ADMINISTRATIVE SERVICES AND
---------------------------
TRANSFER AGENCY AGREEMENT
-------------------------
This Agreement, made and entered into this 1st day of April, 1987, by and
between Security Tax-Exempt Fund, a Kansas corporation ("Fund"), and Security
Management Company, a Kansas corporation, ("SMC").
WHEREAS, the Fund is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Security Management Company is willing to provide general
administrative, fund accounting, transfer agency, and dividend disbursing
services to the Fund under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties agree as follows:
1. EMPLOYMENT OF SECURITY MANAGEMENT COMPANY
SMC will provide the Fund with general administrative, fund accounting,
transfer agency, and dividend disbursing services described and set
forth in Schedule A attached hereto and made a part of this agreement
by reference. SMC agrees to maintain sufficient trained personnel and
equipment and supplies to perform such services in conformity with the
current prospectus of the Fund and such other reasonable standards of
performance as the Fund may from time to time specify, and otherwise in
an accurate, timely, and efficient manner.
2. COMPENSATION
As consideration for the services described in Section I, the Fund
agrees to pay SMC a fee as described and set forth in Schedule B
attached hereto and made a part of this agreement by reference, as it
may be amended from time to time, such fee to be calculated and accrued
daily and payable monthly.
3. EXPENSES
A. EXPENSES OF SMC. SMC shall pay all of the expenses incurred in
providing Fund the services and facilities described in this
agreement, whether or not such expenses are billed to SMC or the
fund, except as otherwise provided herein.
B. DIRECT EXPENSES. Anything in this agreement to the contrary
notwithstanding, the Fund shall pay, or reimburse SMC for the
payment of, the following described expenses of the Fund
(hereinafter called "direct expenses") whether or not billed to the
Fund, SMC or any related entity:
1. Fees and expenses of its independent directors and the
meetings thereof;
2. Fees and costs of investment advisory services;
3. Fees and costs of independent auditors and income tax
preparation;
4. Fees and costs of outside legal counsel and any legal
counsel directly employed by the Fund or its Board of
Directors;
5. Custodian and banking services, fees and costs;
6. Costs of printing and mailing prospectuses to existing
shareholders, proxy statements and other reports to
shareholders, where such costs are incurred through the
use of unaffiliated vendors or mail services.
7. Fees and costs for the registration of its securities with
the Securities and Exchange Commission and the
jurisdictions in which it qualifies its share for sale,
including the fees and costs of registering and bonding
brokers, dealers and salesmen as required;
8. Dues and expenses associated with membership in the
Investment Company Institute;
9. Expenses of fidelity and liability insurance and bonding
covering Fund;
10. Organizational costs.
4. INSURANCE
The Fund and SMC agree to procure and maintain, separately or as joint
insureds with themselves, their directors, employees, agents and
others, and other investment companies for which SMC acts as investment
advisor and transfer agent, a policy or policies of insurance against
loss arising from breaches of trust, errors and omissions, and a
fidelity bond meeting the requirements of the Investment Company Act of
1940, in the amounts and with such deductibles as may be agreed upon
from time to time, and to pay such portions of the premiums therefor as
amount of the coverage attributable to each party is to the aggregate
amount of the coverage for all parties.
5. REGISTRATION AND COMPLIANCE
A. SMC represents that as of the date of this agreement it is
registered as a transfer agent with the Securities and Exchange
Commission ("SEC") pursuant to Subsection 17A of the Securities and
Exchange Act of 1934 and the rules and regulations thereunder, and
agrees to maintain said registration and comply with all
of the requirements of said Act, rules and regulations so long as
this agreement remains in force.
B. The Fund represents that it is a diversified management investment
company registered with the SEC in accordance with the Investment
Company Act of 1940 and the rules and regulations thereunder, and
authorized to sell its shares pursuant to said Act, the Securities
Act of 1933 and the rules and regulations thereunder.
