FUND ACCOUNTING AND ADMINISTRATION AGREEMENT
AGREEMENT made as of this 31st day of March, 2004, between Security Income
Fund (the "Company"), a Kansas corporation having its principal place of
business at One Security Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx 00000, and Security
Management Company, LLC ("SMC"), a Kansas limited liability company having its
principal place of business at One Security Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx 00000.
WHEREAS, the Company desires that SMC perform fund accounting and
administration services for each series of the Company as now in existence and
listed on Schedule A or as hereafter may from time to time be created and listed
on Schedule A (individually referred to herein as a "Fund" and collectively as
the "Funds");
WHEREAS, SMC is willing to perform such services on the terms and
conditions set forth in this Agreement;
WHEREAS, SMC and Company wish to enter into this Agreement in order to set
forth the terms under which SMC will perform the fund accounting and
administration services set forth herein for the Company;
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter contained, the Company and SMC hereby agree as follows:
1. Services as Fund Accountant
(a) Maintenance of Books and Records. SMC will keep and maintain the
following books and records of each Fund pursuant to Rule 31a-1 (the "Rule")
under the Investment Company Act of 1940, as amended (the 1940 Act"):
(i) Journals containing an itemized daily record in detail of all purchases
and sales of securities, all receipts and disbursements of cash and all other
debits and credits, as required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest accrued and
interest received, as required by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by subsection (b)(2)(ii) and (iii)
of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule.
(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, SMC shall perform the
following accounting services daily for each Fund:
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(i) Calculate the net asset value per share utilizing prices obtained from
the sources described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent pricing services, or if such
quotes are unavailable, then obtain such prices from each Fund's
investment adviser or its designee, as approved by the Company's Board
of Directors (hereafter referred to as the "Board");
(iii) Verify and reconcile with the Funds' custodian all daily trade
activity;
(iv) Compute, as appropriate, each Fund's net income and capital gains,
dividend payables, dividend factors, 7-day yields, 7-day effective
yields, 30-day yields, and weighted average portfolio maturity;
(v) Review daily the net asset value calculation and dividend factor (if
any) for each Fund prior to release to shareholders, check and confirm
the net asset values and dividend factors for reasonableness and
deviations, and distribute net asset values and yields to NASDAQ;
(vi) Determine unrealized appreciation and depreciation on securities held
in variable net asset value Funds;
(vii) Amortize premiums and accrete discounts on securities purchased at a
price other than face value, if requested by the Company;
(viii) Update fund accounting system to reflect rate changes, as received
from an independent pricing service, on variable interest rate
instruments;
(ix) Post Fund transactions to appropriate categories;
(x) Accrue all necessary and appropriate expenses of each Fund;
(xi) Determine the outstanding receivables and payables for all (1)
security trades, (2) Fund share transactions and (3) income and
expense accounts;
(xii) Provide accounting reports in connection with the Company's regular
annual audit and other audits and examinations by regulatory agencies;
and
(xiii) Provide such periodic reports as the parties shall agree upon, as
set forth in a separate schedule.
(c) Special Reports and Services.
(i) SMC may provide additional special reports upon the request of the
Company or a Fund's investment adviser, which may result in an
additional charge, the amount of which shall be agreed upon between
the parties.
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(ii) SMC may provide such other similar services with respect to a Fund as
may be reasonably requested by the Company, which may result in an
additional charge, the amount of which shall be agreed upon between
the parties.
(d) Additional Accounting Services. SMC shall also perform the following
additional accounting services for each Fund, without additional compensation:
(i) Provide accounting information for the following:
(A) federal and state income tax returns and federal excise tax
returns;
(B) the Company's semi-annual reports with the Securities and
Exchange Commission ("SEC") on Form N-SAR;
(C) the Company's annual and semi-annual shareholder reports and
related Form N-CSR filings;
(D) registration statements on Form N-1A and other filings relating
to the registration of shares;
(E) the Administrator's monitoring of the Company's status as a
regulated investment Company under Subchapter M of the Internal
Revenue Code, as amended;
(F) annual audit by the Company's auditors; and
(G) examinations performed by the SEC.
2. Administrative Services
SMC shall perform or supervise the performance by others of
administrative services in connection with the operations of the Company and
Funds, and, on behalf of the Company, shall investigate, assist in the selection
of and conduct relations with custodians, depositories, accountants, legal
counsel, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks and persons in any other capacity deemed to be necessary or desirable for
the Company's and Funds' operations.
