Document:

Exhibit 10.15

 

INVESTMENT
MANAGEMENT AGREEMENT

 

This Agreement,
originally made the 1st day of July, 1990, by and between W&R TARGET FUNDS,
INC., f.k.a. TMK/United Funds, Inc., (hereinafter called “Corporation”)
and Waddell & Reed, Inc. (“W&R”), and assigned to WADDELL &
REED INVESTMENT MANAGEMENT COMPANY (“WRIMCO”) on January 8, 1992, and
amended and restated as of August 21, 2002, has been approved, annually,
by the Board of Directors, including separate approval by the Disinterested
Directors, as prescribed by Section 15(c) of the Investment Company
Act of 1940, as amended (“1940 Act”), and is hereby further amended and
effective November 9, 2005.

 

WITNESSETH:

 

In consideration of the
mutual promises and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, it is hereby agreed
by and between the parties hereto as follows:

 

I.  In General

 

WRIMCO agrees to act as
investment adviser to the Corporation with respect to the investment of its
assets and in general to supervise the investments of the Corporation with
regard to each of its series listed in Exhibit A, the Fee Schedule,
subject at all times to the direction and control of the Board of Directors of
the Corporation, all as more fully set forth herein.

 

II.  Duties of WRIMCO with respect to
investment of assets of the Corporation

 

A.  WRIMCO shall regularly provide investment
advice to the Corporation and shall, subject to the succeeding provisions of
this section, continuously supervise the investment and reinvestment of cash,
securities or other property comprising the assets of the investment portfolio
of the Corporation; and in furtherance thereof, WRIMCO shall:

 

1.  obtain and evaluate pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally or the
portfolio of the Corporation, and whether concerning the individual companies
whose securities are included in the Corporation’s portfolio or the industries
in which they engage, or with respect to securities which WRIMCO considers
desirable for inclusion in the Corporation’s portfolio;

 

2.  furnish continuously an investment program
for the portfolio of the Corporation;

 

3.  determine what securities shall be purchased
or sold by the Corporation;

 

 

4.  take, on behalf of the Corporation, all
actions which appear to WRIMCO necessary to carry into effect such investment
programs and supervisory functions as aforesaid, including the placing of
purchase and sale orders.

 

B.  WRIMCO shall make appropriate and regular
reports to the Board of Directors of the Corporation on the actions it takes
pursuant to Section II.A. above. 
Any investment programs furnished by WRIMCO under this section, or any
supervisory function taken hereunder by WRIMCO shall at all times conform to
and be in accordance with any requirements imposed by:

 

1.  the provisions of the 1940 Act and any rules or
regulations in force thereunder;

 

2.  any other applicable provision of law;

 

3.  the provisions of the Articles of
Incorporation of the Corporation as amended from time to time;

 

4.  the provisions of the Bylaws of the
Corporation as amended from time to time;

 

5.  the terms of the registration statement of
the Corporation, as amended from time to time, under the Securities Act of 1933
and the 1940 Act.

 

C.  Any investment programs furnished by WRIMCO
under this section or any supervisory functions taken hereunder by WRIMCO shall
at all times be subject to any directions of the Board of Directors of the
Corporation, its Executive Committee, or any committee or officer of the
Corporation acting pursuant to authority given by the Board of Directors.

 

III.  Allocation of Expenses

 

The expenses of the
Corporation and the expenses of WRIMCO in performing its functions under this
Agreement shall be divided into two classes, to wit:  (i) those expenses which will be paid in
full by WRIMCO as set forth in subparagraph “A” hereof, and (ii) those
expenses which will be paid in full by the Corporation, as set forth in
subparagraph “B” hereof.

 

A.  With respect to the duties of WRIMCO under Section II
above, it shall pay in full, except as to the brokerage and research services
acquired through the allocation of commissions as provided in Section IV
hereinafter, for (a) the salaries and employment benefits of all employees
of WRIMCO who are engaged in providing these advisory services; (b) adequate
office space and suitable office equipment for such employees; and (c) all
telephone and communications costs relating to such functions.  In addition, WRIMCO shall pay the fees and
expenses of all directors of the Corporation who are employees of WRIMCO or an
affiliated corporation and the salaries and employment benefits of all officers
of the Corporation who are affiliated persons of WRIMCO.