6. LIABILITIES AND INDEMNIFICATION
SMC shall be liable for any actual losses, claims, damages or expenses
(including any reasonable counsel fees and expenses) resulting from
SMC's bad faith, willful misfeasance, reckless disregard of its
obligations and duties, negligence or failure to properly perform any
of its responsibilities or duties under this agreement. SMC shall not
be liable and shall be indemnified and held harmless by the Fund, for
any claim, demand or action brought against it arising out of, or in
connection with:
A. Bad faith, willful misfeasance, reckless disregard of its duties or
negligence of the Board of Directors of the Fund, or SMC's acting
upon any instructions properly executed and authorized by the Board
of Directors of the Fund;
B. SMC acting in reliance upon advice given by independent counsel
retained by the Board of Directors of the Fund.
In the event that SMC requests the Fund to indemnify or hold it
harmless hereunder, SMC shall use its best efforts to inform the Fund
of the relevant facts concerning the matter in question. SMC shall use
reasonable care to identify and promptly notify the Fund concerning any
matter which presents, or appears likely to present, a claim for
indemnification against the Fund.
The Fund shall have the election of defending SMC against any claim
which may be the subject of indemnification hereunder. In the event the
Fund so elects, it will so notify SMC and thereupon the Fund shall take
over defenses of the claim, and (if so requested by the Fund, SMC shall
incur no further legal or other claims related thereto for which it
would be entitled to indemnity hereunder provided, however, that
nothing herein contained shall prevent SMC from retaining, at its own
expense, counsel to defend any claim. Except with the Fund's prior
consent, SMC shall in no event confess any claim or make any compromise
in any matter in which the Fund will be asked to indemnify or hold SMC
harmless hereunder.
PUNITIVE DAMAGES. SMC shall not be liable to the Fund, or any
third party, for punitive, exemplary, indirect, special or
consequential damages (even if SMC has been advised of the
possibility of such damages) arising from its obligations and the
services provided under this agreement, including but not limited
to loss of profits,
loss of use of the shareholder accounting system, cost of capital
and expenses of substitute facilities, programs or services.
FORCE MAJEURE. Anything in this agreement to the contrary
notwithstanding, SMC shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including
but not limited to acts of civil or military authority, national
emergencies, work stoppages, fire, flood, catastrophe, earthquake,
acts of God, insurrection, war, riot, failure of communication or
interruption.
7. DELEGATION OF DUTIES
SMC may, at its discretion, delegate, assign or subcontract any of the
duties, responsibilities and services governed by this agreement, to
its parent company, Security Benefit Group, Inc., whether or not by
formal written agreement. SMC shall, however, retain ultimate
responsibility to the Fund, and shall implement such reasonable
procedures as may be necessary, for assuring that any duties,
responsibilities or services so assigned, subcontracted or delegated
are performed in conformity with the terms and conditions of this
agreement.
8. AMENDMENT
This agreement and the schedules forming a part hereof may be amended
at any time, without shareholder approval, by a writing signed by each
of the parties hereto. Any change in the Fund's registration statements
or other documents of compliance or in the forms relating to any plan,
program or service offered by its current prospectus which would
require a change in SMC's obligations hereunder shall be subject to
SMC's approval, which shall not be unreasonably withheld.
9. TERMINATION
This agreement may be terminated by either party without cause upon 120
days' written notice to the other, and at any time for cause in the
event that such cause remains unremedied for more than 30 days after
receipt by the other party of written specification of such cause.
In the event Fund designates a successor to any of SMC's obligations
hereunder, SMC shall, at the expense and pursuant to the direction of
the Fund, transfer to such successor all relevant books, records and
other data of Fund in the possession or under the control of SMC.
10. SEVERABILITY
If any clause or provision of this agreement is determined to be
illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such
clause or provision shall be considered severed herefrom and the
remainder of this agreement shall continue in full force and effect.