SMC shall provide the Company with all necessary office space,
equipment, personnel, compensation and facilities (including facilities for
shareholders' and Board meetings) for handling the affairs of the Company and
Funds and such other services as SMC shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. In addition, at the
request of the Board, SMC shall make reports to the Board concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, SMC shall:
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(a) calculate contractual Company expenses and control all disbursements
for the Company, and as appropriate, compute the Company's yields, total return,
expense ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) provide information and assistance to counsel to the Company in
preparing (i) the annual update to the Company's registration statement on Form
N-1A, (ii) other amendments to the Company's registration statement and
supplements to its Prospectus and Statement of Additional Information, and (iii)
Notices of Annual or Special Meetings of shareholders of the Company and proxy
materials relating thereto;
(c) coordinate and prepare, with the assistance of the Funds' investment
adviser and officers, communications to shareholders of record of the Funds
("Shareholders"), including the annual report to Shareholders; coordinate the
printing and distribution of prospectuses, supplements, proxy materials and
reports to Shareholders;
(d) administer contracts on behalf of the Company with, among others, the
Company's investment adviser, distributor, custodian and transfer agent;
(e) supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(f) calculate performance data of the Funds for dissemination to
information service providers covering the investment company industry;
(g) coordinate and supervise the preparation and filing of the Company's
tax returns;
(h) assist with the layout and printing of prospectuses and assist with and
coordinate layout and printing of the Funds' semi-annual and annual reports to
Shareholders;
(i) assist with the design, development, and operation of the Funds,
including new classes, investment objectives, policies and structure;
(j) provide registration and other administrative services necessary to
qualify the Company's shares for sale in those jurisdictions determined from
time to time by the Company's officers (commonly known as "Blue Sky
Registration"), provided that all filing and other fees charged by such
jurisdictions shall be paid by the Company;
(k) make available appropriate individuals to serve as officers of the
Company, upon designation as such by the Board;
(l) advise the Company and the Board on matters concerning the Company, the
Funds and their affairs;
(m) obtain, maintain and file fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company at the expense
of the Company and Funds in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the Investment
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Company Act of 1940, as amended (the "1940 Act"), to the extent such bonds and
policies are approved by the Board;
(n) monitor and advise the Company and its Funds on their regulated
investment company status under the Internal Revenue Code of 1986, as amended;
(o) perform required administrative services and functions of the Company
and each Fund to the extent administrative services and functions are not
provided to the Company or such Fund pursuant to the Company's or such Fund's
investment advisory agreement, distribution agreement, custodian agreement, or
transfer agent agreement;
(p) maintain corporate records on behalf of the Company, including, but not
limited to, minute books, Articles of Incorporation and By-Laws;
(q) furnish advice and recommendations with respect to other aspects of the
business and affairs of the Funds as the Company and SMC shall determine
desirable;
(r) provide assistance and guidance to the Company with respect to matters
governed by or related to regulatory requirements and developments including:
monitoring regulatory and legislative developments which may effect the Company,
and assisting in strategic planning in response thereto; assisting the Company
in responding to and providing documents for routine regulatory examinations or
investigations; and working closely with counsel to the Company in response to
such routine or non-routine regulatory matters; and
(s) assist the Company in preparing for Board meetings by (i) coordinating
Board book production and distribution, (ii) preparing the relevant sections of
the Board materials pertaining to the responsibilities of SMC, (iii) assisting
and coordinating special materials related to annual contract approvals and
approval of rule 12b-1 plans and related matters, and (v) performing such other
Board meeting functions as agreed by the parties.
SMC shall perform such other services for the Company that are
mutually agreed upon by the parties from time to time. Such services may include
performing internal audit examinations; mailing the annual reports of the Funds;
preparing an annual list of Shareholders; and mailing notices of Shareholders'
meetings, proxies and proxy statements, for all of which the Company will pay
such fees as may be mutually agreed upon, including SMC's out-of-pocket
expenses.