 

B.  The Corporation shall pay in full for all of
its expenses which are not listed above (other than those assumed by W&R or
its affiliates in their respective capacities as principal 

 

2

 

underwriter of the shares
of the Corporation, as Shareholder Servicing Agent or as Accounting Services
Agent for the Corporation), including (a) the costs of preparing and
printing prospectuses and reports to shareholders of the Corporation including
mailing costs; (b) the costs of printing all proxy statements and all
other costs and expenses of meetings of shareholders of the Corporation (unless
the Corporation and WRIMCO shall otherwise agree); (c) interest, taxes,
brokerage commission and premiums on fidelity and other insurance; (d) audit
fees and expenses of independent accountants and legal fees and expenses of
attorneys, but not of attorneys who are employees of WRIMCO or an affiliated
company; (e) fees and expenses of its directors not affiliated with WRIMCO
or its affiliates; (f) custodian fees and expenses; (g) fees payable
by the Corporation under the Securities Act of 1933, the 1940 Act, and the
securities or “Blue-Sky” laws of any jurisdiction; (h) fees and
assessments of the Investment Company Institute or any successor organization; (i) such
non recurring or extraordinary expenses as may arise, including litigation
affecting the Corporation and any indemnification by the Corporation of its
officers, directors, employees and agents with respect thereto; (j) the
costs and expenses provided for in any Shareholder Servicing Agreement or
Accounting Services Agreement, including amendments thereto, contemplated by
subsection C of this Section III. 
In the event that any of the foregoing shall, in the first instance, be
paid by WRIMCO, the Corporation shall pay the same to WRIMCO on presentation of
a statement with respect thereto.

 

C.  WRIMCO, or an affiliate of WRIMCO, may also
act as (i) transfer agent or shareholder servicing agent of the
Corporation and/or as (ii) accounting services agent of the Corporation if
at the time in question there is a separate agreement, “Shareholder Servicing
Agreement” and/or “Accounting Services Agreement,” covering such functions
between the Corporation and WRIMCO or such affiliate.  The corporation, whether WRIMCO or its
affiliate, which is the party to such Agreement with the Corporation is
referred to as the “Agent.”  Each such
Agreement shall provide in substance that it shall not go into effect, or be
amended, or a new agreement covering the same topics between the Corporation
and the Agent be entered into unless the terms of such Agreement, such
amendment or such new agreement have been approved by the Board of Directors of
the Corporation, including the vote of a majority of the directors who are not “interested
persons” as defined in the 1940 Act, of either party to the Agreement, such
amendment or such new agreement (considering WRIMCO to be such a party even if
at the time in question the Agent is an affiliate of WRIMCO), cast in person at
a meeting called for the purpose of voting on such approval.  Such a vote is referred to as a “disinterested
director” vote.  Each such Agreement
shall also provide in substance for its continuance, unless terminated, for a
specified period which shall not exceed two years from the date of its
execution and from year to year thereafter only if such continuance is
specifically approved at least annually by a disinterested director vote, and
that any disinterested director vote shall include a determination that (i) the
Agreement, amendment, new agreement or continuance in question is in the best
interests of the Corporation and its shareholders; (ii) the services to be
performed under the Agreement, the Agreement as amended, new agreement or
agreement to be continued are services required for the operation of the
Corporation; (iii) the Agent can provide services the nature and quality
of which are at least equal to those provided by others offering the same or
similar services; and (iv) the fees for such services are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. 
Any such Agreement may also provide in substance that any disinterested
director vote may be conditioned 

 

3

 

on the favorable vote of
the holders of a majority (as defined in or under the 1940 Act) of the
outstanding shares of each class of the Corporation.  Any such Agreement shall also provide in
substance that it may be terminated by the Agent at any time without penalty
upon giving the Corporation one hundred twenty (120) days’ written notice
(which notice may be waived by the Corporation) and may be terminated by the
Corporation at any time without penalty upon giving the Agent sixty (60) days’
written notice (which notice may be waived by the Agent), provided that such
termination by the Corporation shall be directed or approved by the vote of a
majority of the Board of Directors of the Corporation in office at the time or
by the vote of the holders of a majority (as defined in or under the 1940 Act)
of the outstanding shares of each class of the Corporation.

