Exhibit 10.16
SHAREHOLDER SERVICING
AGREEMENT
THIS AGREEMENT, as
amended and restated April 1, 1996, between W&R FUNDS,
INC., (the “Company”), and Waddell & Reed
Services Company (the “Agent”), and further amended
August 22, 2001,
W I T N E S S E T H
:
WHEREAS, The
Company wishes, as applicable, to appoint the Agent or to continue
the appointment of the Agent to be its shareholder servicing agent
upon, and subject to, the terms and provisions of this
Agreement;
NOW THEREFORE, in
consideration of the mutual covenants contained in this Agreement,
the parties agree as follows:
1.
Appointment of Agent as
Shareholder Servicing Agent for the Company; Acceptance.
(1)
The Company hereby
appoints the Agent to act as Shareholder Servicing Agent for the
Company upon, and subject to, the terms and provisions of this
Agreement.
(2)
The Agent hereby accepts
the appointment as Shareholder Servicing Agent for the Company and
agrees to act as such upon, and subject to, the terms and
provisions of this Agreement.
(3)
The Agent may appoint an
entity or entities approved by the Company in writing to perform
any portion of Agent’s duties hereunder (the
“Subagent”).
2.
Definitions.
(1)
In this Agreement
-
(a)
The term the
“Act” means the Investment Company Act of 1940 as
amended from time to time;
(b)
The term
“account” means the shares of the Company registered on
the books of the Company in the name of a shareholder under a
particular account registration number and includes shares subject
to instructions by the shareholder with respect to periodic
redemptions and/or reinvestment in additional shares of any
dividends payable on said shares;
(c)
The term
“affiliate” of a person shall mean a person
controlling, controlled by, or under common control with that
person;
(d)
The term
“Class” shall mean each separate sub-class of a class
of shares of the Company, as may now or in the future
exist;
(e)
The term
“Fund” shall mean each separate class of shares of the
Company, as may now or in the future exist;
(f)
The term
“officers’ instruction” means an instruction
given on behalf of the Company to the Agent and signed on behalf of
the Company by any one or more persons authorized to do so by the
Company’s Board of Directors;
(g)
The term
“prospectus” means the prospectus and Statement of
Additional Information of the applicable Fund or Class from
time to time in effect;
(h)
The term
“shares” means shares including fractional shares of
capital stock of the Company, whether or not such shares are
evidenced by an outstanding stock certificate issued by the
Company;
(i)
The term
“shareholder” shall mean the owner of record of shares
of the Company;
(j)
The term “stock
certificate” means a certificate representing shares in the
form then currently in use by the Company.
3.
Duties of the
Agent.
The Agent shall
perform such duties as shall be set forth in this paragraph 3 and
in accordance with the practice stated in Exhibit A of this
Agreement or any amendment thereof, any or all of which duties may
be delegated to or performed by one or more Subagents pursuant to
Paragraph (3) above.
(1)
Transfers.
Subject to the
provisions of this Agreement the Agent hereby agrees to perform the
following functions as transfer agent for the Company:
(a)
Recording the ownership,
transfer, exchange and cancellation of ownership of shares of the
Company on the books of the Company;
(b)
Causing the issuance,
transfer, exchange and cancellation of stock
certificates;
(c)
Establishing and
maintaining records of accounts;
(d)
Computing and causing to
be prepared and mailed or otherwise delivered to shareholders
payment checks including bank wire transfers and notices of
reinvestment in additional shares of dividends, stock dividends or
stock splits declared by the Company on shares and of redemption
proceeds due by the Company on redemption of shares;
(e)
Causing checking accounts
to be available and maintained for shareholders who elect to redeem
shares by drawing checks on such accounts, including accepting or
rejecting signatures on all checks drawn on the checking account
and notifying the payor bank to dishonor any check the Agent deems
not to be validly signed;
(f)
Furnishing to shareholders
such information as may be reasonably required by the Company,
including appropriate income tax information;
(g)
Addressing and mailing to
shareholders prospectuses, annual and semi-annual reports and proxy
materials for shareholder meetings prepared by or on behalf of the
Company;
(h)
Replacing allegedly lost,
stolen or destroyed stock certificates in accordance with and
subject to procedures and conditions agreed upon and set out in
officers’ instructions;
(i)
Maintaining such books and
records relating to transactions effected by the Agent pursuant to
this Agreement as are required by the Act, or by rules or
regulations thereunder, or by any other applicable provisions of
law, to be maintained by the Company or its transfer agent with
respect to such transactions; preserving, or causing to be
preserved, any such books and records for such periods as may be
required by any such law, rule or regulation; furnishing the
Company such information as to such transactions and at such time
as may be reasonably required by it to comply with applicable laws
and regulations;
(j)
Providing such services
and carrying out such responsibilities on behalf of the Company, or
imposed on the Agent as the Company’s transfer agent, not
otherwise expressly provided for in this Paragraph 3, as may be
required by or be reasonably necessary to comply with any statute,
act, governmental rule, regulation or directive or court order,
including, without limitation, the requirements imposed by the Tax
Equity and Fiscal Responsibility Act of 1982 and the Income and
Dividend Tax Compliance Act of 1983 relating to the withholding of
tax from distributions to shareholders.