11. TERM
This agreement initially shall become effective upon its approval by a
majority vote of the Board of Directors of the Fund, including a
majority vote of the Directors who are not "interested persons" of Fund
or SMC, as defined in the Investment Company Act of 1940, and shall
continue until terminated pursuant to its provisions.
12. APPLICABLE LAW
This agreement shall be subject to and construed in accordance with the
laws of the State of Kansas.
SECURITY MANAGEMENT COMPANY
BY: XXXXXXX X. XXXXX, PRESIDENT
---------------------------
ATTEST:
Xxxxxxx X. Xxxxxx, Secretary
SECURITY TAX-EXEMPT FUND
BY: XXXXXXX X. XXXXX, PRESIDENT
---------------------------
ATTEST:
Xxxxxxx X. Xxxxxx, Secretary
SCHEDULE A
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule of Administrative and Fund Accounting
Facilities and Services
Security Management Company agrees to provide the Fund the following
Administrative facilities and services:
1. FUND AND PORTFOLIO ACCOUNTING
A. Maintenance of Fund General Ledger and Journal.
B. Preparing and recording disbursements for direct fund expenses.
C. Preparing daily money transfers.
D. Reconciliation of all Fund bank and custodian accounts.
E. Assisting Fund independent auditors as appropriate.
F. Prepare daily projection of available cash balances.
G. Record trading activity for purposes of determining net asset
values and daily dividend.
H. Prepare daily portfolio evaluation report to value portfolio
securities and determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine the daily, monthly, quarterly, semiannual or annual
dividend per share.
K. Prepare monthly, quarterly, semiannual and annual financial
statements.
L. Provide financial information for reports to the securities and
exchange commission in compliance with the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933, the
Internal Revenue Service and other regulatory agencies as
required.
M. Provide financial, yield, net asset value, etc. information to
NASD and other survey and statistical agencies as instructed by
the Fund.
N. Report to the Audit Committee of the Board of Directors, if
applicable.
2. LEGAL
A. Provide registration and other administrative services necessary
to qualify the shares of the Fund for sale in those jurisdictions
determined from time to time by the Fund's Board of Directors
(commonly known as "Blue Sky Registration").
B. Provide registration with and reports to the Securities and
Exchange Commission in compliance with the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933.
C. Prepare and review Fund prospectus and Statement of Additional
Information.
D. Prepare proxy statements and oversee proxy tabulation for annual
meetings.
E. Prepare Board materials and maintain minutes of Board meetings.
F. Draft, review and maintain contractual agreements between Fund and
Investment Advisor, Custodian, Distributor and Transfer Agent.
G. Oversee printing of proxy statements, financial reports to
shareholders, prospectuses and Statements of Additional
Information.
H. Provide legal advice and oversight regarding shareholder
transactions, administrative services, compliance with contractual
agreements and the provisions of the 1940 and 1933 Acts.
(Notwithstanding the above, outside counsel for the Funds may provide the
services listed above as a direct Fund expense or at the option of the
Funds, the Funds may employ their own counsel to perform any of these
services.)
SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES
Security Management Company agrees to provide the Fund the following transfer
agency and dividend disbursing services:
1. Maintenance of shareholder accounts, including processing of new
accounts.
2. Posting address changes and other file maintenance for shareholder
accounts.
3. Posting all transactions to the shareholder file, including:
A. Direct purchases
B. Wire order purchases
C. Direct redemptions
D. Wire order redemptions
E. Draft redemptions
F. Direct exchanges
G. Transfers
H. Certificate issuances
I. Certificate deposits
4. Monitor fiduciary processing, insuring accuracy and deduction of fees.
5. Prepare daily reconciliations of shareholder processing to money movement
instructions.
6. Handle bounced check collections. Immediately liquidate shares purchased
and return to the shareholder the check and confirmation of the
transaction.