 

IV.  Brokerage

 

(A)  WRIMCO may
select brokers to effect the portfolio transactions of the Corporation on the
basis of its estimate of their ability to obtain, for reasonable and
competitive commissions, the best execution of particular and related portfolio
transactions.  For this purpose, “best
execution” means prompt and reliable execution at the most favorable price
obtainable.  Such brokers may be selected
on the basis of all relevant factors including the execution capabilities
required by the transaction or transactions, the importance of speed,
efficiency, or confidentiality, and the willingness of the broker to provide
useful or desirable investment research and/or special execution services.  WRIMCO shall have no duty to seek advance
competitive commission bids and may select brokers based solely on its current
knowledge of prevailing commission rates.

 

(B)  Subject to the
foregoing, WRIMCO shall have discretion, in the interest of the Corporation, to
direct the execution of its portfolio transactions to brokers who provide
brokerage and/or research services (as such services are defined in Section 28(e) of
the Securities Exchange Act of 1934) for the Corporation and/or other accounts
for which WRIMCO and its affiliates exercise “investment discretion” (as that
term is defined in Section 3(a)(35) of the Securities Act of 1934); and in
connection with such transactions, to pay commission in excess of the amount
another adequately qualified broker would have charged if WRIMCO determines, in
good faith, that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker, viewed in terms of
either that particular transaction or the overall responsibilities of WRIMCO
and its investment advisory affiliates with respect to the accounts for which they
exercise investment discretion.  In
reaching such determination, WRIMCO will not be required to attempt to place a
specified dollar amount on the brokerage and/or research services provided by
such broker; provided that WRIMCO shall be prepared to demonstrate that such
determinations were made in good faith, and that all commissions paid by the
Corporation over a representative period selected by its Board of Directors
were reasonable in relation to the benefits to the Corporation.

 

4

 

V.  Compensation of WRIMCO

 

As compensation in full
for services rendered and for the facilities and personnel furnished under
sections I, II, and IV of this Agreement, the Corporation will pay to
WRIMCO for each day the fees specified in Exhibit A hereto.

 

The amounts payable to
WRIMCO shall be determined as of the close of business each day; shall, except
as set forth below, be based upon the value of net assets computed in
accordance with the Articles of Incorporation of the Corporation; and shall be
paid in arrears whenever requested by WRIMCO. 
In computing the value of the net assets of the Corporation, there shall
be excluded the amount owed to the Corporation with respect to shares which
have been sold but not yet paid to the Corporation by WRIMCO.

 

Notwithstanding the
foregoing, if the laws, regulations or policies of any state in which shares of
the Corporation are qualified for sale limit the operation and management
expenses of the Corporation, WRIMCO will refund to the Corporation the amount
by which such expenses exceed the lowest of such state limitations.

 

VI.  Undertakings of WRIMCO; Liabilities

 

WRIMCO shall give to the
Corporation the benefit of its best judgment, efforts and facilities in
rendering advisory services hereunder.

 

WRIMCO shall at all times
be guided by and be subject to the Corporation’s investment policies, the
provisions of the Corporation’s Articles of Incorporation and Bylaws as each
shall from time to time be amended, and to the decision and determination of
the Corporation’s Board of Directors.

 

This Agreement shall be
performed in accordance with the requirements of the 1940 Act, the Investment
Advisers Act of 1940, the Securities Act of 1933, and the Securities Exchange
Act of 1934, to the extent that the subject matter of this Agreement is within
the purview of such Acts.  Insofar as
applicable to WRIMCO as an investment adviser and affiliated person of the
Corporation, WRIMCO shall comply with the provisions of the 1940 Act, the
Investment Advisers Act of 1940 and the respective rules and regulations
of the Securities and Exchange Commission thereunder.