3. Subcontracting
SMC may subcontract with any entity or person concerning the provision
of fund accounting services contemplated hereunder (a "Sub-Fund Accountant" and
"Sub-Administrator," respectively); provided, however, that SMC shall not be
relieved of any of its duties and obligations under this Agreement by the
appointment of such subcontractor and provided further, that SMC shall be
responsible, to the extent provided in Section 7 hereof, for all acts of such
subcontractor as if such acts were its own.
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4. Compensation
The Company shall pay SMC compensation for the services to be provided
by SMC under this Agreement in accordance with, and in the manner set forth in
Schedule B attached hereto.
5. Reimbursement of Expenses and Miscellaneous Service Fees Relating to
Fund Accounting.
(a) In addition to paying SMC the fees provided in Schedule B, the Company
agrees to reimburse SMC for its reasonable out-of-pocket expenses in providing
fund accounting services hereunder, including without limitation the following:
(i) All freight and other delivery and bonding charges incurred by SMC in
delivering materials to and from the Company or other service
providers of the Company;
(ii) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by SMC in communication with
the Company, the Fund's investment advisor or custodian, dealers or
others as required for SMC to perform the services to be provided
hereunder;
(iii) The cost of microfilm or microfiche of records or other materials;
(iv) All systems-related expenses associated with the provision of special
reports and services pursuant to Section 1(c) herein; and
(v) Any additional expenses reasonably incurred by SMC in the performance
of its duties and obligations under this Agreement.
(b) In addition, SMC shall be entitled to receive the following amounts:
(i) Systems development fees billed at an hourly rate of $150 per hour, as
approved by the Company;
(ii) Ad hoc reporting fees billed at an agreed upon rate; and
(iii) Charges for the pricing information obtained from third party vendors
for use in pricing the securities of each Fund's portfolio pursuant to
Section 1(b)(ii) of this Agreement, which shall not exceed the amounts
that would be incurred if the Fund were to obtain the information
directly from the relevant vendor or vendors.
6. Allocation of Charges and Expenses for Administrative Services
(a) The Administrator. SMC shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this
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Agreement. SMC shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Company and directors who are affiliated persons of SMC or any
affiliated corporation of SMC; provided, however, that unless otherwise
specifically provided, SMC shall not be obligated to pay the compensation of any
employee of the Company retained by the Board to perform services on behalf of
the Company.
(b) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for preparing and filing tax
returns, expenses for legal and auditing services, the expenses of preparing
(including typesetting), printing and mailing reports, prospectuses, statements
of additional information, proxy solicitation material and notices to existing
Shareholders, all expenses incurred in connection with issuing and redeeming
Shares, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of directors of the Company who are not affiliated
persons of SMC or any affiliated corporation of SMC , insurance, interest,
brokerage costs, litigation and other extraordinary or nonrecurring expenses,
and all fees and charges of investment advisers.
7. Standard of Care; Uncontrollable Events; Limitation of Liability
SMC shall use reasonable professional diligence to ensure the accuracy
of all services performed under this Agreement, but shall not be liable to the
Company for any action taken or omitted by SMC in the absence of bad faith,
willful misfeasance, negligence or reckless disregard by it of its obligations
and duties. The duties of SMC shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against SMC
hereunder.
SMC shall maintain adequate and reliable computer and other equipment
necessary or appropriate to carry out its obligations under this Agreement. Upon
the Company's reasonable request, SMC shall provide supplemental information
concerning the aspects of its disaster recovery and business continuity plan
that are relevant to the services provided hereunder. Notwithstanding the
foregoing or any other provision of this Agreement, SMC assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control. Events beyond SMC's reasonable control include, without limitation,
force majeure events. Force majeure events include natural disasters, actions or
decrees of governmental bodies, and communication lines failures that are not
the fault of either party. In the event of force majeure, computer or other
equipment failures or other events beyond its reasonable control, SMC shall
follow applicable procedures in its disaster recovery and business continuity
plan and use all commercially reasonable efforts to minimize any service
interruption.
SMC shall provide the Company, at such times as the Company may
reasonably require, copies of reports rendered by independent public accountants
on the internal
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controls and procedures of SMC relating to the services provided by SMC under
this Agreement.
Notwithstanding anything in this agreement to the contrary, in no event
shall SMC, its affiliates or any of its or their directors, officers, employees,
agents or subcontractors be liable for exemplary, punitive, special, incidental,
indirect or consequential damages, or lost profits, each of which is hereby
excluded by agreement of the parties regardless of whether such damages were
foreseeable or whether either party or any entity has been advised of the
possibility of such damages.