(2)
Correspondence.
The Agent agrees
to deal with and answer all correspondence from or on behalf of
shareholders relating to its functions under this
Agreement.
4.
Compensation of the
Agent.
The Company agrees
to pay the Agent for its services under this Agreement in
accordance with the schedule as then in effect set forth in
Exhibit B of this Agreement or any amendment thereof. In
addition, the Company agrees to reimburse the Agent for the
following “out-of-pocket” expenses of the Agent within
five days after receipt of an itemized statement of such expenses,
to the extent that payment of such expenses has not been or is not
to be made directly by the Company: (i) costs of stationery,
appropriate forms, envelopes, checks, postage, printing (except
cost of printing prospectuses, annual and semi-annual reports and
proxy materials) and mailing charges, including returned mail and
proxies, incurred by the Agent with respect to materials and
communications sent to shareholders in carrying out its duties to
the Company under this Agreement, bank charges for wire transfers
pursuant to Section 3(1)(d) herein above, and maintenance
of shareholder checking accounts pursuant to
Section 3(1)(e) herein above; (ii) long distance
telephone costs incurred by the Agent for telephone communications
and microfilm and storage costs for transfer agency records and
documents; (iii) costs of all ancillary and supporting
services and related expenses (other than insurance
premiums) reasonably
required by and provided to the Agent, other than by its employees
or employees of an affiliate, with respect to functions of the
Company being performed by it in its capacity as Agent hereunder,
including legal advice and representation in litigation to the
extent that such payments are permitted under Paragraph 7 of this
Agreement and charges to Agent made by any Subagent;
(iv) costs for special reports or information furnished on
request pursuant to this Agreement and not specifically required by
the Agent by Paragraph 3 of this Agreement; and (v) reasonable
costs and expenses incurred by the Agent in connection with the
duties of the Agent described in Paragraph (3)(1)(i). In
addition, the Company agrees to promptly pay over to the Agent any
fees or payment of charges it may receive from a shareholder for
services furnished to the shareholder by the Agent.
Services and
operations incident to the sale and distribution of the
Company’s shares, including sales communications,
confirmations of investments (not including reinvestment of
dividends) and the clearing or collection of payments will not be
for the account or at the expense of the Company under this
Agreement.
5.
Right of Company to
Inspect Records, etc.
The Company will
have the right under this Agreement to perform on site inspection
of records and accounts and to perform audits directly pertaining
to the Company shareholder accounts serviced by the Agent hereunder
at the Agent’s or any Subagent’s facilities in
accordance with reasonable procedures at the frequency necessary to
assure proper administration of the Agreement. The Agent will
cooperate with the Company’s auditors or representatives of
appropriate regulatory agencies and furnish all reasonably
requested records and data.
6.
Insurance.
The Agent now has
the insurance coverage described in Exhibit C, attached
hereto, and the Agent will not take any action to eliminate or
decrease such coverage during the term of this Agreement without
receiving the approval of the Fund in advance of any change, except
the Agent, after giving reasonable notice to the Company, may
eliminate or decrease any coverage if the premiums for such
coverage are substantially increased.
The Company, at
its expense, will include as part of its insurance coverages
maintained pursuant to Section 17(j) of the Investment
Company Act of 1940 fidelity insurance with respect to forgery or
alteration of checks drawn on its checking account referred to in
Section 3(1)(e) of the Agreement subject to such
deductible for this particular coverage as it may deem
appropriate. The Agent will maintain at its expense such
insurance coverages with respect to the Agent’s duties under
Section 3(1)(e) for loss caused by errors or omissions as
it deems appropriate. Any loss to the Company by reason of
the deductible on coverages maintained by it hereunder shall be
paid by the Agent.
7.
Standard of Care;
Indemnification.
The Agent will at
all times exercise due diligence and good faith in performing its
duties hereunder. The Agent will make every reasonable effort
and take all reasonably available measures to assure the adequacy
of its personnel and facilities as well as the accurate
performance of all
services to be performed by it hereunder within, at a minimum, the
time requirements of any applicable statutes, rules or
regulations or as set forth in the prospectus.
The Agent shall
not be responsible for, and the Company agrees to indemnify the
Agent for any losses, damages or expenses (including reasonable
counsel fees and expenses) (i) resulting from any claim,
demand, action or suit not resulting from the Agent’s failure
to exercise good faith or due diligence and arising out of or in
connection with the Agen
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