 

In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of WRIMCO, it shall not be subject to liability
to the Corporation or to any stockholder of the Corporation (direct or
beneficial) for any act or omission in the course of or connected with
rendering services thereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.

 

5

 

VII.  Duration of this Agreement

 

This Agreement shall be
renewed at the start of business on the date hereof and shall continue in
effect, unless terminated as hereinafter provided, for a period of one year and
from year-to-year thereafter only if such continuance is specifically approved
at least annually by the Board of Directors, including the vote of a majority
of the directors who are not parties to this Agreement or “interested persons”
(as defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of the
holders of a majority (as so defined) of the outstanding voting securities of
each class of the Corporation and by the vote of a majority of the directors
who are not parties to this Agreement or “interested persons” (as so defined)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.

 

VIII.  Termination

 

This Agreement may be
terminated by WRIMCO at any time without penalty upon giving the Corporation
one hundred twenty (120) days’ written notice (which notice may be waived by
the Corporation) and may be terminated by the Corporation at any time without
penalty upon giving WRIMCO sixty (60) days’ written notice (which notice may be
waived by WRIMCO), provided that such termination by the Corporation shall be
directed or approved by the vote of a majority of the Board of Directors of the
Corporation in office at the time or by the vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the Corporation.  This Agreement shall automatically terminate
in the event of its assignment, the term “assignment” for this purpose having
the meaning defined in Section 2(a)(4) of the 1940 Act and the rules and
regulations thereunder.

 

IN WITNESS WHEREOF, the
parties hereto have caused the foregoing instrument to be executed by their
duly authorized officers and their corporate seal to be hereunto affixed, all
as of the day and year first above written.

 

(Seal)

 

	
   

  	
  W&R TARGET FUNDS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Kristen A. Richards

  	
   

  
	
   

  	
  Kristen A. Richards

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  /s/Megan E. Bray

  	
   

  
	
  Megan E. Bray

  	
   

  
	
  Assistant Secretary

  	
   

  
	
   

  	
   

  
	
  (Seal)

  	
   

  
					

 

6

	
   

  	
   

  
	
   

  	
  WADDELL & REED
  INVESTMENT

  
	
   

  	
  MANAGEMENT COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Henry J. Herrmann

  	
   

  
	
   

  	
  Henry J. Herrmann

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  /s/Wendy J. Hills

  	
   

  
	
  Wendy J. Hills

  	
   

  
	
  Secretary

  	
   

  
					

 

7

 

EXHIBIT A TO
INVESTMENT MANAGEMENT AGREEMENT

 

W&R TARGET FUNDS, INC.

 

FEE SCHEDULE

 

A cash fee computed each
day on net asset value for each Portfolio at the annual rates listed below*:

 

Effective June 30,
1999:

 

	
  Asset Strategy Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  
	
   

  	
   

  	
   

  
	
  Balanced Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  
	
   

  	
   

  	
   

  
	
  Core Equity
  Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  
	
   

  	
   

  	
   

  
	
  Growth Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  
	
   

  	
   

  	
   

  
	
  High Income Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $500 million

  	
   

  	
  0.625%

  
	
  Over $500 million and
  up to $1 billion

  	
   

  	
  0.600%

  
	
  Over $1 billion and up
  to $1.5 billion

  	
   

  	
  0.550%

  
	
  Over $1.5 billion

  	
   

  	
  0.500%

  

 

 

8

 

	
  International
  Growth Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.85%

  
	
  Over $1 billion
  and up to $2 billion

  	
   

  	
  0.83%

  
	
  Over $2 billion
  and up to $3 billion

  	
   

  	
  0.80%

  
	
  Over $3 billion

  	
   

  	
  0.76%

  
	
   

  	
   

  	
   

  
	
  Money Market Portfolio

  	
   

  	
   

  
	
  A cash fee computed
  each day on net asset values for the Portfolio at the annual rate of 0.40% of
  net assets.