7. Issuing all checks and stopping and replacing lost checks.
8. Draft clearing services.
A. Maintenance of signature cards and appropriate corporate resolutions.
B. Comparison of the signature on the check to the signatures on the
signature card for the purpose of paying the face amount of the check
only.
C. Receiving checks presented for payment and liquidating shares after
verifying account balance.
D. Ordering checks in quantity specified by the Fund for the
shareholder.
9. Mailing confirmations, checks and/or certificates resulting from
transaction requests to shareholders.
10. Performing all of the Fund's other mailings, including:
A. Dividend and capital gain distributions.
B. Semiannual and annual reports.
C. 1099/year-end shareholder reporting.
D. Systematic withdrawal plan payments.
E. Daily confirmations.
11. Answering all service related telephone inquiries from shareholders and
others, including:
A. General and policy inquiries (research and resolve problems).
B. Fund yield inquiries.
C. Taking shareholder processing requests and account maintenance
changes by telephone as described above.
D. Submit pending requests to correspondence.
E. Monitor online statistical performance of unit.
F. Develop reports on telephone activity.
12. Respond to written inquiries (research and resolve problems), including:
A. Initiate shareholder account reconciliation proceeding when
appropriate.
B. Notify shareholder of bounced investment checks.
C. Respond to financial institutions regarding verification of deposit.
D. Initiate proceedings regarding lost certificates.
E. Respond to complaints and log activities.
F. Correspondence control.
13. Maintaining and retrieving all required past history for shareholders and
provide research capabilities as follows:
A. Daily monitoring of all processing activity to verify back-up
documentation.
B. Provide exception reports.
C. Microfilming.
D. Storage, retrieval and archive.
14. Prepare materials for annual meetings.
A. Address and mail annual proxy and related material.
B. Prepare and submit to Fund and affidavit of mailing.
C. Furnish certified list of shareholders (hard copy or microfilm) and
inspectors of election.
15. Report and remit as necessary for state escheat requirements.
Approved: Fund SMC Xxxxxxxx X. Xxxxx
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MODEL:
MAINTENANCE FEE........................... $8.00
TRANSACTIONS.............................. $1.00
DIVIDENDS................................. $0.50
ADMINISTRATION FEE........................ 0.00050
(BASED ON DAILY NET ASSET VALUE)
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TAX-EXEMPT
YEAR ENDING
MASTER WORKSHEET JAN. 1987
----------------------
TRANSACTIONS - 968
DIVIDENDS - 5,063
SHAREHOLDER ACCTS - 532
AVERAGE NET ASSETS - 12,639,263.42
INCOME - 1,063,640.21
EXPENSES - 118,488.05
SERVICE FEES - 12,577.99
1986 1986
SERVICE TRANSFER & EXPENSE EXPENSE
FEES ADMINISTRATION RATIO RATIO
ACTUAL MODEL DIFFERENCE ACTUAL MODEL
---------------------------------------------------------------------
TAX-EXEMPT 12,577.99 14,075.13 1,497.14 0.937% 0.949%
SCHEDULE B
AMENDMENT TO SECURITY TAX-EXEMPT FUND
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule of Fees
Annual Maintenance Fee.....................$8.00 per account
Transactions...............................$1.00 per transaction
Administration Fee.........................0.09% of the average net assets of
the Fund (calculated daily and payable monthly).
This amendment shall take effect as of May 31, 1989.
In witness thereof, the parties hereto have caused this amendment to be
executed on the date indicated.