8. Term
This Agreement shall become effective upon its approval by a majority
of the Board, including a majority of the Board who are not parties to this
Agreement or interested persons of such party and shall continue in effect for a
period of two years from the date hereof, subject thereafter to being continued
in force and effect from year to year if specifically approved each year by the
Board. In addition to the foregoing, each renewal of this Agreement must be
approved by the vote of a majority of the Company's directors 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 on such approval. Prior to
voting on the renewal of this Agreement, the Board may request and evaluate, and
SMC shall furnish, such information as may reasonably be necessary to enable the
Board to evaluate the terms of this Agreement. This Agreement may be terminated
at any time by either party, without cause, upon 90 days' written notice to the
other, and for cause upon 30 days written notice by the party alleging cause.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b) a
final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated (which, in the case of the Company, may be with
regard only to one or more Funds) has been found guilty of criminal or unethical
behavior in the conduct of its business; or (c) financial difficulties on the
part of the party to be terminated (which, in the case of the Company, may be
with regard only to one or more Funds) which are evidenced by the authorization
or commencement of, or involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors. SMC shall not terminate this Agreement pursuant to clause (a) above
based solely upon the Company's failure to pay an amount to SMC which is the
subject of a good faith dispute, if (i) the Company is attempting in good faith
to resolve such dispute with as much expediency as may be possible under the
circumstances, and (ii) the Company continues to perform its obligations
hereunder in all other material respects (including paying all fees and expenses
not subject to reasonable dispute hereunder).
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Notwithstanding the foregoing, following any such termination, in the
event that SMC in fact continues to perform any one or more of the services
contemplated by this Agreement (or any Schedule or exhibit hereto) with the
consent of the Company, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Fees and out-of-pocket expenses due SMC but unpaid by the
Company upon such termination shall be immediately due and payable upon and
notwithstanding such termination. SMC shall be entitled to collect from the
Company, in addition to the fees and disbursements provided for herein, the
amount of all of SMC's reasonable cash disbursements in connection with SMC's
activities in effecting such termination, including without limitation, the
delivery to the Company and/or its designees of the Company's property, records,
instruments and documents.
9. Indemnification
The Company agrees to indemnify and hold harmless SMC, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way relating to SMC's
actions taken or omissions with respect to the performance of services under
this Agreement or based, if applicable, upon reasonable reliance on information,
records, instructions or requests given or made to SMC by the Company, the
investment adviser or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of SMC in cases of its own bad faith,
willful misfeasance, negligence or reckless disregard by it of its obligations
and duties.
SMC shall indemnify, defend, and hold the Company harmless from and
against any and all claims, actions and suits and all losses, damages, costs,
charges, reasonable counsel fees and disbursements, payments, expenses and
liabilities (including reasonable investigation expenses) resulting directly and
proximately from SMC's willful misfeasance, bad faith or negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder.
The indemnification rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provisions contained
herein shall apply, however, it is understood that if in any case a party may be
asked to indemnify or hold the other party harmless, the indemnifying party
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the indemnified party
will use all reasonable care to identify and notify the indemnifying party
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the indemnifying
party, but failure to do so in good faith shall not affect the rights hereunder
except to the extent the indemnifying party is materially prejudiced thereby. As
to any matter eligible for indemnification, an Indemnified Party shall act
reasonably and in accordance with good faith business judgment and shall not
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effect any settlement or confess judgment without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by it and reasonably satisfactory to the indemnified
party, whose approval shall not be unreasonably withheld. In the event that the
indemnifying party elects to assume the defense of any suit and retain counsel,
the indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the indemnified party. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
10. Record Retention and Confidentiality
SMC shall keep and maintain on behalf of the Company all books and
records which the Company and SMC is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the 1940 Act, relating to the maintenance
of books and records in connection with the services to be provided hereunder.
Any records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by SMC on behalf of
the Company shall be prepared and maintained at the expense of SMC, but shall be
the property of the Company and will be surrendered promptly to the Company on
request, and made available for inspection by the Company or by the Commission
at reasonable times.