  
	
   

  	
   

  	
   

  
	
  Science &
  Technology Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.85%

  
	
  Over $1 billion
  and up to $2 billion

  	
   

  	
  0.83%

  
	
  Over $2 billion
  and up to $3 billion

  	
   

  	
  0.80%

  
	
  Over $3 billion

  	
   

  	
  0.76%

  
	
   

  	
   

  	
   

  
	
  Small Cap Growth
  Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.85%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.83%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.80%

  
	
  Over $3 billion

  	
   

  	
  0.76%

  

 

Approved February 14, 2001:

 

	
  Value Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up
  to $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  

 

Approved November 19, 2003:

 

	
  Dividend Income Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.70%

  
	
  Over $1 billion and up to
  $2 billion

  	
   

  	
  0.65%

  
	
  Over $2 billion and up
  to $3 billion

  	
   

  	
  0.60%

  
	
  Over $3 billion

  	
   

  	
  0.55%

  

 

9

 

Approved
November 10, 2004:

 

	
  Mid
  Cap Growth Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.85%

  
	
  Over $1 billion
  and up to $2 billion

  	
   

  	
  0.83%

  
	
  Over $2 billion
  and up to $3 billion

  	
   

  	
  0.80%

  
	
  Over $3 billion

  	
   

  	
  0.76%

  

 

Approved August 24, 2005:

 

	
  Energy
  Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.85%

  
	
  Over $1 billion
  and up to $2 billion

  	
   

  	
  0.83%

  
	
  Over $2 billion
  and up to $3 billion

  	
   

  	
  0.80%

  
	
  Over $3 billion

  	
   

  	
  0.76%

  

 

Effective August 6, 2007:

 

	
  Bond Portfolio

  	
   

  	
   

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  Up to $1 billion

  	
   

  	
  0.475%

  
	
  Over $1 billion and up
  to $1.5 billion

  	
   

  	
  0.450%

  
	
  Over $1.5 billion

  	
   

  	
  0.400%

  

 

Approved November 28, 2007:

 

	
  W&R Target Pathfinder
  Aggressive Portfolio

  
	
  W&R Target Pathfinder
  Moderately Aggressive Portfolio

  
	
  W&R Target Pathfinder
  Moderate Portfolio

  
	
  W&R Target Pathfinder
  Moderately Conservative Portfolio

  
	
  W&R Target Pathfinder
  Conservative Portfolio

  
	
  Net Assets

  	
   

  	
  Fee

  
	
  All net assets

  	
   

  	
  0.00%

  

 

*If a Portfolio’s net
assets are less than $25 million, WRIMCO has agreed to voluntarily waive the
management fee, subject to its right to change or modify this waiver.

 

10Exhibit 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 Agent’s duties on behalf of the
Company hereunder; (ii) for any delay, error or omission by reason of
circumstances beyond its control, including acts of civil or military
authority, national emergencies, labor difficulties (except with respect to the
Agent’s employees), fire, mechanical breakdown beyond its control, flood or
catastrophe, acts of God, insurrection, war, riots, or failure beyond its
control of transportation, communication or power supply; or (iii) for any
action taken or omitted to be taken by the Agent in good faith in reliance on (a) the
authenticity of any instrument or communication reasonably believed by it to be
genuine and to have been properly made and signed or endorsed by an appropriate
person, (b) the accuracy of any records or information provided to it by
the Company, (c) any authorization or instruction contained in any
officers’ instruction, or (d) with respect to the functions performed for
the Company listed under Paragraph 3(1) of this Agreement, any advice of
counsel approved by the Company who may be internally employed counsel or
outside counsel, in either case for the Company and/or the Agent.

 

In
order for the rights to indemnification to apply, it is understood that if in
any case the Company may be asked to indemnify or hold the Agent harmless, the
Company shall be advised of all pertinent facts concerning the situation in
question, and it is further understood that the Agent will use reasonable care
to identify and notify the Company promptly concerning any situation which
presents or appears likely to present a claim for indemnification against the
Company.  The Company shall have the
option to defend the Agent against any claim which may be the subject of this
indemnification and, in the event that the Company so elects, it will so notify
the Agent and thereupon the Company shall take over complete defense of the
claim and the Agent shall sustain no further legal or other expenses in such
situation for which the Agent shall seek indemnification under this
paragraph.  The Agent will in no case
confess any claim or make any compromise in any case in which the Company will
be asked to indemnify the Agent except with the Company’s prior written
consent.