Security Tax-Exempt Fund
By: XXXXXXX X. XXXXXXXX, PRESIDENT
------------------------------
Date: March 10, 1989
Attest:
Xxx X. Xxx, Secretary
Security Management Company
By: XXXXXXX X. XXXXXXXX, PRESIDENT
------------------------------
Date: March 10, 1989
Attest:
Xxx X. Xxx, Secretary
AMENDMENT TO ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Tax-Exempt Fund (hereinafter referred to as the "Fund") and
Security Management Company (hereinafter referred to as "SMC") are parties to an
Administrative Services and Transfer Agency Agreement dated April 1, 1987, as
amended March 10, 1989, and September 8, 1989, (the "Administrative Services
Agreement") under which SMC agrees to provide general administrative, fund
accounting, transfer agency, and dividend disbursing services to the Fund in
return for the compensation specified in the Administrative Services Agreement;
and
WHEREAS, on July 27, 1990, the Board of Directors of the Fund voted to amend the
Administrative Services Agreement to provide for payment by the Fund of the fees
of only those directors who are not "interested persons" of the Fund;
NOW THEREFORE, the Fund and the SMC hereby amend the Administrative Services
Agreement, dated April 1, 1987, effective July 27, 1990, as follows:
Paragraph 3.B.1. shall be deleted in its entirety and the following
paragraph inserted in lieu thereof:
3. EXPENSES
B. DIRECT EXPENSES
1. Fees and expenses of its directors (except the fees
of those directors who are deemed to be "interested
persons" of the Fund as that term is defined in the
Investment Company Act of 1940) and the meetings
thereof;
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Administrative Services Agreement this 27th day of July, 1990.
SECURITY TAX-EXEMPT FUND
By: XXXXXXX X. XXXXXXXX, PRESIDENT
------------------------------
Attest:
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY
By: XXXXXXX X. XXXXXXXX, PRESIDENT
------------------------------
Attest:
Xxx X. Xxx, Secretary
AMENDMENT TO ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Tax-Exempt Fund (hereinafter referred to as the "Fund") and
Security Management Company (hereinafter referred to as "SMC") are parties to an
Administrative Services and Transfer Agency Agreement dated April 1, 1987, as
amended, (the "Administrative Agreement"), under which SMC provides general
administrative, fund accounting, transfer agency and dividend disbursing
services to the Fund in return for the compensation specified in the
Administrative Agreement;
WHEREAS, on February 2, 1996, the Board of Directors of the Fund voted to amend
the Administrative Agreement to provide for payment by the Fund for costs
associated with preparing and transmitting electronic filings to the Securities
and Exchange Commission or any other regulating authority;
NOW THEREFORE, the Fund and SMC hereby amend paragraph 3B of the Administrative
Agreement, effective February 2, 1996, by adding the following language at the
end of paragraph 3B:
11. Costs associated with the preparation and transmission
of any electronic filings to the Securities and Exchange
Commission or any other regulating authority.
IN WITNESS WHEREOF, the parties hereto have made this Amendment to the
Administrative Agreement this 2nd day of February, 1996.
SECURITY TAX-EXEMPT FUND
By: Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx, President
ATTEST:
Xxx X. Xxx
-----------------------------------
Xxx X. Xxx, Secretary
SECURITY MANAGEMENT COMPANY
By: Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx, President
ATTEST:
Xxx X. Xxx
-----------------------------------
Xxx X. Xxx, Secretary
AMENDMENT TO ADMINISTRATIVE SERVICES
AND TRANSFER AGENCY AGREEMENT
WHEREAS, Security Tax-Exempt Fund (hereinafter referred to as the "Fund") and
Security Management Company (hereinafter referred to as "SMC") are parties to an
Administrative Services and Transfer Agency Agreement, dated April 1, 1987, as
amended (the "Administrative Agreement"), under which SMC provides general
administrative, fund accounting, transfer agency and dividend disbursing
services to the Fund in return for the compensation specified in the
Administrative Agreement; and
WHEREAS, on October 31, 1996, the operations of SMC, a Kansas corporation, will
be transferred to Security Management Company, LLC ("SMC, LLC"), a Kansas
limited liability company;
WHEREAS, SMC, LLC desires to assume all rights, duties and obligations of SMC
under the Administrative Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties hereto agree as follows:
1. The Administrative Agreement is hereby amended to substitute SMC, LLC for
SMC, 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 Administrative Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Administrative Services and Transfer Agency Agreement 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