In case of any request or demand for the inspection of such records by
another party, SMC may make such records available to such party if (i)
disclosure is required by law, (ii) SMC is advised by counsel that it may incur
liability for failure to make a disclosure, (iii) SMC is requested to divulge
such information by duly-constituted authorities or court process, or (iv) SMC
is requested to make a disclosure by the Company.
11. Activities of SMC
The services of SMC rendered to the Company hereunder are not to be
deemed to be exclusive. SMC is free to render such services to others and to
have other businesses and interests. It is understood that directors, officers,
employees and Shareholders of the Company are or may be or become interested in
SMC, as officers, employees or otherwise and that partners, officers and
employees of SMC and its counsel are or may be or become similarly interested in
the Company, and that SMC may be or become interested in the Company as a
shareholder or otherwise.
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12. Reports
SMC shall furnish to the Company and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by SMC, or as
subsequently agreed upon by the parties pursuant to an amendment hereto.
13. Rights of Ownership
All computer programs and procedures employed or developed by or on
behalf of SMC to perform services required to be provided by SMC under this
Agreement are the property of SMC. All records and other data except such
computer programs and procedures are the exclusive property of the Company and
all such other records and data shall be furnished to the Company in appropriate
form as soon as practicable after termination of this Agreement for any reason.
14. Return of Records
SMC may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company, files, records and documents created
and maintained by SMC pursuant to this Agreement which are no longer needed by
SMC in the performance of its services or for its legal protection. If not so
turned over to the Company, such documents and records will be retained by SMC
for six years from the year of creation. At the end of such six-year period,
such records and documents will be turned over to the Company unless the Company
authorizes in writing the destruction of such records and documents.
15. Representations and Warranties
(a) The Company represents and warrants that: (1) as of the close of business on
the effective date of this Agreement, each Fund that is in existence as of the
effective date has authorized unlimited shares, and (2) this Agreement has been
duly authorized by the Company and, when executed and delivered by the Company,
will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(b) SMC represents and warrants that: (1) the various procedures and systems
which SMC has implemented with regard to safeguarding from loss or damage
attributable to fire, theft, or any other cause the records, and other data of
the Company and SMC's records, data, equipment facilities and other property
used in the performance of its obligations hereunder are adequate and that it
will make such changes therein from time to time as are reasonably required for
the secure performance of its obligations hereunder, and (2) this Agreement has
been duly authorized by SMC and, when executed and delivered by SMC, will
constitute a legal, valid and binding obligation of SMC,
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enforceable against SMC in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
Except as expressly provided in this agreement, all representations and
warranties, including, without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or otherwise
(irrespective of any course of dealing, custom or usage of trade) concerning the
services or any goods provided incidental to the services provided under this
agreement by SMC are completely disclaimed.
16. Insurance
SMC shall maintain a fidelity bond covering larceny and embezzlement
and an insurance policy with respect to directors and officers errors and
omissions coverage in amounts that are appropriate in light of its duties and
responsibilities hereunder. Upon the request of the Company, SMC shall provide
evidence that coverage is in place.
SMC shall notify the Company should its insurance coverage with respect to
professional liability or errors and omissions coverage be canceled. Such
notification shall include the date of cancellation and the reasons therefore.
SMC shall notify the Company of any material claims against it with respect to
services performed under this Agreement, whether or not they may be covered by
insurance, and shall notify the Company should the total outstanding claims made
by SMC under its insurance coverage materially impair, or threaten to materially
impair, the adequacy of its coverage.
17. Legal Advice; Reliance on Prospectus and Instructions
SMC may apply to the Company at any time for instructions and may
consult with counsel for the Funds and with accountants and other experts with
respect to any matter arising in connection with SMC's duties, and SMC shall not
be liable nor accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants or other experts. SMC shall notify the Company at any time SMC
believes that it is in need of the advice of counsel (other than counsel in the
regular employ of SMC or any affiliated companies) with regard to SMC's
responsibilities and duties specific to the Company pursuant to this Agreement.
After so notifying the Company, SMC, at its discretion, shall be entitled to
seek, receive and act upon advice of legal counsel of its choosing, such advice
to be at the expense of the Funds unless relating to a matter involving SMC's
willful misfeasance, bad faith, negligence or reckless disregard of SMC's
responsibilities and duties hereunder, and SMC shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.