 

8.                                       Term of the
Agreement; Taking Effect; Amendments.

 

This
Agreement shall become effective at the start of business on the date hereof
and shall continue, unless terminated as hereinafter provided, for a period of
one year and from year to year thereafter, provided that such continuance shall
be specifically approved as provided below.

 

This
Agreement shall go into effect, or may be continued, or may be amended or a new
agreement between the Company and the Agent covering the substance of this
Agreement may be entered into only if the terms of this Agreement, such
continuance, the terms of such amendment or the terms of such new agreement
have been approved by the Board of Directors of the Company, including the vote
of a majority of the directors who are not “interested persons,” as defined in
the Act, of either party to this Agreement or of Waddell & Reed
Investment Management Company, cast in person at a meeting called for the
purpose of voting on such approval.  Such
a vote is hereinafter referred to as a “disinterested director vote.”

 

 

Any
disinterested director vote shall include a determination that (i) the
Agreement, amendment, new agreement or continuance in question is in the best
interests of the Company and its shareholders; (ii) the services to be
performed under the Agreement, the Agreement as amended, new agreement or
agreement to be continued, are services required for the operation of the
Company; (iii) the Agent can provide services the nature and quality of
which are at least equal to those provided by others offering the same or
similar services; and (iv) the fees for such services are fair and
reasonable in the light of the usual and customary charges made by others for
services of the same nature and quality.

 

9.                                       Termination.

 

(1)                                  This Agreement
may be terminated by the Agent at any time without penalty upon giving the
Company 120 days’ written notice (which notice may be waived by the Company)
and may be terminated by the Company at any time without penalty upon giving
the Agent sixty (60) days’ written notice (which notice may be waived by the
Agent), provided that such termination by the Company shall be directed or
approved by the vote of a majority of the Board of Directors of the Company in
office at the time or by the vote of the holders of a majority (as defined in
or under the Act) of the outstanding shares of the Company.

 

(2)                                  On termination,
the Agent will deliver to the Company or its designee all files, documents and
records of the Company used, kept or maintained by the Agent in the performance
of its services hereunder, including such of the Company’s records in machine
readable form as may be maintained by the Agent, as well as such summary and/or
control data relating thereto used by or available to the Agent.

 

(3)                                  In the event of
any termination which involves the appointment of a new shareholder servicing
agent, including the Company’s acting as such on its own behalf, the Company
shall have the non-exclusive right to the use of the data processing programs
used by the Agent in connection with the performance of its duties under this
Agreement without charge.

 

(4)                                  In addition, on
such termination or in preparation therefore, at the request of the Company and
at the Company’s expense the Agent shall provide to the extent that its
capabilities then permit such documentation, personnel and equipment as may be
reasonably necessary in order for a new agent or the Company to fully assume
and commence to perform the agency functions described in this Agreement with a
minimum disruption to the Company’s activities.

 

10.                                 Construction;
Governing Law.

 

The
headings used in this Agreement are for convenience only and shall not be
deemed to constitute a part hereof. 
Whenever the context requires, words denoting singular shall be read to
include the plural.  This Agreement and
the rights and obligations of the parties hereunder, shall be construed and
interpreted in accordance with the laws of the State of Kansas, except to the
extent that the laws of the State of Maryland apply with respect to share
transactions.

 

 

11.                                 Representations
and Warranties of Agent.

 

Agent
represents and warrants that it is a corporation duly organized and existing
and in good standing under the laws of the State of Missouri, that it is duly
qualified to carry on its business in the State of Kansas and wherever its
duties require, that it has the power and authority under laws and by its
Articles of Incorporation and Bylaws to enter into this Shareholder Servicing
Agreement and to perform the services contemplated by this Agreement.

 

12.                                 Entire
Agreement.

 

This
Agreement and the Exhibits annexed hereto constitutes the entire and complete
agreement between the parties hereto relating to the subject matter hereof,
supersedes and merges all prior discussions between the parties hereto, and may
not be modified or amended orally.

