they agree upon, and Bankers may conclusively assume that any
procedure approved or directed by Security Management does not conflict
with or violate any requirements of Fund's prospectus, charter or
declaration of trust, bylaws, any applicable law, rule or regulation, or
any order, decree or agreement by which the Fund may be bound.
9. TERM AND TERMINATION. This Agreement may be terminated by either party by
notice in writing received by the other party not less than one hundred
twenty (120) days prior to the date upon which such termination shall take
effect. This Agreement shall terminate automatically in the event of the
termination of the (i) Administrative Services and Transfer Agency
Agreement between Security Management and Company, or (ii) Third Party
Feeder Fund Agreement dated May 4, 1999 between Security Management and
Bankers. Upon termination of this Agreement:
(a) Security Management shall pay to Bankers its fees and compensation due
hereunder.
(b) Security Management shall designate a successor (which may be Security
Management) by notice in writing to Bankers on or before the
termination date.
(c) Bankers shall deliver to the successor, or if none has been
designated, to Security Management, at Bankers' office, all records,
funds and other properties of Fund deposited with or held by Bankers
hereunder. In the event that neither a successor nor Security
Management takes delivery of all records, funds and other properties
of Fund by the termination date, Bankers' sole obligation with respect
thereto from the termination date until delivery to a successor or
Security Management shall be to exercise reasonable care to hold the
same in custody in its form and condition as of the termination date,
and Bankers shall be entitled to reasonable compensation therefor,
including but not limited to all of its out-of-pocket costs and
expenses incurred in connection therewith.
10. NOTICES. All notices, requests, instructions and other writings shall be
deemed to have been properly given hereunder if addressed as follows:
If to Security Management:
Security Management Company, LLC
000 XX Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attention: General Counsel
If to Bankers Trust Company:
Mutual Fund Services
BT Alex.Xxxxx Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
or to such other address as a party may designate, in writing, to each
other party.
11. MISCELLANEOUS.
(a) This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of New York, without reference to the choice of laws
principles thereof.
(b) All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
(c) The representations and warranties and the indemnification extended
hereunder, are intended to and shall continue after and survive the
expiration, termination or cancellation of this Agreement.
(d) The confidentiality provisions of Sections 4.E. and 4.F. shall
continue after and survive the expiration, termination or cancellation
of this Agreement.
(e) No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.
(f) The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forbearance or waiver had occurred.
(g) The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
(h) This Agreement may be executed in two or more separate counterparts,
each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
(i) If any provision of this Agreement shall be determined to be invalid
or unenforceable, the remaining provisions of this Agreement shall not
be affected thereby, and every provision of this Agreement shall
remain in full force and effect and shall remain enforceable to the
fullest extent permitted by applicable law.
(j) This Agreement may not be assigned by either party hereto without the
prior written consent of the other. The parties hereby consent to the
acquisition of Bankers by Deutsche Bank AG or an affiliate of Deutsche
Bank AG.
(k) Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Security Management and Bankers.
(l) Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not
affect any rights or obligations of any other party hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective and duly authorized officers, to be effective as of the day
and year first above written.
BANKERS TRUST COMPANY
By: XXXX XXXXXX
--------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
SECURITY MANAGEMENT COMPANY, LLC
By: XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
EXHIBIT A
FEES
For one fund and one class of that fund $10,000.00
For each additional class $ 2,000.00