As to the services to be provided hereunder, SMC may rely conclusively
upon the terms of the Prospectuses and Statement of Additional Information of
the Company relating to the relevant Funds to the extent that such services are
described therein, as well as the minutes of Board meetings (if applicable) and
other records of the Company
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unless SMC receives written instructions to the contrary in a timely manner from
the Company.
18. Notices
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company, to it at One Security Benefit
Place, Topeka, Kansas 66636,
Attn: President; and if to SMC, to it at One Security Benefit Place, Topeka,
Kansas 66636, Attn: President, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
19. Assignment
This Agreement and the rights and duties hereunder shall not be
assignable with respect to a Fund by either of the parties hereto except by the
specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
20. Governing Law
This Agreement shall be governed by and provisions 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, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
21. Privacy
Nonpublic personal financial information relating to consumers or
customers of the Company provided by, or at the direction of the Company to SMC,
or collected or retained by SMC to perform its duties shall be considered
confidential information.
SMC shall not give, sell or in any way transfer such confidential information to
any person or entity, other than affiliates of SMC except at the direction of
the Company or as required or permitted by law. SMC shall have in place and
maintain physical, electronic and procedural safeguards reasonably designed to
protect the security, confidentiality and integrity of, and to prevent
unauthorized access to or use of records and information relating to consumers
or customers of the Company.
22. Miscellaneous
(a) Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the parties hereto
as to the subject matter covered by this Agreement, and supercedes all prior
negotiations, understandings and agreements bearing upon the subject matter
covered herein.
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(c) This Agreement may be executed in counterparts, each of which shall be
an original but all of which, taken together, shall constitute one and the same
agreement.
(d) No amendment to this Agreement shall be valid unless made in writing
and executed by both parties hereto.
(e) Every reference to a Fund will be deemed a reference solely to the
particular Fund. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Fund constitute a right, obligation or
remedy applicable to any other Fund. In particular, and without otherwise
limiting the scope of this paragraph, SMC shall not have any right to set off
claims of a Fund by applying the property of any other Fund.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
Security Management Company, LLC
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Security Income Fund
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
14
SCHEDULE A
TO THE FUND ACCOUNTING AND ADMINISTRATION AGREEMENT
BETWEEN SECURITY MANAGEMENT COMPANY, LLC
AND SECURITY INCOME FUND
DATE: MARCH 31, 2004
FUNDS
Diversified Income Series, High Yield Series, Capital Preservation Series and
Income Opportunity Series
15
SCHEDULE B
TO THE FUND ACCOUNTING AND ADMINISTRATIONAGREEMENT
BETWEEN SECURITY MANAGEMENT COMPANY, LLC
AND SECURITY INCOME FUND
DATE: MARCH 31, 2004
FUND ACCOUNTING AND ADMINISTRATION FEES
The Series of Security Income Fund agree to pay SMC the following fees:
1. 0.09% (9 basis points) for each of Diversified Income Series, High Yield
Series, and Capital Preservation Series (based on average daily net asset
values) or $25,000 per Series per year, whichever is greater.
2. 0.145% (14.5 basis points) for Income Opportunity Series (based on average
daily net asset values) or $25,000 per year, whichever is greater.
3. The fees described herein shall be calculated daily and payable monthly. If
this Agreement is in effect for only a portion of a month, the fee shall be
prorated for such month.
16
FIRST AMENDMENT TO FUND
ACCOUNTING AND ADMINISTRATION AGREEMENT
THIS FIRST AMENDMENT to the Fund Accounting and Administration
Agreement between Security Income Fund (the "Company"), a Kansas corporation
having its principal place of business at One Security Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxx, 00000, and Security Management Company, LLC ("SMC"), a Kansas limited
liability company having its principal place of business at One Security Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxx 00000, is made as of March 1, 2005.