 

IN
WITNESS WHEREOF, the parties have hereto caused this Agreement to be duly
executed on the day and year first above written.

 

	
   

  	
  W&R FUNDS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:   /s/
  Daniel C. Schulte

  	
   

  	
   

  
	
   

  	
       Daniel C. Schulte, Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:   /s/ Kristen A. Richards

  	
   

  	
   

  	
   

  
	
       Kristen A. Richards, Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WADDELL & REED SERVICES COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:   /s/
  Michael D. Strohm

  	
   

  	
   

  
	
   

  	
       Michael D. Strohm, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:  /s/ Daniel C.
  Schulte

  	
   

  	
   

  	
   

  
	
  Daniel
  C. Schulte, Secretary

  	
   

  	
   

  	
   

  
									

 

 

EXHIBIT A

 

A.            DUTIES IN SHARE TRANSFERS AND
REGISTRATION

 

1.                                       The Agent in
carrying out its duties shall follow general commercial practices and the Rules of
the Stock Transfer Association, Inc. except as they may conflict or be
inconsistent with the specific provisions of the Company’s Articles of
Incorporation and Bylaws, prospectus, applicable Federal and state laws and
regulations and this Agreement.

 

2.                                       The Agent shall
not require that the signature of the appropriate person be guaranteed,
witnessed or verified in order to effect a redemption, transfer, exchange or
change of address except as may from time to time be directed by the Company as
set forth in an officers’ instruction. 
In the event a signature guarantee is required by the Company, the Agent
shall not inquire as to the genuineness of the guarantee.

 

3.                                       The Agent shall
not replace a lost, stolen or misplaced stock certificate without requiring and
being furnished with an open penalty surety bond protecting the Company and the
Agent against loss.

 

B.                                     The practices,
procedures and requirements specified in A above may be modified, altered,
varied or supplemented as from time to time may be mutually agreed upon by the
Company and the Agent and evidenced on behalf of the Company by an officers’
instruction.  Any such change shall not
be deemed to be an amendment to the Agreement within the meaning of Paragraph 8
of the Agreement.

 

 

EXHIBIT B

COMPENSATION

 

Class A Shares of Asset
Strategy Fund (“Fund”)

An amount payable on the
first day of each month of $1.5792 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class A Shares of
High Income Fund and Municipal Bond Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class A Shares of Energy Fund, Large Cap
Growth Fund, Mid Cap Growth Fund, Science and Technology Fund, Small Cap Growth
Fund, Tax-Managed Equity Fund and Core Equity Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.5042 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class A
shares of Limited-Term Bond Fund (“Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in
existence during any portion of the immediately preceding month and, in
addition, the Fund also pays the Agent a monthly fee of $0.75 for each
shareholder check it processes.

 

Class A Shares of Money
Market Fund (“Fund”)

An amount payable on the
first day of each month of $1.75 for each account of the Fund which was in
existence during any portion of the immediately preceding month and, in
addition, the Fund also pays the Agent a monthly fee of $0.75 for each
shareholder check it processes.

 

Class B Shares of Asset
Strategy Fund (“Fund”)

An amount payable on the
first day of each month of $1.5792 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class B Shares of
High Income Fund, Limited-Term Bond Fund and Municipal Bond Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class B Shares of Energy
Fund, Large Cap Growth Fund, Mid Cap Growth Fund, Science and Technology Fund,
Small Cap Growth Fund, Tax-Managed Equity Fund and Core Equity Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.5042 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class B Shares of Money
Market Fund (“Fund”)

An amount payable on the
first day of each month of $1.75 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class C Shares of Asset
Strategy Fund (“Fund”)

 

 

An amount payable on the
first day of each month of $1.5792 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class C Shares of High Income Fund,
Limited-Term Bond Fund and Municipal Bond Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in existence
during any portion of the immediately preceding month.