WHEREAS, the parties have entered into the Fund Accounting and
Administration Agreement dated March 31, 2004 (the "Agreement") which is still
in full force and effect; and
WHEREAS, the parties desire to amend the Agreement to provide for the
Company to pay a portion of the compensation of the Chief Compliance Officer of
the Company;
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter contained, the Company and SMC hereby agree as follows:
Section 6 of the Agreement is deleted in its entirety and replaced with
the following:
6. Allocation of Charges and Expenses for Administrative Services
(f) The Administrator. SMC shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. SMC shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Company and directors who are affiliated persons of SMC or any
affiliated corporation of SMC; provided, however, that the Company shall
reimburse SMC a portion of the base compensation paid by SMC to the Chief
Compliance Officer of the Company ("CCO"), who is a legal employee of SMC. The
Company shall reimburse SMC for the Company's proportionate share of base
compensation paid to the CCO, the Company's share of such compensation being
equal to the percentage of the aggregate average annual net assets of the
Company, Security Mid Cap Growth Fund, Security Cash Fund, Security Municipal
Bond Fund, Security Equity Fund, Security Large Cap Value Fund and SBL Fund
attributable to the Company, multiplied by one-half of the annual base
compensation paid to the CCO. Unless otherwise specifically provided, SMC shall
not be obligated to pay the compensation of any employee of the Company retained
by the Board to perform services on behalf of the Company.
(g) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for preparing and filing tax
returns, expenses for legal and auditing services, the expenses of preparing
(including
17
typesetting), printing and mailing reports, prospectuses, statements of
additional information, proxy solicitation material and notices to existing
Shareholders, all expenses incurred in connection with issuing and redeeming
Shares, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of directors of the Company who are not affiliated
persons of SMC or any affiliated corporation of SMC, insurance, interest,
brokerage costs, litigation and other extraordinary or nonrecurring expenses,
and all fees and charges of investment advisers.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to the Agreement as of the day and year first above written.
Security Management Company, LLC
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Security Income Fund
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
18
SECOND AMENDMENT TO FUND
ACCOUNTING AND ADMINISTRATION AGREEMENT
THIS SECOND AMENDMENT to the Fund Accounting and Administration
Agreement between Security Income Fund (the "Company"), a Kansas corporation
having its principal place of business at One Security Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxx, 00000, and Security Management Company, LLC ("SMC"), a Kansas limited
liability company having its principal place of business at One Security Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxx 00000, is made as of December 1, 2005.
WHEREAS, the parties have entered into the Fund Accounting and
Administration Agreement dated February 1, 2004 (the "Agreement") which is still
in full force and effect; and
WHEREAS, the parties desire to amend the Agreement to provide for an
increase in the fee paid to SMC and to eliminate payment by the Company of a
portion of the annual base compensation of the Company's Chief Compliance
Officer;
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter contained, the Company and SMC hereby agree as follows:
Section 6 of the Agreement is deleted in its entirety and replaced with
the following:
6. Allocation of Charges and Expenses for Administrative Services
(h) The Administrator. SMC shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations
under this Agreement. SMC shall also provide the items which it is
obligated to provide under this Agreement, and shall pay all compensation,
if any, of officers of the Company and directors who are affiliated persons
of SMC or any affiliated corporation of SMC; provided, however, that unless
otherwise specifically provided, SMC shall not be obligated to pay the
compensation of any employee of the Company retained by the Board to
perform services on behalf of the Company.
(b) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including,
without limitation, organization costs, taxes, expenses for preparing and
filing tax returns, expenses for legal and auditing services, the expenses
of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation
material and notices to existing Shareholders, all expenses incurred in
connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of
directors of the Company who are not affiliated persons of SMC or any
affiliated corporation
19
of SMC , insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers.
Schedule B of the Agreement is deleted in its entirety and replaced with
the attached new Schedule B.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to the Agreement as of the day and year first above written.
Security Management Company, LLC
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Security Income Fund
By: XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
20
SCHEDULE B
TO THE FUND ACCOUNTING AND ADMINISTRATIONAGREEMENT
BETWEEN SECURITY MANAGEMENT COMPANY, LLC
AND SECURITY INCOME FUND
DATE: EFFECTIVE DECEMBER 1, 2005
FUND ACCOUNTING AND ADMINISTRATION FEES
The Company agrees to pay SMC the following fees:
1. 0.095% (9.5 basis points) for each of Diversified Income Series, High Yield
Series, and Capital Preservation Series (based on average daily net asset
values) or $25,000 per Series per year, whichever is greater.
2. 0.15% (15 basis points) for Income Opportunity Series (based on average
daily net asset values) or $25,000 per year, whichever is greater.
The fees described herein shall be calculated daily and payable monthly. If this
Agreement is in effect for only a portion of a month, the fee shall be prorated
for such month.
21