 

Class C Shares of Energy Fund, Large Cap
Growth Fund, Mid Cap Growth Fund, Science and Technology, Small Cap Growth
Fund, Tax-Managed Equity Fund and Core Equity Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.5042 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class C Shares of Money
Market Fund (“Fund”)

An amount payable on the
first day of each month of $1.75 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class E Shares of Asset
Strategy Fund (“Fund”)

An amount payable on the
first day of each month of $1.5792 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class E Shares of
High Income Fund (“Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class E Shares of Energy Fund, Large Cap
Growth Fund, Mid Cap Growth Fund, Science and Technology Fund, Small Cap Growth
Fund, Tax-Managed Equity Fund and Core Equity Fund (each a “Fund”)

An amount payable on the
first day of each month of $1.5042 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class E
shares of Limited-Term Bond Fund (“Fund”)

An amount payable on the
first day of each month of $1.6958 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class E Shares of Money
Market Fund (“Fund”)

An amount payable on the
first day of each month of $1.75 for each account of the Fund which was in
existence during any portion of the immediately preceding month.

 

Class I Shares of All Funds (except Ivy Money
Market Fund and Ivy Municipal Bond Fund)

An amount payable on the
first day of each month equal to 1/12 of .15 of 1% of the average daily net
assets of the Class for the preceding month.

 

Class R Shares of
Large Cap Growth Fund, Mid Cap Growth Fund, Science and Technology Fund and
Small Cap Growth Fund (each a “Fund”)

An amount payable on the
first day of each month equal to 1/12 of .20 of 1% of the average daily net
assets of the Class for the preceding month.

 

Class Y Shares of All Funds

An amount payable on the
first day of each month equal to 1/12 of .15 of 1% of the average daily net
assets of the Class for the preceding month.

 

The above-referenced per
account fees shall be reduced for certain networked accounts to $6.00 per
account on an annualized basis computed and payable on the first day of each
month for each account which was in existence during any portion of the
immediately preceding month.

 

The above-referenced per
account fees for Class A, Class B, Class C and Class E
shall also be reduced if the total number of accounts for which WRSCO provides
shareholder services reach the following levels:

 

A reduction of 5% of the
per account fee for the number of accounts in excess of 2.5 million but less
than 3.0 million; and

 

A reduction of 10% of the
per account fee for the number of accounts in excess of 3.0 million.

 

When considering the
total number of accounts for the purpose of the reductions listed above, Class A,
Class B, Class C, Class E, Class II and Advisors Class accounts
in each of the Ivy Funds, Ivy Funds, Inc. and Waddell &Reed
Advisors Funds are included; however, accounts in Class I, Class R
and Class Y of each such fund and Waddell & Reed InvestEd
accounts are excluded.

 

Fee Schedule Amended and
Effective November 29, 2006.

 

 

EXHIBIT C

 

	
  Name
  of Bond

  	
   

  	
  Amount

  	
   

  	
  Bond or Policy No.

  	
   

  	
  Insurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investment Company 

  	
   

  	
   

  	
   

  	
  87015107B

  	
   

  	
  ICI Mutual Insurance Company

  
	
  Blanket Bond Form

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fidelity

  	
   

  	
  $

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Expense

  	
   

  	
  50,000

  	
   

  	
   

  	
   

  	
   

  
	
  On Premises

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  In Transit 

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Forgery or Alteration

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Securities

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Counterfeit Currency 

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Uncollectible Items of Deposit

  	
   

  	
  25,000

  	
   

  	
   

  	
   

  	
   

  
	
  Phone-Initiated
  Transactions

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
  Computer Security

  	
   

  	
  31,320,000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Directors and

  Officers/ Errors and 

  Omissions Liability 

  Insurance Form 

  Total Limit

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  87015107D

  	
   

  	
  ICI Mutual Insurance Company

  
	
  Blanket Lost 

  Instrument Bond 

  (Mail Loss)

  	
   

  	
   

  	
   

  	
  30S100639551

  	
   

  	
  Travelers

  
	
  Blanket Undertaking 

  Lost Instrument 

  Waiver of Probate

  	
   

  	
   

  	
   

  	
  42SUN339806

  	
   

  	
  Hartford Casualty
  Insurance

  

 

Effective December 31,
2007

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